Auto Component Sector Report: Driving Out of Uncertain Times

January 2010
Auto component
sector report
Driving out of
uncertain times
2
Real valour consists not
in being insensible to
danger; but in being
prompt to confront and
disarm it
Sir Walter Scott
Auto component sector report 3
Contents
Introduction 4
The sample 5
The beginning 6
Recession 8
Managing operations 9
Conclusions 11
Appendix: comparative sub-segment performance 12
Transmission & steering 12
Engine parts 14
Electrical parts 16
Braking suspension 18
Other equipment 20
Cross sub-segment comparison 22
4
Introduction
When economic recession struck the manufacturing
industry, companies reacted in different ways. Some did
not. Many stopped with doing the easy things and some
went ahead and made very difcult, strategic correc-
tions. To understand how groups of rms behaved, we
analysed the Indian automotive component sector over
three years to cover the good times, the recession
months and the year when the recession wore off. This
sector was chosen for the following reasons:
It was a sector that was affected the most globally
It operates in a highly competitive environment and
therefore, there is not much room for complacency.
We hypothesised the rms would be unafraid of
making changes that would be difcult for some of
the lesser competitive sectors to deal with
The eco-system in which these rms operate give
them the advantage of learning from their much
larger customers and peers, who often have global
exposure, and therefore they would be in a position
to acquire the tools to deal with the recession
There is fair amount of data and understanding of
the sector that it is relatively easier to analyse this
sector.
While this paper is about rms dealing with recession,
it is important to understand the context. Figure 1
provides some background information of the sector.
In the analysis of the industry that follows, we have
attempted to highlight the key factors that drive
company performance, how they reacted to the slow
down and potentially what could have been done.
Figure 1: A snap-shot of the automotive component industry in India
Growth potential of Indian Automotive Industry
Automotive Industry offers huge growth
potential in terms of sales volume (including
exports) and so immense employment
opportunities. The likely future volumes of
different vehicle categories were estimated
on the basis of projections made by iMaCS,
NCAER and AT Kearney. Value of projected
domestic output was computed based on
historical average vehicle prices. Export
potential was estimated on the basis of
current trends and possible opportunities in
major export destinations. Demand for after-
market auto components and export output
was also included in computing growth
potential of the industry. The unit value of
different vehicle categories in 2016 have
been estimated keeping in view the need
for compliance with emissions and crash
standards.
It is expected that the world production of
Auto-Components would reach USD 1.7
Trillion by 2015. About USD 700 billion
worth of auto-components shall be sourced
out from low cost countries (LCCs) by 2016.
If India targets to get a 10% share of this
potential, it would mean USD 70 billion, nearly
ve times current total size of the industry in
India. However, this Mission Document has
set a modest target of USD 25 billion by 2016
for export of auto components.

The projected size in 2016 of the Indian
automotive industry varies between USD
122 billion and USD 159 billion including
USD 35 billion exports. This translates into
a contribution of 10-11% to Indias GDP by
2016, that is, double the current contribution.
This would mean a domestic vehicle market
of USD 82 billion to USD 119 billion by
2016, USD 12 billion exports of vehicles
and tractors, USD 20-25 billion component
exports and more than USD 5 billion after
market of components. Another USD 2 2.5
billion in engineering services outsourcing
opportunity is expected to develop. The total
size of the auto component industry in India
is expected to become USD 40-45 billion by
2016. This calls for a major focus and policy
initiative to market India as an attractive
Manufacturing Destination.
The output estimated would require
incremental investment of USD 35-40 billion
(Rs 160,000 -180,000 crores) by 2016 as
indicated in .
-Excerpted from Automotive Mission Plan
2006-2016
Transmission & steering
Engine parts
Electrical parts
Breaking & suspension
Other equipment
100 - 500 Crore INR
501 - 1000 Crore INR
over 1000 Crore
The sample
The sample was chosen to represent the sector (please
see Figure 2). The companies were categorised into
sub-sectors:
Engine parts
Braking and suspension
Electrical parts
Other equipment
These sub-sectors account for about 80% of the
industry turnover. And, the combined turnover of the
sample companies added up to more than 15% of
the industry turnover. This would make the sample
statistically signicant, at least from the perspective of
representing medium/large sized companies. The sizes
of rms were chosen in a manner that they largely
represent the industry pattern.
