C SS Standard Press Tools Market Evaluation V9

AVALON
Consulting
QUICK ESTIMATION OF THE

MARKET FOR “STANDARD”
PRESS TOOLS IN INDIA
Report: 26 Nov 2010
2010 © Avalon Consulting. All Rights Reserved

Roadmap
Introduction
Demand Analysis: Auto Segment
Demand Analysis: Consumer Durables
Opportunity for a Value Added Logistics Intermediary
Conclusions
Annexure
AVALON
02/11/10 – SS Consulting
2
TVS Logistics wishes to evaluate the opportunity for “standard” press tools in India
Study Background
 TVS Logistics is in the process of evaluating an acquisition option in the US. The target is involved in providing an
integrated logistics solution in the tool building value chain through efficient procurement, kitting and delivery of standard
press tooling elements
 As part of the evaluation, TVS Logistics wishes to understand whether there is an opportunity to leverage some aspects of
the business model in the Indian market context
 TVS Logistics has conducted a very preliminary investigation, and has gleaned that there could be a trend in favor of
standardization of press tools parts in India in the automotive market
 TVS Logistics also believes that there could be a similar opportunity in the white goods segment given the magnitude of
the sales volumes
 Some large press tools aggregators, such as Misumi and Fibro, have also recently started operations in India, indicating
that probably the market opportunity for standard press tools is emerging
 However, the concept of a logistics intermediary kitting standard tooling elements appears to be relatively untested in India.
So, TVS Logistics wishes to test whether there is prima-facie interest among potential customers
 Avalon Consulting was engaged by the TVS Logistics to do a quick evaluation of the above aspects
 We have completed the engagement and this report captures the conclusions from our evaluation
AVALON
The focus of the study was limited to press tools used in sheet metal stamping
operations in two customer segments - Automotive and Consumer Durables
Focus segments for the research
Focus Segments
Automotive Consumer Durables
Washing Air
Car CV 2-Wheeler 3-Wheeler Tractor Refrigerator
Machine Conditioner
AVALON
The press tools market consists of two segments - new press tools and replacement
spares
Overall Analysis Methodology
Total Demand
Replacement Replacement
New Tools New Tools
Demand Demand
AVALON
Our estimates of the addressable market were built from the demand side based on
demand drivers & consumption norms for press tools and tooling elements . . . 1
Analysis Methodology: New Tools
No. of new Launches / Facelifts

x
Investments in New Tools per New Model Launch / Facelifts

=
Total Demand for New Tools in India

x
% Share of Standard Tools in New Tools

=
Demand for Standard Tools in New Tools

x
% Share of Domestically Produced New Tools

Analysis limited to
= auto segment
Estimate of the Addressable Market Opportunity
AVALON
Our estimates of the addressable market were built from the demand side based on
demand drivers & consumption norms for press tools and tooling elements . . . 2
Analysis Methodology: Replacement Demand
Spends on Standard Replacement Spares per Replacement Cycle

/
Average No. of Vehicles Produced per Replacement Cycle

=
Replacement Spends on Standard Spares per Vehicle

x
No. of Vehicles Produced

=
Addressable Replacement Demand for Standard Spares
AVALON
We relied both on primary and secondary research to build the demand estimation
model
Overall Project Approach
Project Planning
 Project Kick-off and detailed briefing
 Problem Statement and Initial Hypothesis
 Research Planning
 Questionnaires & Checklists
Secondary Research Primary Research
 Internet research  Automobile OEMs and Tier 1 suppliers across car,

 Published documents CV, 2-wheeler, 3 wheeler and tractor segments
 Avalon’s internal knowledgebase  Interviews with consumer durables manufacturers
 Industry Association databases & others  Interviews with focussed tool rooms
 Interviews with Parts Suppliers
Analysis
 Data collected from various sources was analyzed to arrive
at an estimated size of the press tool and tool spares market
 These insights were synthesized using Avalon Consulting
frameworks to arrive at conclusions for TVS
AVALON
As part of the data collection exercise, we have covered 35 respondents with fair
representation across the press tools value chain
Primary Research Summary
Total Respondents: 35
Consumer Durables Tier I & II Component

Auto OEMs (14) Focused Tool Rooms (3) Tool PartsSuppliers (2)
Companies (8) Suppliers (8)
• AL Nissan • Blue Star • ASAL • Godrej • Misumi India

• Bajaj • Electrolux • Elgi • Nagata • Fibro
• Force Motors • Godrej & Boyce • JBM Maruti • NTTF
• Ford • IFB • TATA Autocomp
• Hero Honda • National Panasonic Systems
• Hyundai • Onida • JBM Ogihara
• Mahindra & Mahindra • Samsung • Delphi TVS
• Maruti • Whirpool • Aroma Industries
• Piaggio • Wheels India
• Swaraj Mazda
• TAFE
• Tata Motors
• TVS Motors
• Renault Nissan
AVALON
14/06/10 – GJ/pd Consulting
Roadmap
Introduction
New Tools Demand
Replacement Demand
Overall
Conclusions
Annexure
AVALON
We will start with the estimation of the demand for new tools in India in FY 2008-09

x

=

x

=

x

=
AVALON
FY 2009-10 witnessed significant new product activity – both new launches and
facelifts
No. of new launches and facelifts by Automotive Segments
New Launches and Facelifts by Automotive Segments (2009-10)
19
The share of
institutional segment
demand has diminished
over the last decade
12
11 11
3
1 1 1
0
Car CV 2-Wheeler 3-Wheeler Tractor
New Launches Facelifts

Source: Secondary Research, Avalon Consulting Analysis
Note: List of Models Considered in Annexure
Typically investment on new press tools precedes the launch by a year, so FY 2009-
10 new product activity has been used to estimate the market for FY 2008-09 AVALON
The investments on press tools and dies for new launches vary significantly by type
of vehicle; the investment for a car is the highest at about Rs 300 Cr.
Investments in Press Tools for a New Model
Investments in Press Tools per Model Launch by Vehicle Type (Rs. Cr.)
1000
500
250
300
200
120
100
75
35 30
25
20 20
18
Average Investment (Mode) 8

