MAGNUM Blog

Welding is reliable, cost-effective and high-tech method for joining materials in manufacturing industries. Electrodes are heart for manufacturing to join metals and alloys efficiently to add value to their products. .Welding today is applied with advanced technologies as lasers and plasma arcs & Submerged arcs. The future of welding holds even greater promise as methods are devised for joining dissimilar and non-metallic materials, and for creating products of innovative shapes and designs.

Welding is most critical operation of any manufacturing process and right electrodes to use for quantity and quality of welding has direct impact on quality of final product. Prior labor intensive but now semi auto & fully automated systems have been developed to counter human errors.

Welding consumables market is expected to grow at a CAGR 10-11% over next five years. Continuous electrodes would witness higher growth compared to Manual Electrodes. Stick electrodes are losing its market share to wires and fluxes to growing usage across the end-use industries and their advantages such as high deposition rate, strong welds, and suitability for outdoor work.

With expected growth in Automobile, Shipbuilding & Repairs, Railways, Infrastructure Developments like Bridges Tunnels construction etc. we anticipate the growth of Welding consumable also to grow.

Robotic Welding for TUBE to FIN Welding, Automated welding system for manufacturing of bifurcate components. GMAW process established for welding of hand holed pipe to dished end (header), GMAW / FCAW technology for welding of piping joints for boiler & turbine at site. TIG welding for high wall thickness tubes.

However, increasing price of steel is expected to impact the prices of welding consumables and thereby the revenue. This could be passed to the consumers easily.

Road Ahead

OEM business growth would directly trigger growth in this segment.

Overall Government spending on Infra would be added advantage. Overall Growth of 9-11% in this segment achievable.

BENEFICIARIES : ESAB INDIA, ADOR WELD, DE NORA INDIA, PANASONIC CARBON.

The term pesticide covers a wide range of compounds including insecticides, fungicides, herbicides, rodenticides, molluscicides, nematicides, plant growth regulators and others. Pesticides are substances or mixtures of substances that are mainly used in agriculture or in public health protection programs in order to protect plants from pests, weeds or diseases and humans from vector-borne diseases, such as malaria, dengue fever, and schistosomiasis. Insecticides, fungicides, herbicides, rodenticides and plant growth regulators.

The primary benefits are the consequences of the pesticides’ effects – the direct gains expected from their use. For example the effect of killing insects, bacteria, virus etc feeding on the crop brings the primary benefit of higher yields and better quality of crop.

Benefits : ֎ Improving productivity ֎ Protection of crop losses/yield reduction ֎ Vector disease control ֎ Quality of food

Pesticides Effects

Residues of pesticides can be found in a great variety of everyday foods and beverages, including for instance cooked meals, water, wine, fruit juices, refreshments, and animal feeds. Furthermore, it should be noted that washing and peeling cannot completely remove the residues. In the majority of cases, the concentrations do not exceed the legislatively determined safe levels. However, these “safe limits” may underestimate the real health risk as in the case of simultaneous exposure to two or more chemical substances, which occurs in real-life conditions and may have synergistic effects. Pesticides residues have also been detected in human breast milk samples, and there are concerns about prenatal exposure and health effects in children.

This creates need for protection against pests is a given and has its roots in antiquity, when both organic and chemical substances were applied as pesticides. Since then, numerous chemical pesticides have been produced, and now multinational agrochemical companies, which mostly control global food production, apply new chemical substances with pesticide properties and implement biotechnological advances, thus diverging from traditional agricultural methods. Furthermore, current agricultural practices are based on the wide use of chemical pesticides that have been associated with negative impacts on human health, wildlife, and natural environment.

Current agriculture has to deal with important factors, such as population growth, food security, health risks from chemical pesticides, pesticide resistance, degradation of the natural environment, and climate change.

Road Ahead

Constant R&D and new pesticides with organic substance has got growth future in our country as our country is more than 60% agri based. The company’s average growth rate is projected at  8-9%, thus the sector looks sustainable in long run.

BENEFICIARIES : BAYER CROP, MOSANTO, SYNGENTA, SUMITOMO CHEMICALS, UPL, PI INDUS, FINE ORGANICs, BASF.

