Overview

Used predominantly where CNC machines are being operated Auto industry major user - 65% of market MNC dominate in carbide tools; and domestic units in HSS tools Competition between HSS and Carbide Tools exists

Select HSS Tools : Market

HSS Tools used where CNC machines are operated. User segments - Auto and Auto Components, General Engineering Around 70 players

- 50 small units; local presence; market share < 5% ; sales mostly in special type (Bindu Tools, Citizen Tools, Dagger Master) - 15 regional players; limited to few HSS tools; sales mostly standardised; market share around 10% - 5 national players; focus on large/ medium customers with quality products and well-set dealers; have 85% of the market (Addisons, ITM, Forbes Gokak, SRP and Cromwel-Miranda)

Imports negligible - restricted to taps and reamers from Japan & Germany. Individually, reamers and taps have fastest growth rates; overall growth at 14%.

Select Carbide Tools

Major Tools

Market Value (Rs. Crs.) Value (US $ mln) 3.0 3.3 0.5 1.9 2.3 2.8 2.8 5.6

No. of Players

Key Players

Delta Drills Solid Carbide Drills Burnishing Drills Ballnose End Mills Solid Carbide End Mills Brazed Carbide End Mills Reamers Milling Cutters

13 14 2 8 10 12 12 24

Only 2 Crowded 3 Crowded (Org & Unorg). Organised only Many Crowded (Org & Unorg.) Few

Sandvik, Sumitomo Widia, Drillco-Hertel Widia, L&T, Iscar Sandvik, Widia, J. Bajaj, Forbes, Iscar Widia Widia Widia Sandvik, Widia L&T Iscar, Drillco-Hertel

Carbide Tools: Industry Characteristics

Carbide tools are predominately used where CNCs machine are operated Around 46 players 20 small players; local presence; very limited range; direct sales 12 regional players; limited tool range; focus on brazed tools; direct sales (Carbtools, J. Bajaj, Addison) 4 major players with national operations; extensive tools range; focus on large and medium customers; well-set distribution network (Sandvik Asia, Widia, Drillco-Hertel, L&T-Iscar) Imports mainly in Solid Carbide tools (40%); major brands - SECO, SGS, Beck, Harroun, Sumitomo Products usually standardised customer-wise - no industry standards

Sales driven by tool performance, tool quality / life and cost vis--vis usage.

Diamond Tools : Industry Characteristics Market size estimated at Rs. 180 crs. (US $ 41.9 mln) Main users - Engineering (Rs. 40 crs. US $ 9.3 mln) and Stone (Rs. 140 crs. US $ 32.6 mln) Engineering industry consumes diamond dressers (45%), diamond/ CBN wheels 25%, PCD/ CBN Tools 10%, diamond honing sticks 9% and others 6%, in value terms.

Major users - Auto and Auto components (33%), Tool rooms (10%), other Cutting Tool makers. Stone industry, comprising granite and marble, consumes integral saws and blades (75%) and diamond segments (25%)

Granites units consume 60% of diamond tools. Other user industries - Oil & Gas, Gem polishing, FHP Motor parts, Ceramics and Electronics Major Players - Wendt India, Winter Misra, Bukhanwala Diamond, Van Moppes, Grindwell Norton Exports - mainly of wheels and dressers, estimated at Rs. 3 crs (US $ 0.7 mln) FY98. Wendt India and Bukhanwala are large exporters. Smaller players also export. Imports common in stone industry (by granite EOUs); Total imports estimated at Rs. 25 crs. (US $ 5.8 mln) FY98

Features Key Success Factors Delivering customised products - meeting customer specifications, with minimum lead time Maintaining quality standards, consistently Product development efforts, to meet new demands Efficiency in operations to remain cost-competitive

Market Characteristics

Wide tool variants - coated/ uncoated, with/ without centre cutting, regular and microfine grades etc. Higher the level of customisation, higher the lead time Product quality levels inconsistent, necessitating imports (30% demand met through imports); overseas quality products available in wide range and at competitive prices. Competition between HSS tools and carbide tools Trend shifting towards carbide tools usage 60-70% of sales are direct; rest through dealer network (predominantly each deals in single brand) Users - Automobile and Auto components, Gem and Jewellery manufacturers, Capital Goods sector Stone industry etc.

Future

Delivery schedules - High levels of customisation requiring longer lead

time. Imports perceived faster. Threat from imports also on quality and price grounds - grey imports prevalent Lack of R&D efforts - Product development efforts minimum. Improving product range to offer Total Solutions vital for survival. Reduced off take by user industries to cut down on tooling cost - directly impacts sales volumes Competition in-house - HSS tools and carbide tools pitted against each other

Business Concerns

Demand Drivers

Economy performance Performance of user industries Fresh investments in user industries, especially auto and auto components
(influx of foreign car makers) to spur demand for high quality toolings Expected indigenisation by foreign units

Future

We estimate the industry to grow at 10 - 12% in the next 5 years.

Summing up Well established industry, with a wide product range; expected to grow alongwith fortunes of auto industry.