10 has been considered for market
estimation 5
4
1
Passenger Cars CV 3-Wheeler Tractor 2-Wheeler
Minimum Investment Average Investment (Mode) Maximum Investment4

Source: Expert Interviews, Avalon Consulting Analysis
AVALON
The investments in press tools for a model facelift ranges from 14% - 28% of the cost
for a new model
Investments in Press Tools for a Facelift
Investments in Press Tools per Model Facelift by Vehicle Type (Rs. Cr.)
% Investment in
a New Model 14% 16% 26% 16% 28%
100.0
The investments for a facelift is
71.7
~40% for the A Class Parts, and 5-
35.843.0 10% for the B&C Class Parts*
33.3
20.0
12.5 8.3
10.0
5.7 5.6
5.0
4.1
3.2
2.1
1.3
1.0
1.0
Passenger Cars CV 3-Wheeler Tractor 2-Wheeler
Minimum Investment Average Investment (Mode) Maximum Investment

* Note: Refer Annexure for Break-up of Investments for a new model by A, B & C Class
Source: Expert Interviews, Avalon Consulting Analysis AVALON

The market for auto press tools in FY 2008-09 is estimated to be ~ Rs. 5450 Cr. with
new car launches being the dominant segment
Auto Segment: Market for New Press Tools in India
Market for Press Tools in India (FY2009, Rs. Cr)
12/8/21 (72%) 12/8/21 (25%) 109(2%) 5450

344 20
(12/8/21) (1%) 390(7%)
Facelift
New Launches
5060 (93%)
1320
3600 (99%)
(12/8/21)
12/8/21 12/8/21s 12/8/21

12/8/21
12/8/21
Source: Avalon Consulting analysis
The share of 2-wheelers, 3-wheelers and tractors is negligible AVALON

15/11/10- SS/pd
Consulting
Next, we will estimate the extent of standardization prevailing in new press tools

x

=

x

=

x

=
AVALON
The methodology for this step requires some elaboration….
Analysis Methodology: Demand for Standard Parts in New Tools
Which are the parts that can be

standardized?
What is the share of these parts

in the investments in new tools
What is the total

“standardizable” market?
What is the extent of

standardization in these parts?
What is the overall market

opportunity for standard parts?
We will walk you though the findings in each step AVALON

Let’s start by understanding what is the “standardizable” market opportunity

Please recall that the total market for
standardized?
new press tools is estimated to be
~Rs. 5450 Cr. in FY09

What is the total



AVALON
In press tool building, tooling elements are more amenable to standardization
Classification of Press Tools Parts
Illustrative List –
Only major parts as
Components of Press Tools & Dies per primary
interviews cited
Essentially customized parts Parts that can be standardized
 Die Mould  Pillar & Die Sets

“The parts that can be
 Die Cavity  Punches standardized are mostly the
 Buttons tooling elements; pillar and die
 Back Plate
sets can be standardized for
 Nitrogen Gas Springs very small child parts, but
 Bottom Plate
 Pillars these parts are very few in auto
 Die Cams
 Guiding Components
 Sliding Components
 Clamps
 Drill bushings Mostly Tooling
Mostly Die Parts
Elements
 Retainers
 Ball Cages
 Utility springs etc.
% Share of 50-80% 20-50%

Tool Cost
Source: Expert Interviews AVALON

The share of tolling elements is low for class A parts. Within vehicle categories, it is
high only for tractors
Share of Tooling Elements in Press Tools
Share of Tooling Elements in Press Tools by Part Class (%) – value terms
Share of tooling element in A class

60% parts is relatively low owing to the 45%
considerably higher cost of dies for 40%
these parts 40%
50%
50% 35%
30% 30% 45%

40% 30%
25%
35% 35% 35% 25%
30% 20%
30% 30% 30% 20%
25% 25% 25%
20% 15%
20% 20% 20%20%
10%
10%
5%
0% 0%
Car CVs 2- Wheelers 3-Wheelers Tractors
Class A Class B1 Class B2 & C Overall

Thus, the market for “standardizable” parts in new tools for auto segment in India is
considerably lower at ~Rs. 1500 Cr. in FY09
Market for Press Tools in India
Market for Tooling Elements in India (FY 2009, Rs. Cr.)
2-Wheelers
3-Wheelers
Tractors This constitutes ~29% of
CVs 23
118 the total new tools
335 1%1%
1% market of Rs. 5450 Cr.
21%
Cars
1183
76%
Total: Rs. 1560 Cr.
Source: Avalon Consulting Analysis
AVALON
Next, we will derive the overall opportunity for standard parts
Overall New Tools

Which are the parts that can be Market:
standardized? Rs. 5450 Cr. in FY09

“Standardizable”
What is the total Market:
“standardizable” market? Rs. 1560 Cr. in FY09


AVALON
The extent of standardization is high in A & B1 class tooling elements
Usage of Standard Tooling Elements by Vehicle Type and Parts Class
Extent of Usage of Standard Tooling Elements by Vehicle Type and Parts Class
2-
Cluster Car CVs 3-Wheelers Tractors
Wheelers
A Class 5 5 5 5 5
B1 Class 5 5 5 5 5
B2 Class 3 2 3 2 2
C Class 2 1 2 1 1
5 4 3 2 1
80- 60-80% 40-60% 20-40% 0-20%
Usage of standard parts is relatively low in CVs,
100%
3-wheelers and tractors owing to the fact that
these segments are dominated by domestic
players who largely do not get involved in tool Denotes segments in which
design for B1 & C class parts Indian OEMs dominate
Source: Avalon Consulting Analysis AVALON

Thus, the level of standardization in tooling elements varies from approx. 55% - 85%
depending on vehicle type
Extent of Standardisation Across Vehicle Types
Extent of Standardization in Press Tools (% of tooling element spends)
100%
90%
80%
70%
60%
50%
40% 85%
70% 75%
68%
30% 57%
20%
10%
0%

Hence, the market for standard parts in new tools for the auto segment in India is
estimated at ~Rs. 1100 Cr. in FY09 and is mainly from cars and CVs
Market for Press Tools in India
Market for Standard Press Tools in India (2009, Rs. Cr.)
2-Wheelers
3-Wheelers
Tractors
CVs 1966 This constitutes ~70% of the
228 2%1%
1% “standardizable” market of
21% Rs. 1560 Cr., and ~20% of
the total new tools market of
Rs. 5450 Cr.
Cars
828
76%
Total: Rs. 1087 Cr.
The share of 2-wheelers, 3-wheelers and tractors is negligible AVALON