The ‘Defence’ sector, considering its importance, is identified as one of the key sectors for ‘Make in India’. Defence sector would be given priority be it for capital acquisition, manufacturing or technology development. By 2025, turnover of USD 25 billion (including export worth USD 5 billion) is expected to be achieved in the Aerospace and Defence sector. Govt.  announced separate budget allocation (in defence manufacturing) for procurements from domestic vendors, a mechanism must be laid forth to enable participation not only from domestic players but also foreign players in this sector. To increase foreign participation, the government recently enhanced the foreign investment limit in the defence sector from 49% to 74% under the automatic sector for companies seeking new industrial licences. Investments beyond 74% will require government approval.

As per the Union Budget for the financial year 2020-21, the total allocation for Defence is around USD 62.85 Bn.  Around 1/4th of this amount is allocated for capital expenditure. India is among the top five countries with the highest military spending. Favourable government policy which promotes self-reliance, indigenisation, and technology upgradation. The policies also aim at achieving economies of scale, including the development of capabilities, for exports in the defence sectorIndia’s requirements on defence are catered largely by imports. The opening of the Defence sector for private sector participation will help foreign Original Equipment Manufacturers (OEMs) to enter into strategic partnerships with Indian companies. This will enable them to leverage the domestic markets as well as aim at global markets. Besides helping in building domestic capabilities, it will also bolster exports in the long term. Preference has been given to ‘Buy (Indian)’, ‘Buy and Make (Indian)’ and ‘Make’ categories over ‘Buy (Global)’ and ‘Buy and Make (Global)’ categories. A clear and unambiguous definition of indigenous content is provided.

The defence ministry on Thursday approved procurement of weapons and military equipment worth Rs 28,000 crore for the three services. All the weapons and military hardware approved for procurement will be acquired from domestic industry. “The Defence Acquisition Council (DAC) headed by Defence Minister Rajnath Singh approved proposals to procure equipment worth Rs 27,000 crore from domestic industry,” the defence ministry said in a statement.

Total of seven acquisition proposals were approved by the DAC, the defence ministry’s highest decision-making body on procurement. “Six of the seven proposals, that is, Rs 27,000 crore out of Rs 28,000 crore for which AoNs (Acceptance of Necessity) were granted will be sourced from the Indian industry to give a boost to the ‘Make in India’ and ‘Atmanirbhar Bharat’ initiatives,” the ministry said.

Road Ahead

The Defence Sector may witness demand in near term and also government focus would create edge for the manufacturer going forward. Growth stable and also forward growth to sustains as further orders in pipeline.

BENEFICIARIES : BHARAT FORGE, BEL, BHEL, BHARAT DYNAMICS GARDEN REACH, MAZGAON DOCK, HINDUSTANAERONAUTICS LTD, MISHRA DHATU NIGAM LTD. (MIDHANI)

The specialty chemicals market in India has been flourishing, owing to the rise in demand from various end-user industries. The specialty chemicals market in India was valued at INR 2,650.92 Bn in FY 2019 and is expected to reach INR 4,527.36 Bn by FY 2024, expanding at a compound annual growth rate (CAGR) of ~11.9% during the FY 2019-FY 2024 period. Unlike basic chemicals, the price of specialty chemicals is determined depending on their unique features and utilities rather than composition.

Despite of uncertainties environmental concerns and sharpening cost focus, the sector has sufficiently sustained the growth as demand for this product from end-user industries, Demand from export and import substitution opportunities due to the clampdown on chemicals manufacturing in China. While these drivers create a conducive.

However, current scenario may impact the growth for limited time span. Structural positivity & right chemistry & involution of new chemicals, we remain positive bias on this sector.

An increase in demand in end-user industries like food processing, personal care, and home care is propelling the development of the different segments of the Indian specialty chemicals market. Due to busy work schedules, people lack the time to cook and prefer consuming processed and packaged foods. Edible oils find application in the food processing market. Therefore, growing consumption of processed and packaged food is leading to the rise in demand of edible colors, flavours and Agents. The premium home care and personal care segments also see lot of demand for non-greasy detergent, Skin friendly Hygiene etc.

Road Ahead

Rising demand for better Homecare solutions, Food Industry, Perfumeries, Oil Substitute etc. would remain, thus giving opportunity for this sector to grow at rate of 11-13% Y-o-Y.

