Angouleme dated 25 th June 2012 M Gouges

Angouleme dated 25 th June 2012. M. Gouges, Y. Somalwar

India – Facts Official Name Bharat (Hindi), Republic of India (English) Federal Republic Formed of 29 States & 6 Union Territories Independence 15 th August 1947 Capital New Delhi Population 1, 2 Bn as per census year 2011 Area 3. 3 million square kilometers Time zone GMT +05: 30 Coastline Length 7600 km Languages National languages : Hindi and English; recognizes 22 regional languages. Major Religions Hinduism, Islam, Christianity, Buddhism, Sikhism, Jainism Currency Rupee (Rs. ) Exchange Rate: 1 USD = Rs. 54 (June 2012) Headed by President elected for five-year term by National & State Legislatures Pratibha Patil – President Today. New President in July’ 12. National Executive Prime Minister chosen from elected members of parliament Dr. Manmohan Singh ( of Congress Party) – Prime Minister today. National Flag 35 states, 1618 languages, 6400 castes, 6 religions, 6 ethnic groups, 29 major festivals & 1 country

India- State & Region wise facts INDIA Political Map • Normally the country is divided in 5 zones. • North India. • West India • South India • East India • Central India. • In all the above regions, the Religion, the thinking, the business ideas differs. • Industrialization & business is spread in North, West & South India with little concentration on East & Central part. • Gujarat is the most industrialized state followed by Maharashtra, Tamilnadu. Karnataka. • MNC’s such as Samsung, LG, Honda have a plant in Noida (North India), Volkawagon in Maharashtra, Hyundai, Nissan, Ford in Tamilnadu. • Bangalore & Hyderbad are main centres for IT industry with DELL, HP, Infosys, TCS having their software centres.

India on education Map v v Kerala is the state with 100% literacy (education) There are 15 Indian Institutes of India (IIT’s), 11 Indian Institute of Management (IIM’s) along with hundreds of State/Pvt. Owned engineering colleges. Most of MNC’s hires candidates directly from the institute. Most middle class working families prefers their sons/daughters to be Engineers/Doctors. No of Engineering passout’s per year - 750, 000. IPS - III # 033

Economic Growth Data Countrywise Indian Economy is hit in spite of Global meltdown which is clear from the following indicators.

India Macroeconomic Summary & Forecast : 2012 - 2015 Shown in Calendar year Source: Oxford Economics

India Today – Key Macroeconomic Indicators GDP Growth Slowing Down Inflation 7. 5 % (May 12) 12. 0 GDP 12. 0 10. 0 9. 9 9. 7 6. 2 6. 0 6. 8 6. 0 7. 2 6. 8 4. 0 Manufactured Goods 2. 0 0. 0 2006 2007 2008 2009 2010 2011 Index of Industrial Production – Trending 18. 0 0. 0 Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct 2012 10 10 11 11 12 12 Interest Rates – Still very High 15. 7 16. 0 14. 0 Forecast 8. 0 8. 4 8. 0 Overall 12. 8 12. 0 10. 0 8. 3 8. 0 5. 3 6. 0 3. 6 2. 9 4. 0 2. 0 0. 0 2007 2008 2009 2010 2011 2012 YTD Source: Government of India, Oxford Economics, Edelweiss, Dun & Bradstreet, Trading Economics 7

India Today- Macroeconomic indicators Rupee Weakening Exports shrinking v Exports in 2012 was 300 Bn $. v. Target for exports set up is 360 Bn $ for FY’ 13. v First 2 months of FY’ 13 (Apr-May) shows a drop of 0. 7% compared to two months of FY’ 12. April-May’ 12 Exports 50. 1 Bn$ April-May’ 11 50. 5 Bn$ v Engg exports down by 15. 7% at 4. 9 BN$. v. Petroleum Oil & lubricants down 26. 1% to 4. 1 Bn$. v. Gems & Jewellery exports down at 9% at 3. 6 Bn$. v. Medicine up by 10. 6% at 1. 1 Bn$. v. Readymade garments declined 15. 8% at 1 Bn$. v GOVERNMENT stand: Explore Asian, African & Latin American markets. 3 Source: Government of India, Dun & Bradstreet, JPMorgan, Trading Economics

