Manufacturing of

composite cylinders for

CNG kits for private and
commercial motorized
four wheelers

Chemicals & Petrochemicals

Government of Gujarat
Contents

Project Concept 3
Market Potential 5
Growth Drivers 7
Gujarat – Competitive Advantage 8
Project Information 9
- Location/ Size
- Infrastructure Availability/ Connectivity
- Raw Material/ Manpower
- Key Players/ Machinery Suppliers
- Potential collaboration opportunities
- Key Considerations
Project Financials 15
Approvals & Incentives 16
Key Department Contacts 18

Page 2
Project Concept (1/2)

Indian Auto Component Industry Overview

The Indian auto-components industry has grown at a steady pace in the last few years owing to a
buoyant end-user market, improved consumer sentiment and return of adequate liquidity in the
financial system. According to the Automotive Component Manufacturers Association of India, the
industry is expected to register a turnover of US$100 billion by 2020 backed by strong exports,
and is set to become the third largest in the world by 2025.The Indian auto-components industry
can be classified into - organised and unorganised sectors. It comprises of around 700 organized
players and a few thousand unorganized players, with its size at about INR2.3 trillion in FY15.
During FY15, the industry reported a growth of 11% y-o-y primarily due to recovery in domestic
demand and exports. The future demand is expected to be driven by high automobile demand in
India, especially from the middle class and in is expected to grow at a CAGR of 8–9%, during
FY15–20 to reach 200 million units by FY20.

Indian Auto and Auto Components Industry Classification

Automobile

Commercial vehicles
Passenger cars Two-wheeler Three-wheeler
(CV)

Commercial Light CVs

Cars Motorcycles
purpose
Medium and
heavy CVs
Utility vehicles Scooters Passenger carrier

Mining
Multi Purpose equipment and
Mopeds
vehicles earth movers

Auto components

Others
Suspension Lighting and (Composite
Engine and Powertrain
and other Accessories cylinders for
engine parts parts
braking parts equipment CNG kits, Fuel
injection kits)
Source:
1. http://www.ibef.org/industry/autocomponents-india.aspx 4. http://www.cii.in/sectors.aspx?enc=prvePUj2bdMtgTmvPwvisYH+5EnG
2. http://www.icra.in/Files/ticker/SH-2016-Auto%20(R).pdf jyGXO9hLECvTuNueppNFKWCExayUoGQImfWe
3. http://www.ibef.org/download/Auto-Components-January-2016.pdf

Page 3
Project Concept (2/2)

Indian auto-components industry to register a turnover of

US$115 billion by FY21

India is emerging as global hub for auto component sourcing. Relative to its competitors, India is
geographically closer to key automotive markets like the Middle East and Europe. Industry
revenues grew at a CAGR of 12% from US$26.5 billion in FY08 to US$66 billion in FY16. The
market size for auto component sector increased by 9.7% to US$38.5 billion in FY15 from
US$35.1 billion in FY14, and is expected to grow to US$66 billion in FY16 and US$115 billion by
FY21.

In the medium to long term, growth in the auto component industry is expected to be higher than
the underlying automotive industry growth given the increasing localization by OEMs, higher
component content per vehicle and rising exports from India.

Indian auto component industry Shares in export volumes by

(US$ billion) geography (FY15)
115
Europe
1%
7% Asia
66
7%
41 42 40 39 37% North America
31 35 30
24
10 11 12 23% Africa
5 7 9 10
4
Latin America &
25% Caribbean
Oceania

Total turnover Exports

Demand for the Indian auto component industry can be broadly classified into OE sales (54% of
revenues), aftermarket/ replacement (17% of revenues) and exports (29% of revenues). Auto
component industry growth during FY15 was primarily driven by strong growth witnessed in the
M&HCV segment as well as demand for 2W during H1FY15. Several global leading automotive
manufacturers are expected to outsource their component manufacturing to India and its exports
of auto components increased at a CAGR of 14% from US$5 billion in FY09 to US$11.2 billion in
FY15, and is expected to reach US$30 billion by FY21. Europe accounts for the largest share of
Indian auto components exports (36.4%) followed by Asia (25.3%) and North America (23.3%).