India Sourcing would be the key advantage for this sector as china will be choice for later with importer around the globe.

BENEFICIARIES : PIDILITE, AARTI IND, GALAXY SURFACTANT, SUMITOMO.

India fourth largest auto market in 2019 displacing Germany with about 3.99 million units sold in the passenger and commercial vehicles categories. India is expected to displace Japan as the third largest auto market by 2021.Passenger vehicles & 2-wheeler segment dominate the domestic Indian auto market. Passenger car sales are dominated by small and mid-sized cars. Two wheelers and passenger cars accounted for 80.8% and 12.9% market share, respectively, accounting for a combined sale of over 20.1 million vehicles in FY20. Automobile export reached 4.77 million vehicles in FY20, In October 2020, MG Motors announced its interest in investing Rs. 1,000 crore (US$ million) to launch new models and expand operations in spite of the anti-China sentiments. In October 2020, Ultraviolette Automotive, a manufacturer of electric motorcycle in India, raised a disclosed amount in a series B investment from GoFrugal Technologies, a software company. In January 2020, Tata AutoComp Systems, the auto-components arm of Tata Group entered a joint venture with Beijing-based Prestolite Electric to enter the electric vehicle (EV) components market.

Morris Garages (MG), a British automobile brand, announced plans to invest an additional Rs. 3,000 crore (US$ 429.25 million) in India. Audi India planned to launch nine all-new models including Sedans and SUVs along with futuristic E-tron EV by end of 2019. BMW already announced its Top end and mid segment launch recently.

PARLIAMENTARY PANEL ON AUTO SLOWDOWN –

10% GST REDUCTION CAN OFFSET PRICE INCREASE AND GENERATE DEMAND || REDUCE GST ON USED CARS FROM 12-18% TO 4% TO CREATE DEMAND || SCRAPPAGE POLICY WITH FINANCIAL INCENTIVES TO BOOST DEMAND || STRICT GUIDELINES TO LINK REPO RATE TO INTEREST ON LOANS || MODERATE COLLATERAL NORMS FOR WORKING CAPITAL NEEDS OF DEALERS || EFFECTIVE DEPRECIATION RATE OF 25% ON A PERMANENT BASIS 12:21.PARLIAMENTARY PANEL ON AUTO SLOWDOWN – SLOWDOWN IN AUTO SECTOR HAS LED TO LOSS OF 3.4 LAKH JOBS || OEMS HAVE SLASHED PRODUCTION BY 18-20% || AUTO SECTOR COULD FACE TWO CONSECUTIVE YEARS OF CONTRACTION || AUTO SECTOR NEEDS A FOCUSED STIMULUS PACKAGE

Road Ahead

Economy recovery would benefit this sector with rising demand in this sectorGrowth rate of 7-9% could be assumed going forward for this sector.

BENEFICIARIES : MARUTI, TATA MOTORS, M&M.

The building materials industry is the second largest employer in the country. Not only does the sector employ a large number of people, but also contributes significantly to the nation’s economy. It accounts for 8% of India’s GDP and is valued at approximately $126 billion; industry reports forecast building materials to record a CAGR of 13% y-o-y to reach $750 billion by 2023. Major developments are expected in Infrastructure development sectors, Affordable Housing segment, Airport development, Port, solar park development, strengthening of logistics and warehousing segments and metro rail network expansion. hospitality, retail, entertainment, education, SEZs, FTWZs etc. have largely contributed to the growth.

The backbone for the overall economic development of the country has been our developing infrastructure market. Building infrastructure requires cement, ceramics, steel, aluminium & lot of other material materials which make the future of building material industry more promising. The launch of numerous ambitious building schemes in the recent past by the Indian government including industrial parks and corridors, smart cities, logistics networks, Housing for All 2022 scheme etc are strong contributing agents to the growth of the industry.

This will also increase the focus on industries like coal and steel, natural gas, windows, ceramics, crude oil, refinery products, fertilisers, water supply, cement, electricity and sanitation. which will, in turn, lead to the growth of the building materials. Framework for policy such as GST, RERA, Benami Act, REIT, steps to reduce approval delays Solutions for thermal proofing, water proofing, sound proofing, fire proofing, corrosion proofing, building automation including security, access regulation, climate control etc. are going to strengthen the future of the construction industry in India. The Order size would vary from project to project, the products are co-related and have demand.