We thus arrived at the market opportunity for standard parts in new tools

standardized?
Overall New Tools

Market: What is the share of these parts
Rs. 5450 Cr. in FY09 in the investments in new tools
What is the total

“Standardizable”
Market:
Rs. 1560 Cr. in FY09 What is the extent of
Market for Standard What is the overall market

Parts in New Tools: opportunity for standard parts?
Rs. 1087 Cr. in FY09
There is a further sub classification within standard parts which is relevant AVALON
Within standard parts, there are OEM standards and Global Standards; both the
opportunities are addressable for an independent player
Types of Standardization in Tool Parts
Types of Standard Parts
OEM Standards Global Standards
 The central tool rooms of all major OEMs have their own set  The global standards find their origin from OEM standards
of standard parts which they use at the design stage. All when popular OEM specified designs are made available by
major OEMs such as Suzuki, Toyota, Hyundai, Nissan etc. common suppliers to independent and competitor tool rooms.
have own standards What started off as aftermarket sales subsequently got
 With increase in outsourcing of B2 & C class parts adopted as global standards
procurement, the usage of OEM standards is on a decline,  The usage of global standards is high in B2 & C class parts,
and largely limited to A & B1 class parts which are either designed by independent tool rooms or by
OEMs who take into consideration the maintenance issues in
remote locations
“Each OEM has their own standards.. there “The origin of the standards is usually
is Nissan standard, Toyota standard, the OEMs…. Once they develop a new
etc… the trend is to use the global dimension, it is known in the market as a
standards these days… we have moved particular part number (usually provided
to more than 80% global standards now… by the OEM)… then its for anybody to
only for very critical and proprietary parts, use… that’s how we have also
we use Nissan standards.” developed our products..”
- Renault Nissan - Misumi
The usage of OEM standard parts is mostly limited to A & B1 class parts AVALON
Global standard parts constitute about two-thirds of the standard parts demand; the
share of OEM standards is relatively high in cars
Auto Segment: Demand for Standard Press Tools in New Tools
Demand for Standard Press Tools in New Tools in India (2008-09, Rs. Cr.)
19 (2%)
6 (1%)
12/8/21 (76%) 12/8/21 (21%) 6 (1%) 1087
316 67 391
(12/8/21) (12/8/21) (36%)
12/8/21
12/8/21
161 696
513 (12/8/21) (64%)
(12/8/21)
12/8/21 12/8/21 12/8/21

12/8/21
12/8/21

AVALON
The next level of analysis deals with estimating the addressable market opportunity

x

=

x

=

x

=
AVALON
Our expert interviews indicate that only the Indian OEMs design their tools in India.
Thus, the imported new press tools opportunity is not addressable as the design is
done by the global parent and the tool is supplied to India in CKD / SKD form
Comments from Primary Interviews
Remarks – Global OEMs Remarks – Indian OEMs
“100% of our press tool requirement is imported from our ”We have an in-house set-up for all our tooling requirements”
mother plant in South Korea” - Force Motors
- Hyundai
“We directly import our Class A and Class C parts from our “ We have a dedicated tool room for all Classes of sheet
foreign plants because it is cheaper than procuring or metal parts”
manufacturing press tools in India” - Tata Motors
- Ford
“ We manage all our tooling requirements internally”
“All our tools are developed outside India, and supplied to - M&M
MUL or its suppliers.. To the best of my knowledge only Tata
and M&M (in cars) do their tooling in India”
“ We outsource our tool building to JBM Ogihara… but they
- MUL work on our designs…
- Ashok Leyland
“All the Nissan Micra tools were imported…”
- Renault Nissan
AVALON
Most of the new launches in the cars segment are by foreign OEMs; CVs, 3-wheelers
and Tractors are dominated by Indian players
New Model Launches and Facelifts by Indian OEMs
New Launches and Facelifts by Indian Vs. MNC OEMs (2009-10)
19
12
11 11 11
9
8
3 3
1 1 1 1
0
Car CV 2-Wheeler 3-Wheeler Tractor
Launches - Indian OEMs Facelifts - Indian OEMs Launches - MNC OEMs Facelifts - MNC OEMs
Source: Secondary Research, Avalon Consulting Analysis
We consider only the launches and facelifts of Indian OEMs to estimate the
addressable market opportunity AVALON
Thus, the addressable opportunity for a new Indian entrant is about Rs 450 Cr. in
FY09
Automotive Segment: Addressable Opportunity for Standard Tools in New Tools
Addressable Opportunity for Standard Tools in New Tools (Rs. Cr., 2008-09)
Addressaable
449
41%
Imported as
SKD / CKD
Tools
638
59%
Total: Rs. 1087 Cr.

AVALON
About two-thirds of the addressable market opportunity is in global standard tools
Automotive Segment: Addressable Opportunity for Standard Tools in New Tools
Addressable Demand for Standard Press Tools in New Tools in India (Rs. Cr.)
6 (1%)
12/8/21 (44%) 12/8/21 (51%) 12/8/21 (2%)
6 (1%) 449
75 67 148
(12/8/21) (12/8/21) (33%)
12/8/21
12/8/21
161 301
123 (12/8/21) (67%)
(12/8/21)
12/8/21 12/8/21 12/8/21 12/8/21

12/8/21

AVALON
Roadmap
Introduction
New Tools Demand
Replacement Demand
Overall
Conclusions
Annexure
AVALON
The calculation of replacement spends per vehicle is the first step towards estimation
of the standard spares demand for replacements
% Spends on Standard Replacement Spares per Replacement Cycle

/

=
Replacement Spends for Standard Spares per Vehicle

x

=
AVALON
Very few of the standard parts are frequently replaced; the spends on parts
replacement is estimated to be only about 3% of the total investments on standard
press tools per replacement cycle
Types of Standardization in Tool Parts
Type of Maintenance
Largely Repaired / Breakdown Frequently Replaced