Source:
1. Automotive Mission Plan 2016–26 (AMP 2016–26), LMC Automotive, EY analysis
2. http://www.cii.in/sectors.aspx?enc=prvePUj2bdMtgTmvPwvisYH+5EnGjyGXO9hLECvTuNueppNFKWCExayUoGQImfWe
3. http://www.icra.in/Files/ticker/SH-2016-Auto%20(R).pdf
4. http://www.ibef.org/download/Auto-Components-January-2016.pdf

Page 4
Market Potential (1/2)

Components of a CNG kit

 .

Composite cylinders for CNG kits market

 There are four types of cylinders
available for use in CNG kits: Type 1, 2, 3
and 4. Indian market has Type 1 cylinder
technology.
 The global cylinder industry has
witnessed a gradual shift from Type 1
cylinders to an increased use of composite
cylinders (Type 4). Indian auto industry has
recognized the need to upgrade technology
to Type 4 cylinders.
 As of 2014, the Indian market recorded
1.8 million natural gas vehicles (8% of the
total vehicle population) and 903 fueling
stations.
 The Indian government in an attempt to fulfill
COP-21 commitments is increasing the gas share
in the country’s fuel basket from 7% to the world
average of 24%.
 The primary benefit of Type 4 technology is
substantial weight reduction and hence reduction
in carbon emission. Composite cylinder market
holds promising future for light weight cylinders
with an increased focus on environment and fuel
efficiency.
 Composite cylinders are light weight, robust,
corrosion proof plastic inside shell which enable
them to be used for wide range of vehicles: cars,
buses, trucks etc.

Source:
1. India CNG Vehicle Market Analysis, RNCOS Business Consultancy Services
http://www.business-standard.com/article/economy-policy/govt-launches-pilot-for-cng-fuelled-2-wheelers-116062400049_1.html
2. Petroleum Planning and Analysis Cell

3. Report on CNG cylinders for automotive vehicle applications, http://www.siamonline.in/SIAM-19th-CSR-Agenda/Anex12-AL-Report-on-Type-4-

Cylinders.pdf

Page 5
Market Potential (2/2)

CNG vehicles industry in Gujarat

 Gujarat is emerging as a key investment destination for the major auto players. It is one of the
leading states in owning vehicles with 14.4 million total vehicles in FY12. The state is set to
become the country's automotive hub within the next few years.

 Gujarat government plans to increase the share of automotive industries in its overall
engineering output to 10% by 2020, from the current 3.7%.

 Gujarat expects to surpass the production capacity of top car manufacturing states like
Haryana, Maharashtra and Tamil Nadu, with an installed capacity to roll out 10 lakh units
annually within the next 3-4 years.

 There are as many as 5 companies operating in the CNG sector in Gujarat which is more than
other states like Haryana, Maharashtra, Madhya Pradesh, Delhi NCR etc.

 As of FY16 among the Indian states, Gujarat has the highest number of gas filling stations i.e.
361 and the highest number of CNG vehicles i.e. 811,880. Hence an immense potential for
composite CNG cylinders in Gujarat.

 Starting FY17, CNG prices in Gujarat fell by 90 paisa/kg. thereby benefitting as many as 1.2
million piped gas connections and over 0.8 million vehicles.

 Several OEM approved raw material suppliers and heat treatment service providers are readily
available in Gujarat, which gives it a competitive advantage in providing the services in the
most efficient and effective way.

 The state has many other advantages that include labor friendly environment, availability of
skilled and unskilled workforce and good connectivity to the rest of the country with an
extensive network of road and rail.
Source:
1. Petroleum Planning and Analysis Cell, http://www.livemint.com/Industry/nJxn3QpLhJ1U3DisFxynCP/Fall-in-price-of-natural-gas-makes-CNG-
vehicles-more-attract.html
2. http://www.ibef.org/download/Construction-Equipment-August-2015.pdf
3. http://www.ibef.org/download/Agriculture-January-2016.pdf
4. http://www.makeinindia.com/article/-/v/direct-foreign-investment-towards-india-s-growth
5. http://www.technavio.com/report/agricultural-machinery-market-in-india-2015-2019
6. http://www.mahindraearthmaster.com/blog/market-of-earth-moving-equipment-in-india
7. http://www.mahindraearthmaster.com/blog/opportunities-galore-for-earth-moving-equipment-manufacturers-in-2016-2020
8. https://www.atkearney.in/documents/10192/4399341/Road+Map+to+Success+for+the+Construction+Equipment+Industry.pdf/44777e2a-7556-
4da1-b07d-c6f0220a04e3
9. http://www.business-standard.com/article/companies/auto-components-sector-in-gujarat-may-see-rs-10-15k-cr-investments-
115042801131_1.html

