Investir en Inde pour une PME? Opportunités et risques intervention de la part de Fribourg, 18th of June 2009 Seite 1
Some things changed others remained the same...or adapted Hindustan Ambassador Seite 2
1 Gherzi & India 2 Case Study 1: Swiss Machinery Producer 3 Case Study 2: Swiss Supplier to the Construction Industry 4 Key Success Factors & Risks Seite 3
Services to the industry since 1929 Offices Zürich Engineering Logistics Management & Operations Strategy Milano M & A Krefeld Retail Istanbul Operational Improvements Cairo Mumbai Delhi BOSS H U G O B O S S Technology Restructuring and Turn-around Seite 4
GHERZI EASTERN Ltd: present in India for 49 years JV: Gherzi AG, Zürich & Wadia Group, Mumbai > 400 professionals: engineers, architects, econom. over 2 000 successful projects Textiles & Clothing Industry Hotels & Hospitals Infrastructure Green techn. 1960 1970 1980 1995 2005 today Headquarter 8 Regional offices 6 Branches Seite 5
GHERZI EASTERN Ltd: some Industrial References Seite 6
GHERZI EASTERN Ltd: some Infrastructure References Since 2005: Green Technology INOX Multiplex, Vadodara Seite 7
1 Gherzi & India 2 Case Study 1: Swiss Machinery Producer 3 Case Study 2: Swiss Supplier to the Construction Industry 4 Key Success Factors & Risks Seite 8
Methodology for state selection: case study 2007 A Swiss Machinery Producer was planning a new production site in India in 2007. Gherzi was asked to assist on the identification of suitable Location Possibilities. Gherzi applied the following methodology: 1.1 1.2 1.3 Define Requirements Sourcing SWOT Environment & Logistics Recommendation Incentives Cost Factors Seite 9
Methodology for state selection: from 26 to 6 states Starting Point : 29 States 1 st Shortlist: 10 States 2 nd Shortlist: 6 States 29 10 6 Final Choice All the twenty-nine states reviewed with reference to availability or otherwise of critical inputs based on available knowledge and information A state to be qualified for the next stage should have atleast one very good and one good rating The purpose is to eliminate all those states which do not have at least one compelling attractive feature States rated on the basis of critical parameters - Raw material availability - Industrialization - Power availability & quality - Fiscal Incentives - Social Infrastructure Strategic Analysis of states was carried out with reference to the critical parameters Focus on the implication of State Policy and its environment on our client Fiscal incentives and proximity to raw material given more weight Comparison based on Present Value of Profit after Tax Seite 10
Methodology for state selection: from 6 states to final choice State Impact on PAT (PV, 10 years) Raw material Cost of Labour Power Land Fiscal incentives not disclosed & Maharashtra (general) 100% confidential 100% 100% 100 IPS, EDE, special incent Gujarat n.d. & conf. 100% 100% 100% 104 CIS Impact Chhattisgarh n.d. & conf. 105% 106% 80% Negligible 100 IS, EDE (since it represented only 3% of the sales Price) Uttarakhand n.d. & conf. > 110% >110% 80% 106 CEE, ITE, IS Tamil Nadu n.d. & conf. 100% 100% 80% 104 IS, EDE, CIS Karnataka n.d. & conf. 103% 100% 100% 100 SDE Wing (Maharashtra) n.d. & conf. 100% 100% 100% C Category 100% Center IPS Industrial Promotion Subsidy EDE Electricity Duty Exemption CIS Critical Infrastructure Subsidy ITE Income Tax Exemption IS Investment Subsidy Source: Gherzi Calculations Seite 11
1 Gherzi & India 2 Case Study 1: Swiss Machinery Producer 3 Case Study 2: Swiss Supplier to the Construction Industry 4 Key Success Factors & Risks Seite 12
Swiss Supplier to the Construction Industry Overview of Indian 1 economy 3 Competitive position 2 Market Attractivity 4 Implementation Strategy Activities 2.1 2.2 2.3 Infrastructure Airports Railways 2.7 GDP Growth Rising Income 2.4 2.5 2.6 Tourism Real Estate Retail Seite 13
Swiss Supplier to the Construction Industry 1 2 Overview of Indian economy 3 Competitive position Market Attractivity 4 Implementation Strategy Activities Global Market: 1.2 Mn tons Indian Market 35 000 t (approx 3%) Buildings 13% Appliances 16% Transport 14% Automotive 20% General Industrial 10% Furniture 35% General Industrial 57% Building Architecture 15% Appliances 20% Source : Industry estimates / Gherzi analysis Seite 14
Swiss Supplier to the Construction Industry 1 2 Overview of Indian economy 3 Competitive position Market Attractivity 4 Implementation Strategy Options Options 1. 2. 3. 4. Export Acquisition Combination of 1, 2 & 4 Local production own plant J-V Job work Seite 15 4. Local production
1 Gherzi & India 2 Case Study 1: Swiss Machinery Producer 3 Case Study 2: Swiss Supplier to the Construction Industry 4 Key Success Factors & Risks Seite 16
Some key issue affect all SME s: weak infrastructure Total losses of the Indian economy caused by inefficient transportation: 4-6 bn US$ p.a. (1% of GDP) Gherzi Fribourg International Expérience d entreprises suisse Ajit Gulabchand, en Inde Hindustan Construction Seite 17
For Swiss companies India offers a great opportunity for production. Huge capital for English speaking workforce in India 22 Mio. Graduates 6 Mio. Science Graduates 1.2 Mio. Engineering Graduates 0.6 Mio. Medical doctors Graduates per year that finish their studies: 25 000 Medical doctors 50 000 Programmers 360 000 Engineers (vs D, USA) decision drivers: security social status Largest number of English speaking scientists after the US Quelle: FICCI, Knowledge Wharton Seite 18
Equally India as a market, offers a unique opportunity for Swiss companies. In 2015, 60% of the Indian population will buy consumer goods Global India Seeking India Aspiring India Einkommen pro Kopf u. Jahr ($ 2005-06 prices) > INR 200 000 > INR 40 000 > INR 18 000 Bevölkerung 2007 35% 8% 16% 2015 20% 66% < INR 18 000 65% Deprived India 42% 34% Quelle: NCAER, Harvard Business Review, Nestlé Seite 19
Equally India as a market, offers a unique opportunity for Swiss companies. Population-Pyramid 2000 Population-Pyramid 2025 Indien CH Indien CH China USA China USA Quelle: U.S. Census Bureau Quelle: U.S. Census Bureau Seite 20
Key Success Factors Soft Factors are of great relevance 1. Connecting to Culture & People 2. Right choice of Partner(s) and/or Management 3. Time & Patience! 4. Take advantage of the Swissness factor Gherzi Eastern, Mumbai, Indien Seite 21
Some key issues will affect all of us in India: fierce & fast competition Seite 22
Gherzi's profile For further information please contact: Mr. Francesco Gherzi Gherzi AG Gessnerallee 28 8021 Zürich Tel: +41 44 219 60 00 f.gherzi@gherzi.com www.gherzi.com www.gherzieastern.com Seite 23