imacs capabilities - automotive sector 2013imp
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Capability StatementAutomotive Sector
2013
ICRA Management Consulting Services Limited
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IMaCS - An introduction
ICRA Management Consulting Services Limited (IMaCS) is a multi-line management consulting firm
headquartered in India. It has an established track record of 17 years in management and development
consulting across various sectors and countries. IMaCS has completed more than 1200 consulting
assignments with about 600 clients and has worked in over 40 countries across the globe. IMaCS is awholly-owned subsidiary of ICRA Limited (ICRA), one of Indias leading credit rating agencies. IMaCS
operated as an independent division of ICRA till March 20051, when it was de-merged from ICRA and
became a standalone company in its present form.
About Group ICRA
Launched in 1991, ICRA has been set up by a number of prominent Indian financial institutions, banks,
and insurance companies. In September 2001, Moodys Investment Company India (Private) Limited, a
100% subsidiary of Moodys Investors Service, USA, became the single largest shareholder in ICRA. Post a
successful IPO in 2007, ICRA is a publicly listed company. ICRA has subsidiaries in Indonesia and Sri Lanka.
Group ICRA comprises four businesses,
namely, Credit Rating, Management
Consulting, Information Technology,
and Outsourcing, offered by four
different companies comprising ICRA
and its three subsidiaries, namely,
IMaCS, ICRA Techno Analytics Ltd.
(ICTEAS) and ICRA Online Limited. ICRA
is listed on the National Stock Exchangeand the Bombay Stock Exchange in
Mumbai, India.
The main driver for IMaCS growth has been a growing need for unbiased professional views on adopting
best business practices arising from
economic deregulation, deepening of
international trade and integration,
increasing uncertainty in business due to
advancement of technology and rising
volatility in the market place, and the
compelling need to be globally
competitive. IMaCS began as a firm
operating in India and has since worked
in several parts of the world on its own
1Under the name ICRA Advisory Services
IMaCS Virtus
Global Partners, Inc.
GROUP ICRA
Credit
Rating
ICRA Management
Consul t ing Services
Limited
Management
ConsultingIT
(Software)
BPO
ICRA Limited ICRA Techno
Analyt ics Ltd.ICRA Online Ltd .
ICRA Techno
Analyt ics Inc.
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and through strategic partners. Our clientele includes banks & financial service companies, private
corporates (manufacturing and service organizations), governments, government-owned organizations,
financial investors and fund managers, regulators, and multilateral agencies. Our New York based
subsidiary, IMaCS Virtus Global Partners, Inc. (www.ivgpartners.com) offers Strategy and Transactional
Advisory services to companies in North America and in India seeking to operate in the Indo-American
corridor.
Through the process of carrying out several assignments over the past 17 years, IMaCS has accumulated
considerable analytical and consulting expertise, backed by the following organisational capabilities:
An extensive and organised database on several sectors.
Knowledge of key factors of success in different projects and program.
An ability to research emerging global trends, both in specific countries as well as in different sectors,
based on primary and secondary data.
Performance benchmarking
Quantitative and financial modeling
Ability to identify the various types of risks and suggest appropriate strategies to mitigate the same
Ability to work in different geographies on its own and through affiliate partners
IMaCS Business Groups and Practice Areas
IMaCS has six practice areas grouped
under Strategy, Risk Management,
Process Consulting, TransactionAdvisory, Policy Advisory, and
Capacity Building. The different
business groups and practice areas
within IMaCS form our matrix of
service offerings. Multi-disciplinary
teams are used on most assignments.
The diversity of experience in IMaCS
teams helps it to adopt a creative and
cross-functional approach to problem solving, which has not only been very successful in practice, but
has also been well appreciated by all our clients.
Most consultants at IMaCS have advanced academic degrees and also have experience in reputed firms
before joining IMaCS. Both freshers and experienced consultants undergo formal and informal training in
IMaCS to deliver high quality solutions to clients. IMaCS clients also have the benefit of the considerable
organisational expertise that IMaCS has built up over the past 15 years.
