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Industrial Markets (IM)
In the Industrial markets the companies with traditional competitive models are experiencing diminishing returns, and scale benefits can no longer be taken for granted. Companies must go beyond the obvious in order to find new sources of profitable growth and maintain their competitive edge. The industrial markets can broadly be classified into:
The chemical industry is characterised by sluggish growth and relatively low international and local demand in the traditional areas of bulk / commodity chemical products. These are typically large volume commodity products produced in capital intensive plants, sold to industrial and processing customers and distinguished by a very high degree of price elasticity. The shift of focus in this sector would be in the area of specialty chemicals with small volume but large margin products typically made for specific customers e.g. for making pharmaceuticals or formulated for specific end use (dye stuff). The pharmaceutical industry is poised for substantial growth with large-scale consolidation being the hallmark of companies in this sector. Companies globally are either merging to form mega companies with unmatched product portfolios or else entering into strategic and marketing tie ups with others in the same or even different product categories. Global consolidation is also beginning to have an effect on the Indian market, which is both extremely competitive and highly fragmented. It is also characterised by lower affordability and emphasis on basic drug manufacture. Companies would have to increasingly enhance their marketing and retailing capability in addition to developing patented products and formulations to ensure long-term growth and profitability in this sector. There would also be focus on the emerging genetics market and entry into higher platforms of biotechnology and new drug delivery systems. Sub segments in the sector:
Energy and natural resources A rapidly increasing population, and growing urbanisation has put immense pressure on energy and natural resources in India as traditional sources of energy such as fossil fuel reserves are rapidly depleting. Alternatives to traditional fossil fuels are vital to help the country avert an impending energy crisis. Natural gas is a growing alternative to coal and all out efforts should be made to harness this valuable resource and set up infrastructure for the supply and distribution of natural gas as a substitute to coal. Increasing pollution in large urban metros has also resulted in demand for alternatives like CNG and ultra low sulphur diesel with low particulate emission to ensure relatively low emission as per internationally accepted norms. Sub segments in the sector:
Industrial and automotive sector The industrial sector is characterized by relatively low investment demand and overcapacity. It is inextricably linked to the infrastructure projects being set up in the country. As a result the fortunes of companies in this sector are directly linked to the general state of economy, with a less than modest rate of economic growth resulting in a downward spiral in growth and profitability. The automotive sector today is probably one of the most intensely competitive sectors with almost all the major car manufacturers having set up manufacturing facilities in India. This has led to competition in every category and sub-category in this sector. Technology as a product differentiator is only limited in nature, with most manufacturers introducing models in India in line with their international product portfolios. The rapid sophistication in this sector in a very limited period has led to a world-class ancillary and component industry, which has resulted in foreign car companies having a relatively large indigenous content. This has greatly enabled manufacturers to reduce cost and maintain process efficiencies. However, with a surfeit of brands and manufacturers, overcapacity will continue to exist and manufactures will have to keep a keen focus on product and process efficiencies while at the same time stepping up brand positioning to have enduring consumer appeal. This sector may also witness consolidation in the future, and companies with strong export orientation will continue to witness growth and profitability in the medium to long term. Sub segments in the sector:
KPMG Focus Consumer Markets and Industrial Markets are by far the largest of KPMG's lines of business, and include some of the leading names in the FMCG, consumer products, industrial and automotive segments. KPMG, with its vast repertoire of skill sets and resources is uniquely positioned to offer clients cutting-edge business advisory services. These include but are not restricted to providing management assurance services, accounting and audit services, financial advisory services, management consulting and tax and regulatory services. Providing sophisticated yet meaningful solutions is a result of KPMG's alignment towards clear lines of business in which KPMG has dedicated professionals specialising in these chosen lines of business. The consumer and industrial markets sector has perhaps the largest growth amongst any segment in the economy today and is by far the barometer of the state of the economy. Companies seeking KPMG's expertise in these sectors have benefited substantially, and greatly increased their value proposition in arriving at both product and process efficiencies, enabling sustained profitability and growth. For further details contact us |
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