Assignment

Situation: The Partner of your consulting firm calls you at 9:00AM on

a Monday morning and the conversation goes like this:
Partner: Hey Neha, I have a client meeting on Tuesday, tomorrow,
and I was wondering if you could help me.
You: Sure, Rishabh, what would you like me to prepare for you?
Partner: I am trying to prepare an overview of the client’s market. It
would give me a good idea of the entire market space and where my
client plays and what are the industry dynamics. I sent some
information request to the analyst and he sent couple of emails with
a lot of data. I am going to forward all the emails to you. Can you
please try to make some powerpoint slides and show me the market
overview?
You: Certainly, I will go through all the data and send you my
summarized understanding.
Analyst Email 1: Rishabh, in your email, you had mentioned that the
client is a player in the compressor industry and you had asked me to
prepare an overview of the compressor market in India. I did some
research and let me shoot you some mails with data that I was able
to collect. Compressors are used in 2 types applications, air-
conditioning and refrigeration. Air-conditioning means that the
compressors are fitted in room split a/c, light commercial a/c that
are used in shops and small offices, and large a/c that are used in
malls, movie halls and large offices. For refrigeration, compressors
are fitted in domestic refrigerators and they are also used in
commercial applications like (freezers, cold storages, milk cooling,
poultry storage etc).
I found that there are few compressor types: rotary, reciprocating,
scroll, semi- hermetic, screws, centrifugal. These are various
technologies. I also found that rotaries are mostly used in room split
a/c and domestic refrigerators. The reciprocating types are mostly
used in commercial refrigeration. The scrolls are more widely used –
both in a/c and refrigeration. What I found is that scrolls are mostly
used in light commercial and large commercial application. Scrolls
are also used in refrigeration. The semi hermetic is exclusively used
in commercial refrigeration. The screws are used in refrigeration.
The centrifugal are used in large air-conditioning systems.
In my next mail, I will quickly try to grab some more data.
Analyst Email 2: I found that there are 10 compressor makers in
India. Due to confidentiality, I will call them as A1, B2, C3, D4, E5, F6,
G7, H8, I9, J10.
In the rotary segment, there are 3 compressor makers. The total
size of the segment in terms of value was about INR 150 crore in
2019. The market growth was robust in the past 3 years, and the
growth CAGR was 7%. Due to Covid, the demand has fallen, and
talking to some industry experts, I am forecasting about 5% CAGR
growth in the next 3 years. In this rotary segment, your client A1 has
0% share. The market shares of the other companies are: B2 = 50%,
C3= 30%, F6 = 20%.
In the reciprocating segment, there are 3 players, your client A1, and
D4, E5. The size of the segment is INR 100 crore in 2019.
Surprisingly, I found that the last 3 years market growth CAGR was
only 2% and the forecasted CAGR is 1%. Your client A1 has 50%
share, D4 = 15%, E5= 35%.
In the scroll segment, there are 5 players. All the scrolls are
imported from either China or Thailand. The segment size is INR 200
crore, Last 3 years growth has been 8% and the forecasted growth is
9% (kind of strange given the Covid scenario). You client A1 has 40%
share, B2 = 10%, C3=10%, D4= 30%, F6=10%
In the semi hermetic segment, which is mostly used in refrigeration,
there are 2 players. The size of the segment is INR 75 crore. Your
client A1 has 55% share, G7 = 45%. The segment CAGR for the last 3
years was 6% and the forecasted growth rate is 7%.
In the screw segment, there are 3 players. Your client A1 has 0 share.
Other players are G7 = 45%, H8 = 35%, I9 = 20%. The size of this
segment is INR 55 crore. Segment growth has been 5% and
forecasted growth is 9%. I tried to deep dive in the forecasted
growth and it seems related to the government spending in this
segment.
In the centrifugal market, there are 2 players: I9 = 55% share and J10
= 45% share. The segment size is 60 crores. Past 3 years CAGR is 7%
and forecasted CAGR is 5%.
I am going to talk to a few industry experts and get back to you in the
next mail. I was unable to put all these data in a proper way as I am
in a car and using my smartphone to punch all data.
Analyst Email 3: It seems that the market is going to consolidate.
There are 10 player and they are way too many. The market
profitability is very low and some players are bleeding. The larger
players might go for some acquisition to consolidate the market. I
would suggest that you look at M&A with your client A1 and see the
strategic fit and then we can discuss about potential buy out
candidates.
Neha is good in slide making and she can put together all these data
in slides. Good luck on your meeting and please let me know if you
need any more information.