Strategy
Risk
Management
Enhancing Competitiveness / Market Assessment / Product development/
Market Intelligence / Profit improvement
Credit Risk / Market Risk/ Operational Risk / Enterprise wide Risk management/
Risk Analytics/ Risk Software
Transaction
AdvisoryM&A / Due diligence / Project Advisory / Bid advisory / Financial restructuring
Policy&
RegulationPolicy Advisory / Regulatory Economics / PPP Models/ Governance
Process
Consulting
Cost reduction / Process re-engineering / Organisation design /
/ Supply Chain Management / Outsourcing
Capacity
Building
Investment Institutional Programme Sustainable Monitoring
Climate Strengthening Management Development & Evaluation
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Services offered by IMaCS
IMaCS has executed assignments in several sectors of the Indian economy and its consulting
activities are organised along five major functional groups:
1. The Banking and Finance Group focuses on assisting banks and financial service companies in the
areas of Strategy, Risk management, Process improvement and Transaction advisory. Our services
span the areas of M&A, purchase/sale of portfolios, setting up risk management systems across
credit/ market/ operations, strategic and business planning, organisation design and restructuring,
developing credit and portfolio risk models, derivatives strategy, corporate debt restructuring,
developing risk control processes and profit improvement studies. Besides providing consulting
services to banks, IMaCS also develops and installs software programmes in the areas of risk
management and workflow automation related to credit management. IMaCS also designs and
conducts a variety of training programmes in risk management for banks and other financial service
organisations.
2. The Corporate Advisory Group focuses on enhancing the competitiveness of clients across the
different constituents of its value chain. Its work has spanned multiple sectors and industries, with
strong expertise and experience in certain sectors such as, metals, automotive and engineering,
healthcare, hospitality and tourism, textile, retail, consumer goods and food processing. Specific
areas of consulting include competitiveness studies at firm/industry/region/country levels,
shareholder value maximisation, business process design and improvement, entry strategies and
product positioning, enterprise-wide risk management, evaluation of acquisition or divestiture plans,
and transaction assistance (e.g. partner search, valuation, due diligence, structuring deals and
business and financial restructuring).
3. The Infrastructure Group focuses on policy and transactional projects in the areas of sector reform
and restructuring, creating public private partnerships, and building capacity in government and
public sector institutions. At the policy level, IMaCS seeks to serve regulators, governments and
multilateral agencies in formulating or refining sector-wide policy issues such as licensing, regulation,
business rules, competition, tariffs, service level obligations, and subsidies. At a transaction level, the
Group has accumulated substantial experience and skills in handling engagements related to
regulatory representations, financial modeling, structuring payment and security mechanisms,
designing project contracts and concession agreements, and providing assistance in financial closurefor various infrastructure projects.
4. The Energy Group focuses on strategy, policy and transactional issues related to the Electricity,
Renewable energy, and the Oil and Gas sectors. The Group has garnered significant expertise in the
restructuring and reform process in the electricity sector by having been associated with multiple
entities such as the government, regulators, state owned and private power companies since the
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beginning of the reforms process in the sector. Our services in the energy domain encompass
regulatory assistance to utilities and regulatory commissions, restructuring and privatization,
formulating strategies and business plans for utilities, conducting market assessment studies for
investors/utilities, providing assistance to developers/project appraisal/project risk assessment, and
investment and transaction assistance. IMaCS has also assisted Indian and international business
groups in formulating strategies to enter the energy business. IMaCS has completed several projects
in the renewable sector covering diverse technologies such as wind, hydro, co-generation, and
biomass, and has also worked on policy level assignments.
5. IMaCS Development Consulting Group has emerged out of IMaCS experience in working with
profit-seeking organisations and investors that the principles and practices that commercial
enterprises follow are just as applicable for organizations working in the not-for-profit, government
and social development. The significant difference between for-profit and not-for-profit
organizations is essentially in how they are funded and/or in the expectations of returns of their
respective sponsors. As far as operations or efficiency is concerned, there should not be too muchdifference between the ways they work, if they are to be successful. The quest for strategic clarity,
operating efficiency, and financial sustainability remain the top priorities for senior management of
all kinds of organizations, spanning from profit-seeking enterprises to not-for-profit organizations in
the development sector. IMaCS works with governments at various levels national, state or local
government - in a bid to help them become more effective in achieving their objectives. Our clients
include Government institutions at central, state and local levels, bilateral and multilateral aid
agencies in India and overseas.