Long term forecast for India 2013 2014 2015 2016 GDP 7. 5 8. 7 8. 5 7. 9 Consumption 8. 3 8. 8 8. 5 7. 8 Investment 8. 6 12. 8 11. 5 9. 4 Govt. Consumption 5. 3 6. 2 Exports 7. 8 11. 5 13. 6 12. 9 Imports 12. 2 13 12. 7 12. 2 Unemployment (%) 8 8 Consumer Prices 5. 4 4. 5 4. 1 3. 9 Current Balance (% of GDP) -3. 7 -4. 2 Exchange Rate (Per $) 51. 9 51. 7 52 52. 3 IPS - III # 033

Is it a downturn or opportunity? v v l l l v v v It is always easy to over react negatively & conclude that once economy is down, it’s going to keep down. If we be India specific here, the economic downturn is a temporary phenomenon for the three reasons: India continues to be a high growth country with 35% of national income being invested today. FDI in 2011 -12 was 46. 85 Bn $. Government relaxing outflow of FDI & India today ranks 5 th in the world after USA, Canada, Japan, & China. Exports: Exports reported 300 Bn$ in 2012 thus forming a export to GDP ratio of 22% from a paltry 4. 4% in 1961. This current slow down must be taken as an opportunity to push major reforms such as retail which will benefit farmers. What is RBI (Reserve Bank of India) & Government doing? ? As May inflation touches 7. 5%, Reserve Bank of India (RBI), may cut interest rates to boost growth in economy. A good monsoon with strong agricultural growth may help growth & reduce inflationary pressures. Government considering building warehouses & cold chain to address the current supply side constraints. IPS - III # 033

EMERSON in INDIA Specific Markets data

Emerson’s Presence in India MOHALI • • PWS IEC NEW DELHI APSCO Engaged Sites • BARODA Emerson Network Power , Thane Emerson Process Management, Pawane MUMBAI PAWANE • • • PUNE • Emerson Climate Technology, Atit HYDERABAD • KARAD/ HUBLI ATIT BANGALORE • • CHENNAI • ECP Leroy Somer, Noida ASCO India, Chennai Trident Powercraft Pvt Ltd, Bangalore Fisher Regulators Fisher Valves TRIDENT EDEC, EEEC

Motor Market Update (Production Statistics) LT MOTORS - TOTAL 12000000 10818256 KW 9000000 1600000 9486869 8457168 1439678 1200000 1224608 7500000 950771 Nos. 10500000 800000 6000000 4500000 3000000 0 2008 -09 2009 -10 Total KW 2010 -11 Toatal Nos. Ratings % of total Remarks < 7. 5 KW 28% Dealer dominated. Strong competition >7. 5 KW-45 KW 28% OEM market. >45 KW-315 KW 39% Mostly OEM/ Project requirements >315 KW 13 5% Project requirement. 2008 -09 2009 -10 2010 -11 Qty change 28% 17. 5% KW change 12% 14%

Investments: Some positive signals. . Foreign Investments l Domestic Players $80 B FDI Expected in Next 2 ● Reliance J 3 & Other Project Investments $9 B (expected) years; Up from ~$25 B in 2011 ● A. V. Birla investing $10 B by 2014 l BP-Reliance Mega Deal ($7. 2 B) l Automotive Majors To Invest $3 B+ ● O & G majors – ONGC, GAIL, IOCL, - Mercedes, BMW, VW, Bosch, etc HPCL planning investments l Japan looking at Major Investments - Delhi Mumbai Industrial Corridor ($4. 5 B over next 5 years) l l - GAIL $ 8 bn by 2015; ONGC $ 5 bn by 2014 ● Asian Paints setting up Asia’s largest Paint facility ● NTPC Targeting Additional 40 GW by 2017; 7 GW Tenders under Award Government may push FDI in Retail in Second Half ● 20 GW Solar Power Vision by 2020 Germany and Qatar considering investments in India ● 0. 3 M New Jobs in IT/ITES Sectors ● Jindal, Essar Group, Tata’s eye investments in Africa Rate Cut By Central Bank (RBI) & FDI Will Help Start Building Momentum on New Investments 14