Reconditioned Replacement Parts The spends on press tools
List of Key  Cams  Punches  Bushes parts is hence only about
Parts 3% of the investments in
 Nitrogen Gas Springs  Buttons  Springs
 Pillars standard tools per
 Die Sets
 Guiding Components maintenance cycle
 Sliding Components
 Clamps
 Retainers “The replacement market is very
 Ball Cages small (compared to new tools
market)…so we are not tracking
that opportunity…”
Share of - Misumi / Fibro
Investments 4 2 1
“The parts which are usually replaced are low value parts like bushes
and springs… cam is the most high value part, but its usually
reconditioned… nitrogen gas springs are again refilled and
reconditioned… in fact, even springs are serviced and refitted many 5 4 3 2 1
time… so the spends on replacement parts is very low… ”
>80% 60-80% 40-60% 20-40% <20%
- Renault Nissan

Hence, the average spends on standard replacement parts per vehicle produced is
very nominal
Maintenance Cycle and Average Spends per Cycle
Maintenance Cycle (No. of Vehicles) and Average Spends per Cycle (% of Standard Spares)
Average Spend per Vehicle

Initial Produced (Rs. / Vehicle)
Average
Investment
Maintenance Spends per
Vehicle in Standard
Cycle (No. of Cycle (% Value Global OEM
Type Tools per
Vehicles)* of Standard Standard Standard Total
Model (Rs.
Spares) Parts Parts
Cr.)
Cars 62.6 100,000 3% 116 72 188

CVs 19.8 50,000 3% 89 30 119
2-Wheelers 0.8 100,000 3% 2 1 3
3-Wheelers 4.1 100,000 3% 9 3 12
Tractors 5.9 15,000 3% 80 38 118
*Note: The maintenance cycle is based on number of stampings; a few key parts require multiple stampings, whereas a single
stamping can produce multiple (primarily non-critical) components. In the absence of a clear conversion norms, a 1:1 ratio of
stampings to no. of vehicles is assumed based on expert views

Next, we factor in the no. of vehicles produced to arrive at the total demand for
standard spares

/

=
Replacement Spends on Standard Spares per Vehicle

x

=
AVALON
India’s vehicle production in FY 2008-09* was about 11.5 million vehicles
Vehicle Production in India
Vehicle Production in India (‘000 Nos., 2008-09*)
CVsTractors
339.51
3-Wheelers 416.87
497.02 4% 3%
4%
Car
1838.59
16%
2- Wheelers
8419.79
73%
Total: 11,512
* Note: We have considered 2008-09 production to maintain consistency with estimate of market for new tools
Source: SIAM, ACMA
AVALON
Factoring the average spends per vehicle produced, the market for standard press
tools spares in India is estimated to be ~ Rs. 46 Cr.
Market for Standard Press Tools Spares in India
Replacement Market for Standard Press Tools

Spares by Vehicle Type (2008-09, Rs. Cr.)
2-Wheelers
3-Wheelers
Tractors 2.1 0.6
4.0 5%1% Based on vehicle production, the
9% replacement market is expected to
CVs
5.0 have grown to Rs. 60 cr. in 2009-10
11%
Cars
34.5
75%
Total: Rs. 46.2 Cr.

Cars segment account for about three-fourths of the demand AVALON

Over 60% of the demand is for global standard parts
Segment-wise Demand for OEM Vs. Global Standard Parts (Rs. Cr.)
Segment-wise Demand for OEM Vs. Global Standard Parts (Rs. Cr.)
34.5 (75%) 4.9 (11%) 2.1 0.6 4.0 46.2
1.2 12/8/21
0.6
(12/8/21) (12/8/21) 1.3 OEM Standard
13.2(12/8/21) (12/8/21)(12/8/21)16.6 (36%)
Global Standard
29.6 (64%)
3.7 0.47
(12/8/21) (12/8/21)
21.3
(12/8/21) 1.5 2.7
(12/8/21)(12/8/21)
12/8/21 12/8/21 12/8/21

12/8/21
12/8/21

15/11/10- SS/pd
Consulting
Roadmap
Introduction
New Tools Demand
Replacement Demand
Overall
Conclusions
Annexure
AVALON
The overall addressable opportunity for standard tools in auto segment is Rs. 495
Cr.; replacement demand constitutes only about one-tenth of the opportunity
Automotive Segment Summary: Addressable Opportunity for Standard Tools
Addressable Opportunity for Standard Tools in Auto (Rs. Cr., 2008-09)
449 (90%) 46.0 (10%) 495
OEM
12/8/21 12/8/21
(12/8/21) Standard
(12/8/21)
164 (33%)
12/8/21 Global
12/8/21
(12/8/21) (12/8/21) Standard
331 (67%)
12/8/21 12/8/21
AVALON
Roadmap
Introduction
New Tools Demand
Replacement Demand
Overall
Conclusions
Annexure
AVALON
We use the same methodology as auto segment to estimate the demand in consumer
durables
No. of new Launches

x
Investments in New Tools per New Model Launch

=

x

=
Let’s start with estimating the demand for new tools in India AVALON
The refrigerator segment is estimated to have seen the highest number of new
launches in 2009-10
No. of New Launches and Facelifts by White Goods Segments
No. of Launches by Segment (2009-10)
20
Considering only The base frame of
The share of 20% of the new Total
the AC hardly ever
institutional segment
launches are in changed There is no concept of
demand has diminished
metal body as most Facelifts facelift in consumer durables
over the last decade
models have moved
to plastic
New12
Launches
Refrigerators Washing Machines Air Conditioners
Source: Expert Interviews, Tracking of New Launches by Top 5 Players in each category, Avalon Consulting Analysis
AVALON
The investments on press tools and dies is substantially lower than in auto segment,
and does not vary significantly by type of product
Investments in Press Tools for a New Model
Press Tool Investment Range for all segments (Rs. Cr.)
The corresponding
investment in the auto
3 3 segment starts from Rs. 5 cr.
and can be > Rs. 300 cr.
1.5 1.5 1.5

1.25
1 1
Refrigerator Washing Machine Air Conditioner
Min Investment Average Investment Maximum Investment

Consequently, the total market for press tools in the white goods segment in 2008-09
is estimated to be ~ Rs. 60 Cr.; refrigerators dominate with about 50% share
Market for White Goods Press Tools in India
Market for White Goods Press Tools in India (2008-09, Rs. Cr.)
Air
Conditioner
15.0
25%
Refrigerator
30.0
49%
Washing
Machine
16.0
26%
Total: Rs. 61 Cr.