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Select Automotive Sector clients
Mahindra & Mahindra
TATA Motors Limited
Volvo India Private Limited
Hyundai Motor India Limited
Honda Siel Cars India Limited
Eicher Motors Limited
Escorts Limited
Apollo Tyres Limited
Cummins India Limited
IDIADA, Spain
Sumitomo Corporation India PrivateLimted
Roots Industries Limited
Toyota Kirloskar Motor Private Limited
Society of Indian Automotive
Manufacturers (SIAM) Automotive Components
Manufacturers Association (ACMA)
IMaCS Consulting Services in the Corporate Advisory Group
Our Corporate Advisory practice focuses on enhancing client competitiveness in all areas of operation.
We focus on how to improve a firm's competitiveness across its value chain for different industry sectors
such as manufacturing and services, as well as capacity building initiatives for the government and
government-owned organisations. Our service offerings are grouped across the functions of Strategy,Operations Improvement, and Corporate Finance.
Our clients include large and medium-size corporates, family-
run businesses, SME units, Central and State Government,
Government-owned undertakings, and national/state-level
industry associations. With in-house consultants and
partnerships with some leading industry associations like
Society of Indian Automotive Manufacturers (SIAM),
Automotive Component Manufacturers Association (ACMA),
Confederation of Indian Industry (CII) and India Brand Equity
Foundation (IBEF), the Corporate Advisory Group of IMaCS
enjoys the trust of a wide repertoire of clients.
While our work has spanned multiple sectors of the economy,
we have built up expertise and are more active in certain
sectors such as Retail and Consumer Markets, Automotive &Engineering, Metals & Mining, Education & Skill Development,
Tourism & Hospitality, Healthcare & Life Sciences, and Media &
Entertainment.
IMaCS has built a wealth of experience in the Automotive sectors over the last 10 years having
researched the sector and the trends, having assessed many of the leading entities therein, and by virtue
Strategy
BusinessStrategy/PlanFormulation
CompetitivenessStudies
Market/ DemandAnalysis
Location selection
studies Entry Strategies &Product Positioning
Enterprise-wide RiskManagement (ERM)
Opportunities in thenew free trade regime
Metals & Mining
Retail & Consumer Goods
Automotive & Engineering
Telecom & Technology
Media & Entertainment
Tourism & Hospitality
Corporate
Finance
Financial Restructuring Enhancing Shareholder
Value Assessing Investment
Risks Evaluating Acquisition/
Divestiture Plans M&A -Valuation, Due
Diligence & DealStructuring
Conducting PartnerSearch & Evaluation ofJV Partners
Brand Valuation
Healthcare & Life- Sciences
Operat ions
Improvement
Business ProcessDesign & Improvement
Cost reductionOrganization Design &
RestructuringSupply Chain
ManagementOperations &
Performanceassessment
Information & SystemsDesign
Evaluation of distributionnetwork
Customer relationshipmanagement
Service Offerings erticals
Education & Skills
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Growth
strategy
Marketing
strategy
Sales/channel
management
Operations
improvement
Riskassessment
and
management
of having interacted with industry associations on policy issues. We have worked with prominent entities
amongst vehicle manufacturers, auto ancillaries and vehicle finance companies. Our client list reads as
Whos who of the Indian automotive sector.
IMaCS offerings in the Automotive Sector
Our offerings for the automotive sector are in the following broad functional areas:
We help clients set the direction for growth through consolidation of existing
businesses as well as tapping new business opportunities (new products, new market
segments, new geographies, alliances, mergers & acquisitions).
We help clients put in place effective marketing organisations and processes that
aim at targeting attractive customer segments. Areas of work include competitivepositioning of brands, brand valuation as well as improving marketing mix
effectiveness. Our allied offerings include:
Customer Segmentation: We help clients identify and target profitable
customers as well explore new user groups
Product Innovation: We focus on optimizing product innovation processes in
order to increase new product success rate and improve customer satisfaction
by delivering value at acceptable price points
Pricing: We help clients identify and tap pricing opportunities, also implement
effective pricing processes.