Share of analysed companies per sub-segment Analysed companies grouped by total sales
Figure 2: Sample
17%
17%
28%
17% 17%
21% 55%
28%
The comparisons in the ensuing pages, unless otherwise stated, are on the growth rate over the previous period.
For example, in Figure 3, the bars refer to the growth of equity into the sector over the previous year in 2008 the
industry median was up 15% over 2007 and in 2009 the median increase was 4% over 2008.
Where cross sub-segment comparisons are made, the sub-segments are shown as 1, 2, etc with the legend below
indicating the name of the sub-segment.
All graphs in this report
are basis Deloitte
analysis
6
The Indian auto sector was the place to be in for global
OEMs right from the early 2000s. At a penetration of
less than ten cars per 1000 persons, the upside was
enormous. While many manufacturers were not making
huge prots, they did not want to miss out on what
could eventually be amongst the top ve markets by
volume. As the middle class India started to buy to its
potential and as the roads became better, the anxiety
in companies was not around will we sell. It was more
around do we have the capacity and brand position
to convert opportunity into revenues. Even in 2008,
when the global manufacturers were not nding it
easy to sell automobiles, the equity inow into the
researched companies increased between eight and
twenty three percent (see gure 3). Many companies in
the sector were doing deals with PE funds. This ush of
activity happened after a relatively quiet period around
2005 06 when the investment into capacity was not
signicant.
At a median level of 12-15% in equity increase and the
consequent ability to borrow, the sector was creating
capacities that would meet the demands of high growth
for over three years or so. Perhaps, the announcements
the OEMs made on their Greeneld projects or capacity
expansions drove the investments.
The beginning
Engine parts
Electrical parts
Braking & suspension
Other equipments
Industry
25
20
15
10
5
0
2008 2009
Figure 3: Annual growth rate of equity in the sub-segments
This was when the Return on Equity and Return on Investment were declining over 2007 (see gure 4). Clearly, the
automotive industry had not understood the import of what was beginning to happen outside India and/or believed
India would escape the impact. Equity was going into a sector where the Fixed Asset Turnover Ratio (FATO) was
perceptibly coming down over 2007. Clearly, optimism was a powerful reason.
1 Transmission & steering (2007)
2 Engine parts (2008)
3 Electrical parts (2009)
4 Braking & suspension
5 Other equipments
6 Industry
2007 2008 2009
Figure 4: Financial ratios of the sector
ROE
FATO
1 2 3 4 5 6
25
20
15
10
5
0
ROI
1 2 3 4 5 6
15
10
5
0
0% -2% -4% -6% -8% -10% -12%
2009
2008
The focus on growth led companies to create high
xed and structural costs. It is apparent in hindsight
that the companies were not giving themselves any
room to manoeuvre in the case of a growth slump. The
downside risks were clearly not envisaged by them.
Just before the recession set in, the companies were
high on cost rigidity, low on ability to bargain with their
customers (on account of the relative sizes and the high
dependence they have on their major customers), low
medium on their ability to bargain with their suppliers
and the industry was highly competitive with many
rms operating without any differentiation. Further, the
companies in this sector were not innovative from a
new product standpoint and they had to compete on
price. Applying the Porter ve forces model for industry
attractiveness, one would have come to the conclu-
sion this was not where one would want to invest. But,
as mentioned earlier, investments did come in quite
rapidly. And, the only way to live up the expectations of
the investors was to hope that the sales growth would
continue.
8
Unlike the western markets, recession did not bring
about a big change in the sales volume. There were
categories that had huge drop in sales (commercial
vehicles dropped by 30% for some time) but on an
overall basis, the companies that were supplying to
passenger car makers were not hit by the recession
from a volume perspective except the late 2008,
when there was a perceptible slow down in volumes.
In fact, the export sales went up dramatically for
companies such as Maruti Suzuki and Hyundai on the
back of the small car, cash-for-clunker programs of
some large European markets. However, the OEMs
were driving harder bargains and were probably
unwilling to commit to off-take which would have
been the norm in earlier times.