The spends on standard tool parts is substantially low in consumer durables; the
average spends per model is the highest at Rs. 30 lakhs in washing machines
Spends on Standard Tooling Elements Per Model
Spends on Standard Tooling Elements Per Model (Rs. Lakhs)
“As an OEM, we only deal with

outer skin panels which Average standardization of 15% is
requires a high level of 35 taken across all product lines
customization, hence
standardization is low – only 30
about 15%” – Whirlpool
(Refrigerator Division) 25
20
15 30.00
Standard parts is about 10-15% 22.50

10 18.75
of the total tooling cost for a
model. 5
- Godrej Appliances
0
Refrigerators Washing Machines Air Conditioners
These spends are substantially lower than investments in automotive products AVALON
Hence, the total market for standard press tools in the white goods category is
estimated to be ~ Rs. 9.2 Cr.; Refrigerators dominate with about 40% share
Consumer Durables: Market for Standard Tools in New Tools Market
Market for Standard White Goods Press Tools in India (2008-09, Rs. Cr.)
Air
Conditioner
2.3
25%
Refrigerator
4.5
49%
Washing
Machine
2.4
26%
Total: Rs. 9.2 Cr.

Roadmap
Introduction
New Tools Demand
Replacement Demand
Overall
Conclusions
Annexure
AVALON
Let us now assess what is the addressable replacement demand for standard spares

/
Average No. of Units Produced per Replacement Cycle
=
Replacement Spends on Standard Spares per Unit Produced
x
No. of Units Produced
=
AVALON
Refrigerators, Washing Machines and Air Conditioners are the three major consumer
white goods using sheet metal parts
Consumer White Goods Production in India
Consumer White Goods Production in India (‘000 Nos., 2008-09)
7614
3836
1789
Refrigerator Washing Machines Air Conditioners
Source: CMIE, Press Clippings
The production volume of white goods is substantially higher than of vehicles AVALON
However, the average spends per unit is negligible across products
Maintenance Cycle and Average Spends per Cycle
Maintenance Cycle (No. of Units) and Average Spends per Cycle (% of Standard Spares)
Average Average
Value of
Spends per Spend per
Standard Maintenance
Cycle (% Unit
Vehicle Type Parts per Cycle (No. of
Value of Produced
Model (Rs. Units)
Standard (Rs./ 100,000
Lakhs)
Spares) units)
Refrigerators 22.50 500,000 3% 13,500
Washing Machines 30.00 200,000 3% 45,000
Air Conditioners 18.75 500,000 3% 11,250
“ The tools we use can stamp parts for “We barely spend on repair and
around 500,000 units without any maintenance of our tools; even from
problems, so we don’t incur much cost that spend we usually don’t replace
on maintenance...” any parts but carry out maintenance
activities like greasing etc...”
- Whirlpool (Refrigerator Division)
- Blue Star

Consequently, the market for standard press tools spares in India is estimated to be
just about Rs. 30 lakhs in the white good segment
Market for Standard Press Tools Spares in India in the White Goods Segment
Market for Standard Press Tools Replacement

Parts by Product Type (2008-09, Rs. Cr.)
Air
Conditioner
s
0.020
6%
Refrigerators
0.130
Washing 41%
Machines
0.170
53%
Total: Rs. 0.3 Cr.

Roadmap
Introduction
New Tools Demand
Replacement Demand
Overall
Prima–facie Opportunity for a Value Added Logistics Intermediary
Summary of Conclusions
Annexure
AVALON
The overall opportunity for standard press tools in the consumer durables segment
is estimated to be about Rs. 10 Cr; replacement demand has negligible share
Consumer Durables Segment: Addressable Opportunity for Standard Tools
Addressable Opportunity for Standard Tools in Consumer Durables (Rs. Cr., 2008-09)
Replacement
0.3
3%
New Tools
9.2
97%
Total: Rs. 9.5 Cr.

Roadmap
Introduction
Conclusions
Annexure
Disclaimer: The conclusions in this section

are based on a very high-level analysis of
available information and limited
additional research. Further detailed
evaluation is recommended prior to making
a business decision to target this
opportunity
AVALON
We have restricted the opportunity evaluation only to the automotive application
Overall Analysis Methodology
Opportunity Evaluation
Replacement Replacement
New Tools New Tools
Demand Demand
 Overall  Overall  Overall  Overall
addressable addressable addressable addressable
demand is about demand is about demand < Rs 10 demand < Rs 0.5
Rs 450 Cr. Rs 50 cr. Cr. cr.
(restricted to
 May not be  Not worth  Not worth
Indian OEMs like
worth pursuing pursuing further pursuing further
Tata, Mahindra,
as a standalone
AL, etc.)
opportunity, but
 Needs to be can be pursued
evaluated further if new tools
market is also
available
AVALON
59
Both OEM standard parts and global standard parts are prima facie attractive
opportunities
Automotive Segment: Addressable Opportunity for Standard Tools
Addressable Demand for Auto Standard Press Tools in India (Rs. Cr., 2008-09)
12/8/21
232.5 (47%) 232.9 (47%) 12/8/2112/8/21 495
OEM standards of
domestic OEMs like 12/8/21
Tata, AL and M&M (12/8/21)
OEM
12/8/21 12/8/21
are level fields for (12/8/21) 12/8/21 Standard
12/8/21 (12/8/21)
existing and new (12/8/21) 164 (33%)
players to compete. (12/8/21)
However, a strong
catalog in global
standard parts would
be essential to also
tap this segment
Global
12/8/21 Standard
12/8/21 (12/8/21)
12/8/21 331 (67%)
(12/8/21) 12/8/21
12/8/21 (12/8/21)
(12/8/21)
(12/8/21)
Global standards
is anybody’s play,
and players like
Misumi have
already built a
very strong
catalog
12/8/21 12/8/21 12/8/21 12/8/21
12/8/21

