Cases

Assessing the Market and the Feasibility of Entering the Precision Stamped Tools and Components Market in India

Challenge

The client was a watch ‘dials and hands’ manufacturer supported by a captive tool room unit. With an expertise in precision tool manufacturing, it had started manufacturing tools and precision stamped components for other industries for over a year then. The top management wished to hive off the tool room into a separate profit center and expected a turnover of Rs. 25-30 crore and a profit of Rs. 8-10 crore in next 3-5 years, thus, the top management requested UC to:

  • Asses the market size for precision tools and components
  • Asses the competition scenario
  • Estimate the investments need to be made in machinery and people over a period
  • Make financial projections under different scenarios

Our Approach

UC took the following steps for this project:

  • Identified the industries with an application of precision components
  • Conducted primary research with:

    1) Design heads / product development heads of original equipment manufacturers (OEMs) to understand the current and future application of precision components in different parts

    2) Parts manufacturers to estimate the current and future quantity usage of precision components, the average tool life and the trends of outsourcing

    3) Manufacturers of precision tools and pressed components to understand the infrastructure, current target segments and geographies and future outlook

  • Estimated the target market for precision tools and pressed components for different components in each industry
  • Identified and evaluated the strategic market options and strategic service options
  • Build the financial model which included:

    1) Revenue and profit under different scenarios

    2) Manpower and machinery requirements in each scenario

    3) Net present value (NPV) and breakeven in each scenario

  • Outlined key risks and mitigation strategies for the same and developed a detailed implementation plan for business plan.

Impact

The client received deep insight into the future market opportunities for precision components and an identification and evaluation of strategic options for risk mitigation and building a financial model.