With high xed/structural costs and uncertainty about
the growth, running auto component business was not
easy. Add to this the poor sentiment around the sector
and the fears of OEMs, component manufacturers and
collapsing system integrators, it was almost a perfect
storm confronting CEOs of these companies.
Recession
Traditionally, auto component companies had a repu-
tation of being very good at managing their supply
chains and keeping them exible. They had for quite
some time talked about moving towards low xed cost
models with increased outsourcing. Was it a myth and
what did these companies do when it was required of
them to be efcient, exible and low cost?
When the growth happened, it appears they were
guilty of focussing on growth and letting efciency
slip a bit. They let inventory and receivables go up at
a time when one would believe higher volumes and
a good growth pattern would enable companies get
them down (see Fig 5). Surprisingly, even after the
difcult 2008, the sector still found inventory difcult
to deal with there was a marginal increase.
Contrary to the popular belief that the OEMs were
difcult to deal with, they were actually understanding
of the cash-ow pressures of their suppliers. The
receivables went down appreciably during the difcult
years. Ironically, the component suppliers were the
ones guilty of delaying the payments due to their
suppliers.
From a strategic perspective, the companies suffered
from lower value addition and also could not change
that reality quickly to deal with the new circumstances.
By denition, the companies in the sector have
somewhat hard-wired product portfolios and therefore,
are not strategically nimble.
Nor were they able to bring about any signicant shift
to other markets (perhaps on account of the difculties
the manufacturers in those markets were facing).
Conversely, the exports were perhaps not the reason for
lower prots. See Fig 6 and Fig 7.
Managing operations
15%
10%
5%
0%
-5%
-10%
Inventory days
Payable days
Receivable days
Working capital days
2008 2009
Figure 5: Working capital performance
Figure 6: Value addition and growth in value addition
Figure 7: Export sales
6%
5%
4%
3%
2%
1%
0%
-1%
-2%
-3%
30%
25%
20%
15%
10%
5%
0%
1 2 3 4 5 6
1 2 3 4 5 6
1) Transmission & steering
2) Engine parts
3) Electrical parts
4) Braking & suspension
5) Other equipments
6) Industry
2007 2008 2009
10
Having said all this, it is interesting to note that the cost increase relative to the previous years was not signicant (see
Fig 8). The good thing is that the companies did not have to deal with enormous cost increase but the bad news is
the marginal increase in input costs did impact the prots signicantly (see Fig 9).
As one would expect in an undifferentiated, highly
competitive sector the margin for error is very low. And
the punishment for having a high risk appetite is severe
as the stock performance turned out. The component
sector under-performed the Sensex quite signicantly in
2008 and declined far more than Sensex in 2009 (see
Fig 10).
Interestingly, some of the sub-sectors that have their
footprints covering non-automotive customers seem to
have done better (see appendix). There was no percep-
tible difference in prot performance of sub-sectors that
have a larger after-market exposure.
4%
3%
2%
1%
0%
20%
0%
-20%
-40%
-60%
-80%
-100%
40%
20%
0%
-20%
-40%
-60%
20%
10%
0%
-10%
-20%
-30%
-40%
-50%
1
1
1
2
2
2
3
3
3
4
4
4
5
5
5
6
6 Sensex
6
Figure 8: Cost increases Figure 9a: Prot growth operating prot
Figure 10: Relative performance of auto component stock
April 2008 - March 2009
Figure 9b: Net prot
Ratio total operating cost to net sales
Ratio raw material to net sales
Value addition %
2008 2009
2) Engine parts
3) Electrical parts
5) Other equipments
6) Industry
2) Engine parts
3) Electrical parts
5) Other equipments
6) Industry
2008 2009
2008 2009
Conclusions
What emerges from the analysis of the component
sector is what may be said of a number of others. There
was a certain amount of unbridled optimism that made
companies to invest in infrastructure and create some
level of strategic rigidity that came in the way of them
dealing with the disruption effectively. As in the case
of other emerging markets, risk intelligence on the part
of companies seems fairly low. There is a tendency to
over-play the opportunity and overlook the fact that any
market can and will go through cycles both man-made as
in this case and those driven by macro-economic factors.
