Market Growth and Demand Drivers “Roadmap for Enhancing Value Addition in Electronics Manufacturing” Market Growth and Demand Drivers Vinod S Chippalkatti Vice President-SEBU, Centum Electronics 02-March-2017

The Centum Group COMPANY OVERVIEW

International markets Fast Facts Overview Established 1994 Employees 2300 Design (730) Revenues $150M Public Listed Company (BSE, NSE) >90% Revenue from International markets Mfg area:350,000 SFT Systems and Certifications ISO 9001:2008 AS 9100 Rev C ISO 13485: 2003 ISO 14001: 2004 OHSAS 18001 Independently Certified Reliability Test House Approved R&D facility by DST & GOI

Industry Segments INDUSTRIAL SPACE DEFENCE & AEROSPACE MEDICAL COMMUNICATION TRANSPORTATION

Complete Product Realization Advanced technical capabilities combined with competitive industrialization strengths and a global footprint makes Centum the ideal Product Realization partner Samples System Test DFM, DFT, FMEA Design Optimisation Production Optimisation Supply Chain “A” Class Orders Feasibility Study Business Case Detailed Spec. Sourcing Strategy Industrial Design Ramp Up Volume Production Production Testing Global Distribution Aftermarket/ Life cycle Support Concept Design Pilot Production Mass Production Commercialize Design Prototype Requirements Def. Analyse Need Create Concept Detailed Design Design Reviews (PDR, CDR) Testing Strategy Mock-up’s Production Process Pilot Assembly Supply Chain Prime Sourcing Model Repair Warranty Solutions Out-Of Warranty Sol. Obsolescence Mgmt Product Upgrades Technical Support On-Going Optimisation Engineering Services BTS BTP

Indian Electronics Sector Market Growth and Demand Drivers

Electronics Sector Indian Electronics Sector Electronics Components Consumer Electronics Industrial Electronics Strategic Electronics Computers Communication Equipment

Electronic Components The electronic components industry in India at US$ 14 billion Growing at a CAGR of 11% . Growing domestic demand due to accelerated local manufacturing of electronics products will drive the market for electronics components in India.

Consumer Electronics Introduction of Smart Consumer Electronics Improved reach of offline and online Retail channels Set Top Boxes, Flat TVs, Refrigerators Significant potential to grow Increased Affordability, better Financing mechanisms Increased penetrations in semi-urban and rural markets Forms around 20% of the total electronics product revenues

Industrial Electronics Increased Automation in Industries IOT Impact Energy efficient, Environmental friendly technologies (smart Solar Grid, LED bulbs) Railways modernization Smart Cities

Strategic Electronics SE Production in India is increased to around 3 B$ Economic Growth and Low cost are likely to provide the push to aerospace market Nuclear power – Large role in Energy security requirements Forms around 7-8% of the total electronics product revenues

Computers Fastest growing IT systems and hardware market (3B$) in Asia Pacific Expansion of Server market into smaller cities and small-medium businesses and also into e-commerce sectors National e-governance initiatives and Digital India campaign to boost IT hardware procurement Increased demand for multi-function-printers Forms around 10% of the total electronics product revenues

Communication Equipment Ever Increasing Broadband base Expanding mobile user base with increasing rural penetration Consumer buying power increase resulting in high replacement frequency Emergence of E-commerce channel

Enhanced “Tech-driven-Operations” Growth Drivers Growth Drivers Increased Demand Govt Support Enhanced “Tech-driven-Operations” Investment Increase

Enhanced “Tech-driven-Operations” Increased Demand Growth Drivers Increased Demand Govt Support Enhanced “Tech-driven-Operations” Investment Increase Growing Consumer Base Increased ability to spend Prices-falling, Increased affordability Government and corporate spending – increased demand

Enhanced “Tech-driven-Operations” Government Support Growth Drivers Increased Demand Govt Support Enhanced “Tech-driven-Operations” Investment Increase Electronics Clusters SEZs, EHTPs FDI policy, Make in India, EDF Incentive Schemes (mSIPS) National Electronics Policy Widespread Broadband connectivity E-governance programs Digital India Campaign Smart Cities Project Government Cloud Initiative (Meghraj) Solar Power Projects UIDAI project National Knowledge Network (NKN)

Technology Driven Operations - Enhancement Growth Drivers Increased Demand Govt Support Enhanced “Tech-driven-Operations” Investment Increase Expansion of Production facilities Increased Distribution Centres Offsets R&D enhancements BTS,BTM, BTP Enhancements

Enhanced “Tech-driven-Operations” Growth Drivers Growth Drivers Increased Demand Govt Support Enhanced “Tech-driven-Operations” Investment Increase M&A Consolidation Increased FDI inflows Expansion plans of the companies

Increased Investments Growth Drivers Increased Demand Govt Support Enhanced “Tech-driven-Operations” Investment Increase Growing Consumer Base Increased ability to spend Prices-falling, Increased affordability Government and corporate spending – increased demand M&A Consolidation Increased FDI inflows Expansion plans of the companies Electronics Clusters SEZs, EHTPs FDI policy, Make in India, EDF Incentive Schemes (mSIPS) National Electronics Policy Widespread Broadband connectivity E-governance programs Expansion of Production facilities Increased Distribution Centres Offsets R&D enhancements BTS,BTM, BTP Enhancements

Summary Significant Growth in Demand for Electronic Products in India Government initiatives will boost domestic consumption of electronics Current demand is largely met through Imports – since local production is insufficient To realize the local manufacturing dream, eco-system must be strengthened and move towards increased domestic value addition