AVALON
The OEM standard parts are manufactured domestically, whereas the global standard
parts are largely imported through aggregators
Supply Chain for the Addressable Standard Tool Parts in Automotive in India
Supply Chain for the Addressable Standard Tool Parts in India
Press Tool Global Standard Global Standard

OEM Standard Builders Parts Aggregators Parts Manufacturers
parts are
largely
manufactured Captive Tool Parts Tooling The global
by the tool standard parts are
assemblers Rooms Aggregators in facilities of manufactured
India like Fibro, select outside India and
imported largely
Misumi etc. aggregators through
intermediaries
Tool Rooms of Foreign Parts

Component Aggregators
Suppliers Eg. Misumi
For the
addressable (Thailand)
market, the
tool
assemblers
are in India Focused Tool Independent
Rooms parts suppliers
Tool assemblers
directly dealing with
foreign parts suppliers
independently is
limited, but possible
AVALON
Prima facie, the opportunity for global standard parts is more readily addressable by
an independent aggregator
Supply Scenario in Automotive Standard Press Tools Parts (2008-09, Rs. Cr.)
Standard Press Tools Supply in Automotive Segment* (2008-09, Rs. Cr.)
This is a more readily

accessible market, but
the competition from the
existing suppliers such 32.8
as Misumi and Fibro
49.2
164
82
50
Tapping this opportunity

166 will require concept selling
331 to OEMs to move towards
global standards in their
design. Resistance from
existing tool builders is
116 expected
Total Market Global Standard Parts OEM Standard Parts
Aggregators such as Misumi and Fibro are already supplying global standard parts
to Indian tool builders AVALON
Aggregators like Misumi have already brought about substantial improvements in the
SCM of global standard tools in India. . . 1
Business Model : Misumi
The Misumi like model

seems to have a similar
…we partnered with small scale
value proposition as
component manufacturers scattered
proposed by TVS Logistics,
across Japan and began catalog sales…
except for the kitting
we standardized many components
previously available only through special
orders and listed them in our catalog…
- Misumi Annual Report 2008
Source: Misumi Annual Report 2008 AVALON

Aggregators like Misumi have already brought about substantial improvements in the
SCM of global standard tools in India. . . 2
Business Model : Misumi
Misumi has already

introduced an India-specific
catalog with 1300 standard
parts…
… and promises to deliver

many more from their global
parts catalog
Source: Misumi India Website AVALON

They also appear to have a powerful business model to deliver on their short lead
time proposition especially for the Japanese oriented Indian market
Business Model: Misumi
With India being predominantly
Japanese OEM dominated, the
advantage of Misumi over any
European or US-based aggregator
is high
Source: Misumi Annual Report 2008 AVALON

We did a dip stick evaluation of the value added logistics intermediary proposition in
the press tools value chain (across new tool building and replacement spares)
Integrated Material Solutions Process of Kitting

Value Proposition for Customer
Solutions Provider
• One stop shop for on-time delivery of all parts as per
specifications and as per schedule
Component
Supplier • Significant reduction in cycle times for parts procurement
• Reduced inventory carrying costs

Supply Supplier
Management Collaboration
• Savings in storage space / rent
Kitting Service • Reduced down time

Provider
• Reduction in labor hours
Build-pack
Assembly
• Increase in throughput
• Cost reduction in parts procurement
• Technical inputs to increase standardization and reduce

Order Management JIT Delivery parts cost
New Tool Replacement

Assembly Demand
Source: TVS Logistics Inputs
AVALON
Our interviews indicate that the concept will take time to catch up in India owing to
largely internally developed parts and existing supplier relationships
Respondent Voices: Concept of Press Tools Kits for New Tools
“We get the dies imported from Japan… the tooling is 50% in-house, and 50% outsourced… since the die takes 4 months for delivery, the
tooling elements procurement has not been a bottleneck… there was only one case of part misalignment about 2 years back which
created a problem, but otherwise we do not have an issue…”
- Mahindra
“We develop our tools in-house… the dies are outsourced… most of the elements except Pillars, Bushes, Nitrogen Gas Springs and Ball
Cages are non-standard, and we make it in-house… these parts are also supplied by players like Fibro and Misumi… their service is good…
the non-standard parts are made in-house or procured locally… we haven’t felt any need to standardize… our operations do not require an
aggregator”
- Wheels India
“We take about 18-24 months to develop our tools… but the long lead time is due to the simultaneous engineering in our new models…
the parts procurement lead time is not a constraint as we do most of our tooling in-house… since many of our parts are non-standard
designs, the concept of an aggregator will not work for us…”
- Tata Motors
“We get many of the parts from Misumi… earlier we used to deal with Misumi Japan… now they are present in India… Misumi India takes
longer than Misumi Japan, but the lead times are manageable… we don’t see a major gap in product / service offering”
- JBM Ogihara (manages tooling for AL)
“We do not have any tools in our facility… the tools for our pressed parts are developed by our suppliers… they mostly develop the tools
in-house… the standardization is low… we also push them to lower costs… so the opportunity for premium services is low…”
- Delphi TVS
Source: Avalon Consulting Research AVALON

In the replacement application too, customers are holding spares stocks and appear
less inclined to use an aggregator
Respondent Voices: Concept of Press Tools Kits for Replacement
“I don’t think we would like to use such a service at least for now… the spares we carry is very low… only about Rs. 2 crores…
and depending on an external supplier for such critical parts would not be acceptable… the cost of downtime is very high…
we prefer to hold stocks of spares…”
- Renault Nissan
“The concept of standard spares kits is interesting… but the suppliers might face the entry barriers to this as the market is
already established for such standard spares…. the OEMs will not directly build the trust on such new suppliers.”
- Maruti Udyog Ltd.
“We do most of our tooling in-house… not sure such a concept will work”
- Tata Motors
“Most of our tooling is done at the JBM unit… they (tool supplier) also take(s) care of the parts supply…”
- Ashok Leyland
“Our consumption is less, but the standardization potential is high… a kit aggregator could be useful in the future”
- TAFE
-“We have already established relations with tools suppliers over the years…. an intermediary like an aggregator / kit
supplier is not very useful…”
- - TVS Motor Company
Source: Avalon Consulting Research
AVALON
However, there could be an opportunity in working with Indian OEMs to drive the
conversion of OEM standard tooling elements to global standard elements
Opportunity in Indian OEM Standard Parts