Road Ahead

The major development in metros, Tier 2 & 3 cities would be visible going forward. Government spend would be key to the sector, we estimate Infra development in India is necessary and all major steps in this direction would reflect going forward.

BENEFICIARIES : SHANKARA BULIDING PRODUCTS, EVEREST IND, INDIAN HUME PIPES, ASTRAL, PRINCE PIPES, KAJARIA CERAMICS, HIL, JSW STEEL, TATA STEEL, ACC, AMBUJA

India has huge demand for Carbon black market. Superior reinforcing properties make carbon black a suitable material for use in diverse applications ranging from tyres, plastics, electronic equipment to inks, dyes and coatings. The report reveals that the expansion of tyre and rubber industries in the southern region of India is boosting the demand for carbon black in the country. The shift in manufacturing base of automobiles and tyre industries is expected to be a major driver for the carbon black market over the coming years. Additionally, the use of carbon black has increased in specialty segments such as inks, conductive plastics and high-performance coatings, which has led to diversification in product range offered by key industry players. In the past, Indian carbon black industry faced stiff competition from cheaper imports coming from China, which adversely affected the sales and profit margins of domestic players. However, various duties and taxes imposed by the Indian government on these imports have provided a respite to domestic industry players in the country.

The country’s carbon black industry has been undergoing consolidation as various domestic players have been establishing joint ventures in India and abroad, thereby creating a synergy in their operations and strengthening their footprint in the market. India imports bulk of carbon black from other countries including China, Thailand and Russia to address its growing demand.

Carbon black market in India will in the next five years on account of various favourable developments in the country Majorly to reduce import, Major players have started backward integration to counter the fluctuation in prices of feedstock and volatility in crude oil prices.

Specialty carbon black is a refined form of carbon black which comprises lesser level of ash, sulphur, metals and several other contaminations. Carbon black particles are made from the four processes such as Thermal black, furnace black, acetylene black and lamp black. Carbon black comprises >95% of pure carbon with smaller amount of hydrogen, nitrogen and oxygen and it is recognized as the commercial form of solid carbon. These carbon blacks are used as supplement for the enhancement of execution of conductivity, viscosity of materials. Specialty carbon black has characteristic properties, like protection from ultraviolet rays, increases the conductivity of plastics, and intensify the visual application of several products.

Road Ahead

This Industry is volatile and have past record of high swings in price of raw material which impact the profitability of companies. The growth rate can assumed at 6-7% CAGR for next five years.

BENEFICIARIES: PHILLIP CARBON, GOA CARBON, HIMADRI SP CHEMICLAS, RAIN INDUSTRIES.

The specialty chemicals market in India has been flourishing, owing to the rise in demand from various end-user industries. The specialty chemicals market in India was valued at INR 2,650.92 Bn in FY 2019 and is expected to reach INR 4,527.36 Bn by FY 2024, expanding at a compound annual growth rate (CAGR) of ~11.9% during the FY 2019-FY 2024 period. Unlike basic chemicals, the price of specialty chemicals is determined depending on their unique features and utilities rather than composition.

Despite of uncertainties environmental concerns and sharpening cost focus, the sector has sufficiently sustained the growth as demand for this product from end-user industries, Demand from export and import substitution opportunities due to the clampdown on chemicals manufacturing in China. While these drivers create a conducive.

However, current scenario may impact the growth for limited time span. Structural positivity & right chemistry & involution of new chemicals, we remain positive bias on this sector An increase in demand in end-user industries like food processing, personal care, and home care is propelling the development of the different segments of the Indian specialty chemicals market.

Due to busy work schedules, people lack the time to cook and prefer consuming processed and packaged foods. Edible oils find application in the food processing market.

Therefore, growing consumption of processed and packaged food is leading to the rise in demand of edible colours, flavours and Agents. The premium home care and personal care segments also see lot of demand for non-greasy detergent, Skin friendly Hygiene etc

Road Ahead

Rising demand for better Homecare solutions, Food Industry, Perfumeries, Oil Substitute etc. would remain, thus giving opportunity for this sector to grow at rate of 11-13% Y-o-Y.