Page 6
Market Growth Drivers

Gas cylinders add more weight to vehicle unladen weight. Hence the
Increased focus need of researching for innovative materials for gas cylinders.
1 on research on
Composite material has successfully reduced weight of the vehicle.
innovative
material for gas The shortage of seamless steel tubes and an increased concern of
cylinders environmental impact has driven the shift from Type 1 and 2 cylinders
to Type 4 composite cylinders.

GoI has launched several policies to support the growth of the auto
industry such as Automotive Mission Plan (AMP) 2016–26, the
2 Favourable constitution of NATRiP, National Mission for Electric Mobility 2020,
government
etc. Govt. of Gujarat has established a separate Department for
policies
Climate Change (DCC) which is the first in Asia. One of the green
priorities of DCC is to promote CNG Network in Gujarat.

Vehicles with traditional fuel systems are the leading contributors of

3 pollution levels. To counter this, GoI is providing subsidies to
Need to counter
rising pollution encourage customers to switch to alternative fuels thereby driving
level demand for new CNG kits. In Gujarat in the last 7 years, 0.36 million
auto vehicles switched to clean fuel. Ahmedabad, which was the 4th
most polluted city in India has improved to the 66th rank.

The country is moving towards stricter emission norms in-line with the
Stricter emission
4 European standards. Vehicle manufacturers have to revamp their
norms shifting the
focus towards product portfolio to meet these standards. Further, the
CNG, electric implementation of Bharat stage norms is being carried out in a
vehicles phased manner. This policy is enabling a shift towards CNG vehicles.

At present there are more than 30 engineering clusters and new ones
are emerging at Sanand-Viramgam, Mandal-Becharaji, Halol-Savli,
5 Focus on skill Anjar and Santhalpur. With these, there is considerable focus on
development in
engineering manpower and skill-set development – there are 54 engineering, 106
clusters diploma colleges with over 82,000 seats and 253 ITI institutes. The
state has also initiated a model of skill formation training with
industries.
Exchange rate used: USD/INR: 64.0240 (2015 calendar year average)
Source: http://www.gujaratindia.com/initiatives/initiatives.htm?InitiativeId=NygVcD3gss7g1WJf18DjVg
http://www.mcs-international-gmbh.de/downloads/mcs_cng01_engl.pdf

Page 7
Gujarat - Competitive
Advantage
Skill development and training in auto sector is a focus area
for Gujarat government

Gujarat is a hub of
The government has already
engineering industry, with Manufacturing Government
established
the manufacturing and and engineering focus to
sector growth develop CoEs multiple CoEs (including one
engineering sector in
on Industrial automation
Gujarat contributing over
in Mehsana itself) and is
27% to the state’s GSDP
providing financial incentive
and contributing 9%
for setting up of CoEs for the
overall to the national
manufacturing sector.
engineering output.
Gujarat has a strong
The Gujarat government
Well-developed educational infrastructure in
has recently passed the skill automobile sector with 27
Labour Laws Bill Favorable labor development
colleges providing technical
(December 2015), to give policy industry
education in the sector with
an impetus to
annual intake capacity of
industrialization in the
1,980, and additionally 111
State.
colleges provide technical
education in mechanical field.
Sanand-Hansalpur-
Vithalapur belt is Gujarat has one of the lowest
expected to manufacture Increased cost of living amongst all the
investments from Better social States and is relatively less
1.46 million cars in the auto components infrastructure congested and polluted
next 2 years and will rise suppliers
to 2.3 million vehicles offering better standards of
annually in the next 8 living to the inhabitants.
years. An investment of
INR0.1-0.15 billion is
expected by auto
component suppliers in
the coming decade.
Source
1. http://www.makeinindia.com/article/-/v/direct-foreign-investment-towards-india-s-growth
2. http://www.mahindraearthmaster.com/blog/market-of-earth-moving-equipment-in-india
3. http://www.mahindraearthmaster.com/blog/opportunities-galore-for-earth-moving-equipment-manufacturers-in-2016-2020
4. https://www.atkearney.in/documents/10192/4399341/Road+Map+to+Success+for+the+Construction+Equipment+Industry.pdf/44777e2a-7556-4da1-
b07d-c6f0220a04e3
5. http://www.business-standard.com/article/companies/auto-components-sector-in-gujarat-may-see-rs-10-15k-cr-investments-115042801131_1.html