India Sectoral Updates ~ till 2016 Longer Term Outlook Remains Strong Process Management Industrial Automation Power Expected to grow at >10%; Despite current issues, long term pipeline intact Oil & Gas Metals Robust Growth : 12 -15% Chemicals Steady Growth: ~9% Renewable Energy (wind, solar etc) Infrastructure , Construction , Material Handling 10 -15% y-o-y growth in Infrastructure related project spend. Current Industrial growth sluggish; albeit medium to long term outlook strong. Climate Technologies Residential & Commercial AC Strong y-o-y demand; 10 -15% Industrial Refrigeration Growing ~5 -7% (Retail FDI key driver) Network Power; Embedded Computing& Power Information Technology Growing 10 -12% Telecom 3 G/4 G &BWA Rollout ; License Cancellation a Deterrent Industry (Diverse) – Automobiles, ancillary etc. 7

Major Private Business Houses in India Ø TATA GROUP: Revenues 83. 8 Bn$. l Main Businesses: Steel, Automobile, Software, Hotels, DTH etc. Ø ADITYA BIRLA GROUP: Revenues 35 Bn$. § Main Business: Aluminum, Copper, Insurance, Retail etc. Ø RELIANCE GROUP: Revenues 66 Bn $. • Main Businesses: Crude Oil, Natural gas, Petrochemical, Petroleum, Polyster, Textile, Retail. Ø ADAG GROUP: Revenues 16 Bn$. • Main Businesses: Power, Telecom, Infrastructure, Health, Media etc. q IS IT ONLY INVESTMENT IN INDIA? ? § The Aditya Birla Group gets half of thier revenues from overseas operations. § Indian companies have invested 8 Bn$ in last 4 months. Hotspots being Indonesia & Australia for coal & mining. IPS - III # 033

How to start business in India v v Korean & Japanese Companies are the most aggressive in India. Start up business contacts can be developed by partcipating in major trade fairs such as Elecrama (once in 2 years), IMTEX (Indian machine tool exhibitions), Power Gen (once in 2 years), Textile fares or Hannover fair (G) where most of the Indian businessman travel. . v Different business modes can be as under: 1. Appointing Distributors/Dealers. (margin expectation of min 15%). 2. JV with the Indian Co. (Majority/Minority stake). Perhaps this could help in getting good Sales revenues. . 3. Green field which many MNC’s like Hyundai, Ford, Samsung, LG’s have done. v Approach for appointing Distributors/Dealers (Mumbay, Delhi) 1. Payment terms: Do not like LC, advance payment, but prefers open Credit of 60 -90 days. One needs to have a relaxing Terms of payment. IPS - III # 033

Business in India v Approach for JV/Green Field. 1. Need to approach Ministry of Trade & Commerce & Ministry of Finance. v Challenges ahead for Business in case of imports into India. 1. Bureaucratic approach. 2. Complicated taxes & duties structure. 3. Different rules from State to State. 4. Corruption levels some times. EMR/LS does not entertain the same. IPS - III # 033

l LEROY SOMER MOTOR in INDIA

Leroy Somer Motors India-Introduction l l l Moteurs Leroy Somer started office in India in 1996 as a part of Emerson liaison office. Being a part of liaison office, Direct Sales was done from France to Indian customers for both Alternators & Motors. In 2001 -2002, LS entered into a JV for Alternators to strengthen their presence in Alternator market. LS Motors was established in 2007 as a Division of EECIPL for manufacturing Elevator Motors for Schindler. This was a part of Global agreement between Schindler & LS & today it contributes app 65% of the total LS Motors India Sales. LS Motors also caters to various OEM’s for the balance 35% of our total business for different variety of Motors & Gears. 20

SELF experience v DIRECT SALES v Joined LS in 1996 & was first entrant in the company. v Our focus was on developing OEM’s for different applications like Extrusion machines, Packaging machines, compressors, pumps using our technoligical edge & global contract. Today this forms 30 -35% app part of our business. v Our business for the above is direct between customers & DI & we act as a liason personnel. v We have no distributors/dealers due to the following: 1. 2. High cost of import due to freight from France to Mumbai, road transportation to Noida, devaluating Rupee, & high taxes & duties. Strong local competition. IPS - III # 033