• The genesis of global standard parts is from the OEM standard parts:
“the origin of the standards is usually the OEMs…. Once they develop a new dimension, it is known in the
market as a particular part number (usually provided by the OEM)… then its for anybody to use… that’s how we
have also developed our products..”
- Misumi
• Players like Misumi were instrumental in developing the standard parts as a separate business opportunity
“Three or four decades ago... Component procurement required long lead times and entailed considerable lead
times… small lot production made component manufacturing inefficient and quite costly… Misumi’s business
model revolutionised component procurement… we partnered with small scale component manufacturers
scattered across Japan and began catalog sales… we standardized many components previously available
only through special orders and listed them in our catalogs…”
- Misumi Annual Report 2008
• While players like Misumi have significant first mover advantage in global standard parts, there could be
opportunity for a new player to replicate the model in India by cataloging the Indian OEM standard parts
AVALON
Consulting
69
Our quick research also indicates that Asia is emerging as a supply hub for tooling
elements
Respondent views on Asia as a supply hub for press tools parts
“All the press tools components for Nissan cars come from Japan, Thailand and China… these countries even
service our US and Europe operations… they are not likely to shift out tooling from these countries till there is cost
advantage…”
- Renault Nissan
“We have got Renault press tools components from France, Japan and Thailand… Asia is increasingly supplying
press tools for Renault’s global operations including Europe and US… the focus is on cost reduction, and these
countries provide equivalent quality at significantly lower costs… ”
- Renault Nissan
“Honda has a dedicated tool room in Thailand.. They cater all the major tooling requirements across the globe out
of Thailand…”
- Honda Siel India Ltd.
AVALON
This is also corroborated by the feedback available from the Western tool building
industry on the Asian threat
Prominent Trends in North American and European Tooling Industry
“While US Companies supply approximately 70% of the domestic demand for industrial tools, dies, and molds, foreign
competition, primarily from Japan, Canada and Germany, as well as China is shrinking the domestic demand for US
products…a large challenge faced by the US tooling firms is the continued weakness of US automakers, particularly GM and
Ford… about 50% of all domestic tooling is produced for the “Big Three”…it has been difficult for US companies to enter the
supply chain of foreign carmakers…”
- International Trade Administration, Department of Commerce, USA, 2009
“America’s tool and die industry is in danger of going the way of our shrimping industry…. our tool and die industry is rapidly
disappearing…In Michigan, about 34,000 tooling jobs have vanished in the last five years, according to state labor data…The National
Tooling & Machining Association (NTMA) reports that about 30 percent of the country’s toolmakers have gone out of business since 2000
and many more are expected to follow.”
- “Losing America’s Livelihood”, by William F Jasper, The New American, 2004
“Domestic TDM (tools, dies and molds) sources are being pressed to meet the “world price” for tools or risk losing their bids…
winning bids often include tools made in “low cost countries” (LCCs).. The price advantage of outsourcing tools (is) 20 to 35%
lower than prices offered by Michigan tool shops….most notably, costs are reported to be lower in China, Korea and
Thailand… new cost reduction targets (for tooling by OEMs) are approaching 50% (from 5-10% earlier)…”
- Study titled “The World Class Tools Shop and its Prospects in Michigan”, Center for Automotive Research, Michigan
Manufacturing Technology Center, 2006
“In the recent years, the long established European Tooling Industry has been facing a fierce competition from new emerging
export oriented manufacturing countries (notably from Asia) Most important driving factor has been lower production costs…”
- Eduardo J C Biera, Joaquim Menezes, “The Tool, Mould and Die Sector and the Automotive Industry”, 2005
Thus, an Asia presence will be valuable for a US based aggregator to diversify the business in line
with emerging growth trends. However, there needs to be adequate protection for the base US
business while this diversification happens
AVALON
Roadmap
Introduction
Conclusions
Annexure
AVALON
The opportunity to supply standard press tool parts to support new tool building in
the Indian automotive segment appears to be attractive
Key Conclusions – Market Size
• The overall market for press tools in India is about Rs. 5550 Cr.; automotive segment dominates with 99%
share
• The standardizable components in press tools is largely limited to the tooling elements; a significant part of the
tooling elements is still customized
• Consequently, the addressable market for standard press tools in the automotive and consumer durables
application in India is valued at over Rs. 500 Cr. Of this, the opportunity in consumer durables is negligible, and
not worth pursuing
• The automotive segment’s addressable opportunity is ~ Rs. 500 of which almost 90% (Rs. 450 Cr.) is in new
tools
• About one-third of this opportunity is in OEM standard parts, whereas the rest is in global standard parts
• The trends in the industry favor standardization and the opportunity for standard tools is likely to increase in the
future
• Thus, the market opportunity for standard press tool parts in India is attractive
AVALON
The proposition of an aggregator for global standard parts is already being
addressed in the Indian market and TVS will need to compete and take a share of this
opportunity – preliminary feedback on kitting has not been encouraging
Preliminary Conclusions – Opportunity for the TVS Proposition

• The market for OEM standard parts (about Rs. 160 cr.) is currently being served by:
– Captive production by OEMs (for OEM standard parts, especially the Indian OEMs)
– Tool rooms of component suppliers
– Focused tool rooms
• The larger opportunity (Rs. 330 cr.) in global standard parts is being serviced by:
– Focused tool rooms / aggregators in India
– Imports by foreign aggregators such as Fibro, Misumi etc.
• The competition from players like Misumi is formidable considering the strength of their catalog (300,000 parts),
and their first mover advantage in India, which is primarily a Japanese OEM market
• The customers of standard parts already have established relations with these suppliers and there is no
apparent gap felt in the market
• Hence, the concept of kitting and aggregation did not find resonance based on our preliminary interviews with
OEMs and tool rooms
• Thus, this concept may require to be better articulated in terms of the benefits after a more in-depth analysis of
customer needs and practices and inputs from the US entity
• However, there is a large enough market for standard parts which is being serviced by third party aggregators
and hence prima facie, India is an attractive market
AVALON
Roadmap
Introduction
Conclusions
Annexure
1. Investment break-up for a new model by parts class
2. New Models and Facelifts in 2009-10
AVALON
Annexure 1: Break-up of investments on press tools for a new model by A, B and C
Class parts
Investments in Press Tools for a New Model by Parts Class
Investment in Press Tools by Class of Part (%)
100%
13% 10% 10%
90% 17%
32%
80% 25%
30%
70%
60% 50%
60%
50% 35%
40%
65%
30% 60%
20%
33% 32%
27%
10%
0%
Class A Class B Class C