We help clients design channel structure and management to enhance sales and
profit. Our areas of work include establishing and optimizing sales processes,
distribution footprint analysis and sales force effectiveness.
We help clients develop and execute their operations strategy with specific programs
to improve individual areas like procurement (vendor management, vendor
evaluation), manufacturing (outsourcing) and supply chain (inventory management,
rationalizing logistic costs, optimizing time-to-market)
We help clients manage the risk from counterparties like vendors,
dealers/distributors etc., by developing counter-party risk assessment models
through which they can evaluate and monitor the counterparty risk and make
appropriate changes to their business strategy. We also provide services to clients to
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Transaction
Advisory
put in place an enterprise-wide risk management system. Further we assist clients
manage their investment risks by evaluating these and suggesting appropriate
mitigation measures.
We help clients on strategy prior to an acquisition (this will typically includefinalisation of an acquisition strategy, funding strategies, and other issues such as
organisational implications, regulatory constraints, and legal requirements),
implementing an acquisition (short-listing candidates for acquisition, due diligence,
valuation, assistance in negotiation, deal closure, and post acquisition integration),
advising potential buyers on bidding strategies (e.g. during privatisation or M&A),
implementing sale of businesses / divisions (assistance in negotiations with buyers,
facilitate due diligence and valuation, and deal closure) and joint venture structuring
(partner search, risk assessment, facilitating due diligence, and finalisation of
agreement).
In the following section, we highlight some of the assignments that IMaCS has undertaken in the
automotive sector:
Impact of the FTA between India and Thailand on the competitive strategies of the client
Client: A large Indian automobile manufacturer
Description:
The client wished to assess the impact of the Free Trade Agreement (FTA) signed between India and
Thailand on its sourcing policies and marketing strategies. We were commissioned to evaluate the impact
of FTA on the operations of the company, suggest suitable sourcing strategies and identify import threats
and export possibilities.
Approach:
A study of this kind called for an understanding of the structure and characteristics of the automobile and
auto component industry in the countries under evaluation, the factors affecting competitiveness of the
automotive industry in these countries, the product characteristics, product range and pricing policies
and the current sourcing strategies of the OEM. We accordingly evaluated the following:
Structure, composition and characteristics of the Thai auto component and automotive industries
Competitiveness of manufacturing of components in Thailand vis--vis India
Budgetary quotations of about 50 components to be manufactured in conformance with the OEMs
specifications from Thai vendors and their price competitiveness vis--vis Indian manufacturers under
an FTA scenario
Prices of different vehicle categories in Thailand and their possible landed prices in India under an
FTA scenario
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Results:
We recommended possible sourcing strategies, identified import threats for the OEMs products and also
highlighted the companys export opportunities in certain vehicle categories.
Pricing exercise for a proposed new product
Client: Leading commercial vehicles manufacturer
Description:
IMaCS carried out an independent review to validate past findings resulting from the market research
conducted by the manufacturer on the price sensitivity, expected market shares and estimated demand
for the new product to be launched by the company.
Approach:
IMaCS conducted a conjoint analysis on the past market research undertaken and also did a primary
market survey in various cities to validate the past survey. Various transporters were interviewed for the
purpose. In order to estimate future demand, IMaCS created a demand modelfor commercial vehicles
using relevant variables. The results of the primary survey and the demand modelling was used to
determine the price sensitivity of the product as well as the market size and market share expected at a
certain price point.
Results:
Enabled the client to zero in on the price of the product as well as the product specifications.
Study to setup an Inspection and Maintenance model for vehicles in India
Client: International Centre for Automotive Technology (ICAT)
Description:
IMaCS was appointed to conduct a study and suggest a suitable Inspection and Maintenance (I&M)
model for vehicles in India. ICAT is preparing the blueprint for implementing I&M systems in India under
the aegis of the Union Ministry of Road Transport and Highways (MoRTH) and IMaCS study was aimed
at providing inputs for the same.