SELF experience v v LOCAL MANUFACTURING To serve Schindler locally, a new Company Leroy Somer Motor Division, a subsidiary of Emerson Electric Co. I ndia Pvt. Ltd was created. v Leased a Area of 465 Sqm as per our requirement. v Hired Emerson approved lawyer for due diligence & registered our production unit with local government authorities. v Did local registrations like Excise, Sales Tax, Factory license. v v v Did the first costing of material after selecting vendors for supply of lamination, Copper, Housings etc with import of components like Brakes, bearings, encoders from Overseas suppliers including LS subsidiaries. Hiring of Factory Manager, Workers etc. RESULT: Today the company has manufactured 6600 no of motors with a expected sales of 2. 3 M € in FY’ 12 & we plan to move to double the Area in FY’ 13 with a intention to meet our customers growing demand, keep stocks of motors for our other parners such as Michelin, Kabra, IR etc. v After successful project, LSMD will intends to multiply this experience to explore other manufacturing options: v Local manufacturing is the key to have stronger presence for developing continued presence. IPS - III # 033

LSMD, sequence of Audits & Progress. Ø Pre-series (50 Motors)- Oct/Nov 2008. v SQA Audit: Ø 18 th March 2009 Score 2. 90/4 First Audit Ø 10 th August 2009 Official Approval for C 8 Ø Mass production- March 2009 Ø 29 th October 2010 Score 3. 12/4 Second Audit Ø 8 th July 2011 Score 93. 18% Third Audit. Ø Till date supplied 6500 Motors. Ø 2 years Start up period before mass production Schindler Q Team

Processes at our premises in LSMD Shaft IQC Motor assembly Rotor mass IQC Shaft insertion Brake assembly Fan assembly Brake test bench EDC test bench Damping pad preparation Rotor assembly Packaging

Why local manufacturing or a JV? ? 1. High taxes & duties. FOB Price CIF Total Customs duty CVD 10% 7. 50% 12. 5% 100 € 10. 0 € 110. 0 € 8. 25 € 14. 78 € Net Impact after credit. Credit Educational cess on CVD Sec & Higher edu. Cess on CVD 2% 0. 29 € Credit 1% 0. 14 € Credit Customs edu. Cess Customs Sec& higher edu cess Additional Duty 2% 0. 48 € 1% 4% 0. 24 € 5. 36 € Credit Total after payment of duty 139. 54 € 118. 97 € 2. Devaluation of Rupee adding import cost. 3. Transportation time & cost. 4. Complications in clearing material at port with long waiting time. 5. Local presence making imports unviable solution. IPS - III # 033

Indian Chamber of Commerce D-118, 1 st Floor, Aashirwad Complex, Green Park Main, New Delhi - 110016 Tel : 011 4610 1431 -38 , 4610 1439 (D) Fax : 011 4610 1440 /1441 Email : energy@indianchamber. net Website : www. indianchamber. net

Indo- French Chamber of Commerce & Industry l Address in Mumbai l Indo French Chamber of Commerce & Industry l French Bank Building, 4 th Floor, 62 Homji Street, Fort - MUMBAI 400 001 l Telephone: + 91 22 6747 9761 Fax: + 91 22 6747 9760 Email: contact (at) ifcci. org. in Website: http: //ifcci. org. in l Address in Delhi l Indo French Chamber of Commerce & Industry l A - 31, 3 rd Floor Firoz Gandhi Marg, Lajpat Nagar II New Delhi 110 024, India l Telephone: + 91 11 4954 0093, Telefax: + 91 114954 0094 Email: contactdelhi@ifcci. org. in l Address in Chennai l Indo French Chamber of Commerce & Industry l Old 27, New 66, III Street, Abiramapuram - Chennai - 600 018 l Telephone: + 91 44 4217 8710 Email: contactchennai@ifcci. org. in l Fondée en 1977 à Mumbai, l'Indo French Chamber of Commerce and Industry (IFCCI) est une organisation bilatérale qui compte plus de 500 membres actifs aujourd'hui. Ces membres sont des entreprises françaises et indiennes dans tous les secteurs d'activité.