The price the auto component sector paid in terms of lost
prots on account of the slowdown is in the order of USD
400 million. On a conservative note the value lost would be
about USD 3.5 - 4 billion.
Companies seem to have done easy things like slowing
down supplier payments and getting their customers to pay
faster, but have not been able to make changes to strategic
or tactical parameters like inventory or value addition.
It is also interesting to see the relative performance of the
sub-sectors. Some have handled parts of the supply chain
challenges far better than the others. The slow-down has
put pressure on some myths around the most protable
sub-sectors and the most attractive for investors. See
appendix for the sub-sector comparisons.
Finally, to run auto component business in India
would mean having a margin for error of less than
3-4% on any parameter. In the absence of signicant
intellectual property that can drive protable growth,
companies always operate on the knife edge.
Extreme efciency along the supply chain and staying
low on xed costs matter. As can be seen from the
data presented earlier, the inability of the companies
to make costs elastic is an issue they will think
about when they plan their strategies. The ability to
manage operations with optimized levels of inventory
would determine prots and exibility.
The nancial structure would probably come under
more scrutiny given the fact the companies may have
missed out on the opportunity to operate a higher
leverage during the growth years and improved the
return on equity. The structural costs have a greater
relevance as the operating prot margins have grown
consistently in spite of the recession.
And, CEOs would now know trading off efciency
for growth as was seen during the periods of high
growth when the supply chain efciency seemed to
take the back seat- is not an option any more. They
have to go together.
The manner in which companies develop their
strategy perhaps will undergo some interesting
changes. There will, and, should be greater focus
on building strategic exibility in their plans. There is
likely to be more focus on risk and business cycles.
Over ve years in the early 2000s, we benchmarked
over one thousand manufacturing companies from
around the world. We mapped the manner in
which the best performing companies differentiate
themselves in terms of the processes and the way
they look to develop their strategies. Perhaps,
companies in the auto component sector would like
to look at this map (see Fig 11) to identify gaps in
their management processes to the level where they
run synchronized supply chains.
Figure 11: Value chain maturity
Framework: Building a World Class Value Chain
Synchronized
Value Chain
Differentiator
Qualier
C
a
p
a
b
i
l
i
t
y
Customer strategic
planning
Collaboration
new products
Collaboration - cost
reduction
Customer / channel
protability
Inventory
replenishment
Collaboration -
demand planning
Customer
segmentation
Customer service
levels - fulllment
Customer collabo-
ration- quality
Customer
Product Lifecycle
Management
Design for
Manufacturing
Product data
management
Common parts /
common platform
Product protability
Design for Quality
Cross-functional
design teams
SKU rationalization
Supplier collabora-
tion new materials /
new processes
Product quality
Product
Supply Chain Network
Optimization / Tax
Structure
SCM organization
Program Management
Flexible capacity
Production Schedule
Optimization
Transportation
Optimization
Integrated Sales &
Operations Planning
Quick Changeover
Six Sigma / SPC
Demand planning
Lean Manufacturing
ISO Quality Certication
Supply Chain
Scenario Planning
Business Intelligence
Customer / Supplier
Portal
Product Lifecycle
Mgmt
Advanced Planning
Systems
Customer
Relationship Mgmt
Transportation Mgmt
Product Data Mgmt
Warehouse Mgmt
Demand planning
EDI
Quality Mgmt
ERP
Technology
12
Appendix: comparative
sub-segment performance
The comparisons, unless otherwise stated, are on the growth rates of the corresponding period in the previous year.
For example, in the graphic below, it is not as if the net prot was -60% but the net prot decreased by that level
over the previous year. Where cross sub-segment comparisons are made, the sub-segments are shown as 1), 2), etc
with the legend below indicating the name of the sub-segment.

Brief interpretations of each of the graphics are given as relevant without attempting to make conclusions.
Sales increase close to 0% in 09 which is very low
compared to industry.
OP growth has been at in 08 but declined drasti-
cally in 09.
Sales and Net Prot growth rate well below
industry median
This sub-segment is focused on supplying
OEMs. As OEMs sales declined, the volume
ordered declined as well and therefore the
sales of the sub-segment.