Roadmap
Introduction
Conclusions
Annexure
1. Investment break-up for a new model by parts class
2. New Models and Facelifts in 2009-10
AVALON
Annexure 2A: Launches and Facelifts in 2009-10: Cars*
Car Model Launches and Facelifts 2009

OEM Model Launched Facelifts
 Ritz
 Swift (domestic)
Maruti  A-star
 Alto(domestic)
 WagonR
 Nano (Launched in March 2009 – considered for estimation)
Tata Motors  Aria
 Indigo Manza
M&M  Scorpio
Hyundai  I20  Verna
 Beat
GM
 Cruze
Ford  Figo  Endeavor
• City
Honda  Jazz
• Civic
Nissan  Micra
Mitsubishi • Lancer
Total 12 8
Total Domestic 3 1
* Note: Only models manufactured or assembled in India have been considered
Source: Annual Reports, Company Web Sites, Press Reports

AVALON
16/11/10 RS/pd Consulting
78
Annexure 2B: Launches and Facelifts in 2009-10: Two-wheelers*
Two wheeler Model Launches and Facelifts 2009

 Pulsar 135CC
 Pulsar 150CC
Bajaj  XCD 135 DTS-i
 Pulsar 220
 Discover 100 CC
 Karizma Fi
 CBZ Xtreme
Hero Honda  Passion Pro
 Splendor NXG
 Pleasure
 R6
Yamaha  Fazer  R125
 FZ-S
 TVS SR125
 Apache RTR Menace
TVS  TVS wego
 Scooty streak
 TVS Jive
 Activa 110
 Aviator 110
Honda
 CB Twister
 CBF Stunner
 Rodeo
M&M  Duro
 Flyte
Suzuki  Suzuki GS150R
 Classic 350 CC
Royal Enfield  Bullet Electra 350cc
 Classic 500 CC
Total 19 11
Total Domestic 11 9

AVALON
79
Annexure 2C: Launches and Facelifts in 2009-10: 3-Wheelers*
3 wheeler Model Launches and Facelifts 2009
Atul Auto Atul Gem
Bajaj RE600
 Alfa
M&M
 Champion
Total 1 3
Total Domestic 1 3

AVALON
80
Annexure 2D: Launches and Facelifts in 2009-10: CVs*
CVs Model Launches and Facelifts 2009

 Maxximo
M&M  Gio
 Mahindra-Navistar range of trucks (domestic)
 Magic
 "World Truck" range of trucks (4 models)
Tata Motors  Tata 407 Pickup Marcopolo buses
 Super Ace
 Xenon XT (domestic production)
 Ultra low entry (ULE) bus

AL
 3116
Eicher  E2 Plus’ series of light and medium duty trucks.
Total 11 1
Total Domestic 11 1

AVALON
81
Annexure 2E: Launches and Facelifts in 2009-10: Tractors*
Tractors Model Launches and Facelifts 2009
M&M Yuvraj-215
Total 1 0
Total Domestic 1 0

AVALON
82
END OF PRESENTATION
AVALON
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Demand Analysis: Auto Segment

Demand Analysis: Consumer Durables

Opportunity for a Value Added Logistics Intermediary

Automotive Consumer Durables

Automotive Consumer Durables

No. of new Launches / Facelifts

Investments in New Tools per New Model Launch / Facelifts

Total Demand for New Tools in India

% Share of Standard Tools in New Tools

Demand for Standard Tools in New Tools

% Share of Domestically Produced New Tools

Estimate of the Addressable Market Opportunity

Spends on Standard Replacement Spares per Replacement Cycle

Average No. of Vehicles Produced per Replacement Cycle

Replacement Spends on Standard Spares per Vehicle

No. of Vehicles Produced

Addressable Replacement Demand for Standard Spares

Secondary Research Primary Research

 Internet research  Automobile OEMs and Tier 1 suppliers across car,

 Avalon’s internal knowledgebase  Interviews with consumer durables manufacturers

Consumer Durables Tier I & II Component

• AL Nissan • Blue Star • ASAL • Godrej • Misumi India

No. of new Launches / Facelifts

Investments in New Tools per New Model Launch / Facelifts

Total Demand for New Tools in India

% Share of Standard Tools in New Tools

Demand for Standard Tools in New Tools

% Share of Domestically Produced New Tools

Estimate of the Addressable Market Opportunity

New Launches and Facelifts by Automotive Segments (2009-10)

New Launches Facelifts

Average Investment (Mode) 8

Minimum Investment Average Investment (Mode) Maximum Investment4

Minimum Investment Average Investment (Mode) Maximum Investment

Source: Expert Interviews, Avalon Consulting Analysis AVALON

Market for Press Tools in India (FY2009, Rs. Cr)

12/8/21 (72%) 12/8/21 (25%) 109(2%) 5450

12/8/21 12/8/21s 12/8/21

Source: Avalon Consulting analysis

The share of 2-wheelers, 3-wheelers and tractors is negligible AVALON

No. of new Launches / Facelifts

Investments in New Tools per New Model Launch / Facelifts

Total Demand for New Tools in India

% Share of Standard Tools in New Tools

Demand for Standard Tools in New Tools

% Share of Domestically Produced New Tools

Estimate of the Addressable Market Opportunity

Which are the parts that can be

What is the share of these parts

What is the total

What is the extent of

What is the overall market

We will walk you though the findings in each step AVALON

Which are the parts that can be

What is the share of these parts

What is the total

What is the extent of

What is the overall market

Essentially customized parts Parts that can be standardized