Approach:
IMaCS carried out the study in following three phases:-
Phase IAssessment of I & M requirements in IndiaIMaCS studied the existing in-use vehicle regulatory framework and certification process to identify issues
with the existing systems. Based on the data available, IMaCS evaluated the physical infrastructure
available to carry out vehicle inspection and certification. We then analysed the profile of in-use vehicles
in terms of age of vehicles plying, the technology levels of vehicles with respect to emission standard and
safety standards and the geographical distribution of vehicles. Based on this, the I & M requirements in
India were assessed and capabilities required to run the I & M centres were identified.
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Phase IIBenchmarking of I & M models prevalent in other countries
In this phase, IMaCS studied I & M models prevalent in the US, UK, Japan, China, Singapore, Spain,
Mexico and Dubai. Specifically, IMaCS reviewed the models that have been used to ensure road
worthiness of in-use vehicles, the governance and regulatory mechanism, the policy and legal framework,
and the strategies to control emission and meet safety standards. The key outcome of this phase was to
understand the best practices in various countries and draw upon them to implement an appropriate I &
M model for India.
Phase III Recommending an appropriate I & M model for India
The focus of this phase was to recommend an appropriate I & M system factoring the following:
Prevailing vehicle maintenance and fitness certification practices and profile of vehicles
Best practices in other countries that can be adopted to suit Indian requirements
Existing vehicle ownership practices (purchase, sale, used vehicles) and registration practices
Regulatory framework for the I&M system in India
Extent of decentralisation w.r.t. fitness certification, registration and related practices
Audit mechanism to ensure implementation of a robust I & M system
Layout of typical I & M facility
Sizing of investments and funding strategies that can be adopted
Pricing policy to be adopted for different vehicles
Viability of establishing and running the I & M center
Assessment of Market potential of Indian vehicles in ASEAN countries
Client: Industry Association
Description:
IMaCS was mandated to conduct an assessment of ASEAN (Thailand, Malaysia, Indonesia, Vietnam,
Philippines, and Burma) automobile market. IMaCS carried out an in-depth assessment of the market in
these countries, the key players and consumer preferences. The recommendations focused on the
opportunities available to Indian vehicle manufacturers in accessing the ASEAN market, investment
opportunities in ASEAN and strategy to be adopted by Indian companies.
Approach:
The project was conducted in two phases. In the first phase, IMaCS team visited the individual markets
and met industry participants including industry associations, auto companies, dealers and retailers in
order to gain an understanding on the current market size, structure, trends, competition, product
offerings and price points of automobiles in ASEAN market. In addition, the team met key government
officials to discuss regulations relating to investments and auto industry.
Results:
Projection of the growth in vehicle demand in each of the markets by developing appropriate
econometric models. IMaCS also identified the likely potential barriers to the Indian players and
recommended appropriate strategies for Indian automobile players to tap the ASEAN market.
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Preparation of comprehensive sector reports for the Automobile and Auto Component
Sectors of India
Client: A leading industry association initiative
Description:
The client wanted to prepare detailed sector reports on various sectors in India for showcasing Indias
capability to foreign investors. In this assignment, IMaCS with mandated to prepare 4 sector reports
including Automobile and Auto Component Sectors and several State reports. We prepared
comprehensive sector reports using primary and secondary research covering evolution of the industry,
analysis of the market, key players, products offered and latest trends in them, geographical spread of
the industry, changes in technology, drivers of growth, competitiveness of the sectors vis-a-vis other
competing countries, government support, and several other dynamics of the industry.
Assist in identifying target companies for investment, primarily in Pune, carrying out
engineering services for the auto sector
Client: A leading Spanish Auto Engineering Services group
Description:
IMaCS had been appointed to assist the client in identifying potential target companies that the client
could invest in India. The primary aim of the assignment was to identify the potential target Auto
Engineering Service provider companies in India which could be acquired by the client for establishing its
presence in Indian market as well as leverage on the cost advantage offered by India.