10%
0%
-10%
-20%
-30%
-40%
-50%
-60%
-70%
2008
Turnover OP Net prot
2009
The sub-segment was able to raise their payable
signicantly, while the receivable days have been
kept on a constant level.
The working capital days increased in 09 after no
change in 08.
This sub-segment has been the only one to
keep the inventory days constant.
16%
14%
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
2008
Inventory days
Payable days
Receivable das
2009
Increase in Ratio Raw Material to Sales ratio growth
was lowered to only 1% in 09.
6%
5%
4%
3%
2%
1%
0%
-1%
-2%
2008 2009
Value addition %
The Operating Prot Margin is only slightly below
industry median.
Operating prot margin Cost structure & value addition
Sale turnover and protability Operational performance
Operating prot margin
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
2009 2008 2007
2008 2009
Asset utilisation
FATO
0%
-2%
-4%
-6%
-8%
-10%
-12%
-14%
Returns
ROE / ROI both decrease equally due to reduced
prots. The decrease is the second highest in the
industry, only Other Equipment performing worse.
2007 2008 2009
25%
20%
15%
10%
5%
0%
ROE ROI
14
Engine parts
Engine parts had a very high OPM, which reduced
by over 7% in two years. Ratio Raw Material to Sales increased continuously
from 2% to over 8% while the Total Operating Cost
Ratio increased only by 4% each year, resulting in an
unchanged Value Addition.
Sales growth in 09 was not as high as in 08 but still
growing.
Prot declined both years constantly.
Highest decrease in the industry in 09 regarding WC
days.
Receivable days increased mainly in 08, whereas the
payable days remain constant. During 09, the receiv-
able days seem to have reduced.
The sub-segment had an increase in inventory days
by 2-4% which is well below the industry median.
15%
10%
5%
0%
-5%
-10%
-15%
-20%
10%
5%
0%
-5%
-10%
-15%
2008
2008
Inventory days
Payable days
Receivable das
Value state the change to previous year
2009
2009
10%
8%
6%
4%
2%
0%
-2%
-4%
2008 2009
Value addition %
25%
20%
15%
10%
5%
0%
2009 2008 2007
Cost structure & value addition
FATO decreased in 09 by over 10%.
2008 2009
FATO
4%
2%
0%
-2%
-4%
-6%
-8%
-10%
-12%
Asset utilisation
ROE / ROI both decreased due to reduced prots.
The decrease is not as severe as the median of the
industry.
2007 2008 2009
20%
15%
10%
5%
0%
ROE ROI
Returns
16
Electrical parts
This is the only sub-segment with a constant OPM
in 08.
The decline by ~3% in 09 is well below industry
median.
The sub-segment has been successful in keeping a
constant Ratio Total Operating Cost to Sales, even
though Raw Material cost ratio went up for 08.
Sales increase in both years but 09 growth rate was
higher.
OP & Net Prot also increased in 08.
In 09 OP declined only slightly, but the Net Prot has
been dropping severely.
The companies built up their inventory. Even though
sales increased ~10% each year, the inventory days
grew in 08 by ~16%.
The sub-segment was successful in reducing receiv-
able days.
15%
10%
5%
0%
-5%
-10%
-15%
-20%
-25%
-30%
20%
15%
10%
5%
0%
-5%
-10%
-15%
2008
2008
Inventory days
Payable days
Receivable das
2009
2009
6%
5%
4%
3%
2%
1%
0%
-1%
2008 2009
Value addition %
16%
14%
12%
10%
8%
6%
4%
2%
0%
2009 2008 2007
ROE / ROI both decrease due to reduced prots.
This sub-segment has the lowest decrease of all
sub-segments.
Electrical Parts is the only sub-segment with a
growing FATO in 08.
'07-'08 '08-'09
FATO
4%
3%
2%
1%
0%
-1%
-2%
-3%
-4%
-5%
2007 2008 2009
25%
20%
15%
10%
5%
0%
ROE ROI
Asset utilisation Returns
18
Braking and suspension
Sub-segment had a lower Raw Mat Sales Ratio in 08.
