IMAP India: Industrials Update January 2024

Recent News

• China's economy grew 5.2% in 2023. Recovery has been shaky due to the deepening property crisis, increasing deflationary risks, and drop in demand. USA grew by 2.5% in 2023 - highest among G7
• China overtook Japan as the world’s largest vehicle exporter in CY 2023, shipping 4.91 million vehicles compared to Japan's 4.42 million. Microsoft (Mcap ~$2.95 trillion.) overtook Apple ( Mcap ~$2.85 trillion.) in market cap to become the worlds most valuable company
• India’s Manufacturing PMI grew to 56.5 in Jan 2024 from 54.9 in Dec 2023 (strongest growth since Sep 2023 (value 50< indicates growth
• To make smartphone exports more competitive, GOI slashed the import duty rate for several components from 15% to 10%
• To reduce reliance on imports of natural gas and with a target to gasify 100 MT of coal by 2030 , the Union Cabinet approved  a ₹8,500 crore viability gap funding for coal gasification projects

Selection of Recent Transactions

DATE            TARGET                         ACQUISITION

Jan 2024     DCX Systems              The dairy product producer raised ~₹166 Cr. in a Series-E fundraise led by Temasek

Jan 2024     Clean Max Energy      Sansera Engineering acquired a 26% stake in the clean energy provider for ~₹20 Cr.

Jan 2024     Acro Paints                  JK Paints acquired a 20% stake in the  paint manufacturer for ~₹53 Cr.

Jan 2024     Ascent Circuits            Amber through ILJIN Electronics acquired 60% stake in the PCB manufacturer

Jan 2024     Blu Smart Mobility      The EV ride hailing platform raised ₹208 Cr. in a round led by Responsibility Investments

Growing Opportunities in the Indian Space Sector

The Indian Space economy is estimated to be US$10 billion p.a. (globally US$550 p.a.), with rising participation from private players. The sector has been experiencing significant shifts lately due to two main developments:

• Increased launches by the Indian Space Research Organization (ISRO) with a focus on indigenization. This has led to the evolution of several Indian service providers and component suppliers from Tier2/3 suppliers to providers of more value-added services
• An increasing number of startups in Space Tech with 250+ startups in both downstream and upstream segments cumulatively raising funding of over US$250 million

The regulatory environment has also become more conducive. While the sector was liberalized in the 1990s through the enablement of Satellite communication and Remote Sensing Data Policies (RSDP) it is only recently that we have seen the sector really open up with the establishment of NSIL (commercial arm of ISRO) in 2019, IN-SPACe (to simplify clearances for private space technology companies) in 2020, the National Geospatial Policy in 2022 and the Indian Space Policy 2023.

The increase in number of space missions, advent of small satellites (which now form ~90% of ISRO’s launches), push to ‘Make in India’, and regulatory support have resulted in the evolution of the traditional components suppliers.

In the Indian Space Tech sector, sensing the great market opportunity and following global cues, there has been a proliferation of companies across Upstream (Satellite hardware) and Downstream (Earth Observation and Communication). Some of the primary target audiences for these startups include – Govt. space agencies and industries in Telecommunications, Aerospace, Earth Observation, R&D institutions, Defense, Private Space Travel, Logistics, Mining, and the Energy sector. We also saw the first satellite launch by private player Pixxel in April 2022 and the rocket launch into space by Skyroot in Novembe 2022.