Page 8
 Project Information(1/5)
About Project site
Project at a Glance
Project Name Manufacturing of CNG kits
Location Sanand, Gujarat
Area of the Estate 2056 ha
Automobiles and ancillary units, Auto-components,
Focus Sector
Engineering, Engineering plastics, Semiconductors, Electronics
General Motors, Tata Motors, Maruti Suzuki India Ltd, other
Target Audience
local players

Project site – Sanand (Gujarat)

Major Players within proposed

Location Area of the Estate location
Sanand-Ahmedabad 2056 ha

Focus Sector

Engineering, Automobiles & ancillary units,

Engineering plastics, Semiconductors,
Electronics
Distance from the
Cities

 570 KM from Mumbai

 35 KM from Ahmedabad
 130 KM from Baroda
 275 KM from Surat

Source
1. http://www.nsdcindia.org/sites/default/files/files/gujarat-sg-report.pdf
2. http://www.livemint.com/Industry/xjCUCbnVyv81PDhJUTfNaN/Sanand-rises-as-auto-hub-even-as-it-battles-skilled-labour-s.html
3. http://www.gidc.gov.in/pdf/gidc_sanand_industrial_estate_latest.pdf
4. http://www.technavio.com/blog/top-15-vendors-india-auto-components-market

Page 9
Project Information(2/5)
About Project site

13.5 kL water/ha area

12+ auto ancillary units to be setup

300 vendors expected to setup

Price/ Charges

Base Allotment Price-INR

Land
3600/- per sq mts (2016-2017)
Price
(subject to change)

Water supply charge-INR 50/-

per sq. mts
Water
Charges Water consumption charge-
INR 28.95/ KL (Capital
Contribution if requirement is
above than 13.5 kld/ha)
Sanand Industrial Estate-Layout Plan

Company needs to apply directly

5% frontage charges of the Gas
Addition to Gas Company
prevailing allotment price upto
al
50,000 sq mts and INR15/- for Average power tariff –INR 6/kwh
Charges
each square meter then after Power Please visit the website
www.ugvcl.com for tariff structure
Waste Other
Zero Discharge Estate Welfare fund: INR 15/- per sq. mts
Water Charges
Source
http://www.gidc.gov.in/pdf/gidc_sanand_industrial_estate_latest.pd

Page 10
Infrastructure
Availability (3/5)
Logistics & Connectivity

Rail Road

 National Highways: NH–8A, which connects

 Sanand has the advantage of a Broad Ahmedabad to Saurashtra and Kutch, passes
Gauge railway network
through Sanand
 The nearest railway station is at
 State Highways: SH–17 connects Ahmedabad
Ahmedabad at a distance of 40 km from
the Sanand to Sanand and joins NH – 8A leading to Kutch.
SH-144, SH-135 and SH – 74 are the other
important linkages within Sanand

Air Port

 Ahmedabad International Airport is the

 Port Connectivity is available with three
nearest airport located at a distance of ports – Kandla, Mundra & Pipavav
30 km from Sanand  Mundra port is linked by NH – 8A and lies
 There are domestic airports located in at a distance of 400 km from Sanand
Baroda and Surat

Utility

Water Power

 Gujarat has a state-wide “water supply grid”

 Gujarat boasts of 24 hour – 3 - phase
spread across 1,20,769 km that aims to
uninterrupted power supply
serve 75% of Gujarat’s population
 Gujarat Industrial Development Corporation
(GIDC) is responsible for ensuring
consistent water supply in industrial areas
Source
1. http://www.mapsofindia.com/maps/gujarat/districts/mehsana.htm
2. http://www.nsdcindia.org/sites/default/files/files/gujarat-sg-report.pdf

Page 11
Project Information(4/5)

Leading Players
Global brands using composite CNG cylinder manufacturers
CNG cylinders
Solaris Hexagon Composites ASA (Norway)

Ford Motors Ltd. Luxfer Group (U.K.)