Ratios Raw Material to Sales and Total Operating
Cost to Sales increased marginally in 09.
Change of Value Addition in 08 high.
Sales increased marginally in 08 and further in 09 ,
yet far below the industry median.
OP & Net Prot both declined signicantly.
In 08 all analyzed ratios had increased. In 09 WC
days declined, as well as receivable days.
The inventory days grew ~10% each year slightly
above industry median.
10%
0%
-10%
-20%
-30%
-40%
-50%
15%
10%
5%
0%
-5%
-10%
-15%
2008
2008
Inventory days
Payable days
Receivable das
2009
2009
6%
5%
4%
3%
2%
1%
0%
-1%
-2%
-3%
2008 2009
Value addition %
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
2009 2008 2007
ROE / ROI both decreased.
This sub-segment below the median of the industry.
The FATO decreased due to the fact, that the Fixed
Asset Value is increased by 16% (08) and 29% (09).
2008 2009
FATO
0%
-2%
-4%
-6%
-8%
-10%
-12%
2007 2008 2009
25%
20%
15%
10%
5%
0%
ROE ROI
20
The OPM had not signicantly changed in 08, but
declined by over 6% points in 09.
Ratios Raw Material to Sales did not change much
(small decline in 08 and small increase in 09).
Total Operating Cost Ratio increased by over 5% in 09.
Change of Value Addition highest in industry.
Signicance of Raw Material reduced.
6%
5%
4%
3%
2%
1%
0%
-1%
-2%
2008 2009
Value addition %
16%
14%
12%
10%
8%
6%
4%
2%
0%
2009 2008 2007
Sales increased in 08, but only slightly in 09.
OP & Net Prot both increased in 08, but declined
drastically in 09, the worst drop of Net Prot in the
industry.
The net working capital days actually increased in
09 as against the reduction shown by the other
sub-segments.
The sub-segment had the highest increase in receiv-
able days in the industry.
The inventory days increase is also the highest in the
industry.
20%
0%
-20%
-40%
-50%
-60%
-100%
2008 2009
25%
20%
15%
10%
5%
0%
-5%
-10%
2008 2009
Inventory days Recievable days
Payable days Working Captial days
Other Equipment
Operating prot margin Cost structure & value addition
ROE / ROI both decrease drastically in 09, even
though in 08 there is only a slight decline.
The decline in 09 of this sub-segment is the worst
in the industry.
Highest decline of FATO in the industry.
2008 2009
FATO
0%
-2%
-4%
-6%
-8%
-10%
-12%
-14%
2007 2008 2009
20%
15%
10%
5%
0%
ROE ROI
22
Cross sub-segment comparison
Turnover
Electrical Parts and Braking & Suspension have
been able to realize a higher sales increase in
09 than in 08. All other sub-segments had a
much lower growth rate in 09 than in 08.
None of the sub-segments have been
successful in reducing their costs per unit.
On the industry median the ratio doubled
between 08 and 09
Whereas in 08 two sub-segments had a
positive OP growth, the whole industry was
realizing negative growth in 09.
The raw material cost to sales declined in
08 only in two sub-segments (Braking &
Suspension, Other Equipment). In 09 the ratio
increased for all sub-segments. Engine Parts
took a lead with over 8%.
Same as OP, only that the negative growth
was much higher (up to 80%).
While in 08 the value addition was high in
Braking & Suspension, in 09 Electrical parts
has the highest increase.