India Sourcing would be the key advantage for this sector as china will be choice for later with importer around the globe.

BENEFICIARIES: PIDILITE, AARTI IND, GALAXY SURFACTANT, SUMITOMO.

Battery Industry in Indiahas market of more than Rs. 20,000 Cr, Amara Raja Batteries, Exide Industries, Panasonic Energy, Indo-National have good market share in this industry in India. In this industry, 60%-65% of the market share is of the organized players and the rest 35%-40% is of the unorganized players.

Earlier, there was a difference of 30% in the prices of batteries between organized and unorganized players. But post GST, this difference has come down to 10%-15%. After the implementation of GST, the unorganized players faced a lot of problems.

The opportunities for the battery industry, specifically to the organized players like are the Electronic Vehicles (EV). E-vehicles are the next big thing. This opportunity will open up in the next decade, that is by 2022. The OEM’s have planned on shifting to e-vehicles as soon as possible. Mostly all the companies have started working towards it with the R&D procedure being run with full speed. Many major companies have the timeline to start the rollout of the e-vehicles by 2022.

Thus, this new e-vehicles market looks like a major opportunity which can be grabbed by these 2 companies.

New horizon ahead (e-vehicle market)

The companies have started their preparations for this market. These companies too have R&D running at great speeds to benefit from this market. For this, Exide Industries has found a foreign partner to help them out. Amara Raja Batteries already has foreign partner. Johnson Controls hold 26% stake in the company. Johnson Controls have the uniqueness to provide technology support and gain stake in the company.

Road Ahead

These companies majorly have lead based batteries, which are also the main products of the companies. And in the last 3 years the prices of lead have increased significantly. As a result of this, the Net profit margins of these companies have gone down.

Auto sector has seen downturn in the recent times. This has directly impacted the auto-ancillary companies, battery companies included. But the auto sector will reach a consolidation in the next couple of quarters after which it may experience a revival.

The cycle of the auto sector will take turn toward the positive side and E Vehicles could be the game changer for these companies.

AMARA RAJA, EVERADY, PANASONIC ENERGY, INDO NATIONAL.

Forging is traditionally considered as the back bone of manufacturing industry. It is a major input to the sectors which support economic growth of the nation, such as, Automobile, Industrial Machinery, Power, Construction & Mining Equipment, Railways and General Engineering.

The Indian forging industry is well recognized globally for its technical capabilities. With an installed capacity of around 38.5 lakh MT, Indian forging industry has a capability to forge variety of raw materials like Carbon steel, alloy steel, stainless steel, super alloy, titanium, aluminium and so forth, as per the requirements of user industry. Over the years, the Indian forging industry has evolved from being a labour-intensive industry to capital-intensive manufacturing sector.

The current investment in the plant and machinery by Indian forging companies is worth of INR 27,833 Crore. Based on their installed capacity, the forging units may be classified as very large (capacity above 75,000 MT), large (capacity above 30,000 to 75,000 MT), medium (capacity above 12,500 to 30,000 MT), small (capacity above 5,000 to 12,500 MT) and very small (capacity up to 5,000 MT). Based on this classification it is seen that about 83% of the total number of units are small and very small, while only about 8% can be classified as very large and large units; the balance of about 9% constitute the medium sized units. Current share of auto sector is about 58% of total forging production while the rest is with the non-auto sector.

Changes in Indian automobile industry directly impact Indian forging industry, because the forging components form the backbone of the Indian automobile industry. Since the automobile industry is the main customer for forgings the industry’s continuous efforts in upgrading technologies and diversifying product range has enabled it to expand its base of customers to foreign markets.

The Indian forgings industry has made rapid strides and currently, not only meets almost all the domestic demand, but has also emerged as a large exporter of forgings. Defence Sector is also creating demand for forging parts, as a result, the industry has been making significant contributions to country’s growing demand. In order to reduce the impact of cyclicality and dependence on auto sector, the industry plans to diversify into non-automotive sectors.

Road Ahead

Overall the forging industry will witness a flat rate of growth this year, but there are enough positive indications in the long term which will put the industry back on the growth track.

BENEFICIARIES: BHARAT FORGE, MM FORGING, RAMKIRSHNA FORGING, MAHINDRA CIE, INVESTMENT AND PRECISION CASTINGS LTD.