Honda Cars India Ltd. Everest Kanto Cylinders Ltd. (India)

Chevrolet Quantum Fuel Systems Technologies (U.S)

General Motors Worthington Industries (U.S)

Raw materials and Machinery / Equipment suppliers

Nilam Steel India, India Iron & Steel suppliers, Bharat

Steel
Steel companies (Rajkot)

Simco Groups, Kemrock Industries and Exports

Carbon and E-glass fiber
High density polyethylene liner
Aluminum alloy 6061-T6 boss material
Filament winding machine
Hydrostatic pressure testing machine
Limited, Indian Petrochemicals Corporation Limited
(Vadodara)
Reliance polymers, Deepplast Industries
(Ahmedabad), Jet Fibre India Pvt. Ltd
Mukesh Steel India, Keshariya Metal pvt ltd, Simplex
metals and alloys
CNC Technics pvt ltd, Kineco world of composites,
Dolf industries Baroda
International equipments, Eminence Engineering
(Ahmedabad), Elmech pneumatic industries pvt ltd

Batch polymerization oven Elmetherm, Lewco

Cyclic pressure testing machine Maxbar Inc, Hydraulic and engineering instruments

Source
1. “Manufacturing Sector – Profile”, Vibrant Gujarat website, 7 October 2014
2. “Gujarat – Growth and Prosperity for All”, Vibrant Gujarat website, 25 August 2014
3. http://www.dnb.co.in/smes/company_listing.asp?q=region&rgname=West%20Region
4. www.indiamart.com

Page 12
Project Information (5/5)

Manpower required
 Auto component companies employ significantly varying number of employees depending on
the scale and size of their productions. It also depends on the sophistication of machinery used.
 In general, around four fifths of the auto components employees is engaged in manufacturing
activities, followed by other activities including finance, HR etc. Automation will not affect jobs in
auto component industry, especially in second and third tier component.
 The majority of the workforce in auto components are semi-literate who have not finished their
schooling. They are paid poorly in comparison with their OEM counterparts. Further, awareness
on safety and defined processes is low
 Overall, theirs is significant shortage of skilled labor in India’s auto industry. According to EY,
there’s a shortage of 5 million people presently only in the manufacturing side of the automotive
industry in India. The industry will need an additional 30 million manpower by 2022 to meet
growing requirements of the market.

Auto components workforce distribution

Across Function Across Education Qualifications

Manufacturing 2% 5%
4% Post graduate
3%
8% Service
2% Graduate
40% 18%
Sales Diploma

R&D, Projects, NPD ITI

83% 35% 12th or
Others (Finance, HR
below
etc)

Potential collaboration opportunities

 Many domestic auto component manufacturers maintain strategic partnership with foreign firms.
 Automobile manufacturers Tata, Maruti Suzuki and Hyundai are providing CNG variants in cities
where CNG as a fuel is available.
 Companies like Luxfer Group (U.K.), Worthington industries (U.S.) can be incentivized to set up
their manufacturing units in Gujarat by providing tax holidays and employing local residents.
 Automobile giants like Hyundai and Maruti Suzuki can secure CNG cylinders from Indian cylinder
manufacturing player Everest Kanto cylinder ltd for their CNG variants like Grandi10, Alto K10,
Wagon R so as to promote sales of the Indian product.

Source
1. http://www.nsdcindia.org/sites/default/files/files/Auto-and-Auto-Components.pdf
2. http://www.nsdcindia.org/sites/default/files/files/Auto-Auto-Comp-2009.pdf
3. http://www.dsir.gov.in/reports/ittp_sme/AutoCompReport.pdf
4. https://www.iaccindia.com/userfiles/files/Opportunities%20in%20Automotive%20Engine%20Components%20in%20India.pdf
5. http://vanaz.com/index.html
6. http://www.versusgas.in/about_us.html

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