Operating prot
Net prot
Value added
25%
20%
15%
10%
5%
0%
20%
0%
-20%
-40%
-60%
-80%
-100%
20%
10%
0%
-10%
-20%
-30%
-40%
-50%
1 2 3 4 5 6
1 2 3 4 5 6
1 2 3 4 5 6 1 2 3 4 5 6
1) Transmission & Steering
2) Engine Parts
3) Electrical Parts
4) Braking & Suspension
5) Other Equipments
6) Industry
2) Engine Parts
3) Electrical Parts
5) Other Equipments
6) Industry
2008 2009
2008 2009
6%
5%
4%
3%
2%
1%
0%
-1%
10%
8%
6%
4%
2%
0
-2%
-4%
6%
5%
4%
3%
2%
1%
0%
-1%
-2%
-3%
1 2 3 4 5 6 1 2 3 4 5 6
Depreciation & amortization Interest
2) Engine Parts
3) Electrical Parts
5) Other Equipments
6) Industry
2) Engine Parts
3) Electrical Parts
5) Other Equipments
6) Industry
Operating prot margin Debt/equity ratio
25%
20%
15%
10%
5%
0%
1 2 3 4 5 6
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
1 2 3 4 5 6
2007 2008 2009
2008 2009
60%
50%
40%
30%
20%
10%
0%
70%
60%
50%
40%
30%
20%
10%
0%
1 2 3 4 5 6 1 2 3 4 5 6
The Operating Prot Margin got reduced by up to
5% points in 2009 in all sub-segments.
The sub-segment Engine Parts has the highest
OPM growth in the industry. The least protable
sub-segment is Other Equipment, with almost 10%
points less.
The Depreciation and Amortization increased signi-
cantly in 09. The growth rate on industry median
went up from 8% in 08 to 23% in 09.
The industry seems to have had higher growth as
interest paid increased stronger in 09 (~30%) than
in 08 (~20%).
The comparisons are against actual D/E ratios rather
than the growth rates as in the case of other gures.
In this material Deloitte refers to Deloitte Touche Tohmatsu India Private Limited (DTTIPL), a Company established under the Indian Companies Act, 1956, as amended.
DTTIPL is the member rm of Deloitte Touche Tohmatsu, a Swiss Verein, whose member rms are legally separate and independent entity. Please see www.deloitte.
com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member rms.
This material prepared by DTTIPL is intended to provide general information on a particular subject or subjects and is not an exhaustive treatment of such subject(s).
Further, the views and opinions expressed herein are the subjective views and opinions of DTTIPL based on such parameters and analyses which in its opinion are
relevant to the subject.

Accordingly, the information in this material is not intended to constitute accounting, tax, legal, investment, consulting, or other professional advice or services. The
information is not intended to be relied upon as the sole basis for any decision which may affect you or your business. Before making any decision or taking any
action that might affect your personal nances or business, you should consult a qualied professional adviser. None of Deloitte Touche Tohmatsu, its member rms,
or its and their respective afliates shall be responsible for any loss whatsoever sustained by any person who relies on this material.
2010 Deloitte Touche Tohmatsu India Private Limited
Designed by Brand & Communications, DTTIPL
Kumar Kandaswami
Senior Director
Deloitte Touche Tohmatsu India Private
Limited (DTTIPL)
Tel: +91 (044) 6688 5401
Email: kkumar@deloitte.com
Ahmedabad
Heritage, 3rd Floor,
Near Gujarat Vidhyapith
Ahmedabad 380 014, India
Phone: +91 (079) 6607 3100
Bangalore
Deloitte Centre, Anchorage II, 100/2,
Richmond Road, Bangalore 560025, India
Phone: +91 (080) 6627 6000
Baroda
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Baroda 390007, India
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Chennai
Ol No. 37th, New No: 52, 7th Floor,
ASV N Ramana Towers, Venkatnarayana Road,
T Nbagar, Chennai 600 017, India
Phone: +91 (044) 66885000
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Coimbatore 641018, India
Phone: +91 (0422) 24392801
NCR
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DLF Cyber Ciity Complex, DLF City Phase II,
Gurgaon 122002, India
Phone: +91 (0124) 679-2000
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5th oor, Suyash Complex, Panaji,
Goa 403 001, India
Phone: +91 (0832) 2431821
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1-8-384 & 385, 3rd Floor,
Gora Grand, S.P. Road, Begumpet,
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Phone : +91 (040) 40312600
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Phone : +91 (0657) 2225883
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Warriam Road, Kochi 682 016, India
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Salt Lake Electronics Complex
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Phone : +91 (033) 6612 1000
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Estate, Worli, Mumbai 400 018, India
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Pune
706, B - Wing, 7th oor, ICC Trade Tower
Senapati Bapat Marg, Pune 411 016, India
Phone : +91 (020) 6624 4600
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