Approach:
IMaCS adopted a 2-stage process to assist the client:
Stage 1 Preparation of a database of potential target companies: The focus during this stage of theassignment was to identify companies that met the clients investment criteria and to profile them
based on information available in secondary sources and the public domain. IMaCS also provided its
recommendation on companies that could be shortlisted for further investigations and discussions.
Stage 2 Establishing initial contacts with shortlisted companies: Based on the inputs received from
the client, IMaCS established initial contacts with the shortlisted companies to gauge the interest in
the opportunity and sounded them out on the possibility of investment by the Spanish company.
Results:
The client used the study and IMaCS recommendation to hold advanced talks with the target companies
and develop their entry strategy for the Indian market.
Demand forecasting for CNG buses and understanding customer requirements
Client A leading auto component manufacture, India
Description:
The client wanted to estimate the size of various segments of passenger bus market, the changing
dynamics therein and demand drivers of CNG buses. The client later wanted to understand the
configurations of CNG components required by the customer
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Approach:
IMaCS approached the assignment in following modules
Module 1 Present state estimation of sixe of market of buses across various user segments. Conducted
an adequacy check of existing product offerings vis-a-vis customer requirements
Module 2 Identify the key demand drivers for CNG buses
Module 3 Demand estimation of buses across various segments over the span of 5 years i.e. 2010-15
Module 4 Analysed customer requirements so as to arrive at the desired configuration of auto-
component/product of the client
Detailed Project Implementation Report for setting up National Automotive Testing and R &D Project
Client NATIS, (Under the Ministry of Heavy Industry, Govt. of India)
Description:
Govt. of India proposed to establish state of the art automotive testing and research facilities to support
the growth prospects of the auto industry in India. NATIS mandated the consortium of consultants
(IDIADA of Spain, IMaCS and AVL of Austria) to prepare a detailed project implementation report for
establishing the test centres. The principal test centres are being established in Manesar (N.India), Pune
and Ahmednagar (W. India), Chennai (S. India). In addition a state of the art proving ground is being
proposed in Indore (Central India) and a hill driver training institute in Silchar (N.E. India) and a off road
vehicles and tractor testing facility in Rae Bareilly (N. India)
IMaCS primary role as a part of the consortium was to evaluate the market for testing services in India,
propose typical pricing for the key tests, size up the facilities in the various centres proposed, carry out a
detailed financial feasibility for the project and recommend an ideal management structures for the test
centres.
Approach:
Phase I (Market assessment phase) -
IMaCS team got responses from OEMs and auto component manufacturers in India through one-on-one
meetings and questionnaires on their present and testing requirements, details of testing facilities
available, test carries in-house and tests carried outside India. Based on the regulatory roadmap and
future product plans (new products and freshening plans) in India, the export potential of Indian
manufacturers, IMaCS estimated the market for testing services in India. The market for testing services
was developed lab wise and demarcated into developmental testing and regulatory testing as applicable.
Phase II
IMaCS sized up the various facilities in India in terms of what labs would be located in each location and
the capabilities / equipments of the various labs. To achieve this, IMaCS factored in the present testing
centres available in India and their capabilities, the footprint of OEMs in India and their testing centres,
the concentration of OEMs and the auto component manufacturers in India and the criteria that all the
major test centres should be similarly sized and have equal revenue generating potential.
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Phase III
IMaCS developed a model for evaluating the financial feasibility of the project (complete project and
centre wise). The consortium also made recommendation on improving the financial viability of specific
centres by recommending additional services that could be offered. The recommendations also focused
on defining a suitable organisation and management structure for the project that would ensure that the
centres function independently and free from governmental control, that they are professionally
managed and are able to attract talent on an ongoing basis.
Assessment of markets for filters and evolving entry strategy, India
Client: A Leading auto component group
Description:
The project includes assessing the Original Equipment Manufacturer (OEM) and after-market for filters
(oil filters, air filters and fuel filters) for use in automotive application and non-automotive applications in
India and evolution of an appropriate market strategy for entry into this market. The market was
analysed for automotive (cars, MUV, LCV, M/HCV) and non-automotive (earthmoving and stationery
diesel engine) applications. The study covers the assessment of key competitors, their market shares,
areas of strength and their performance in replacement market and finally recommending an entry
strategy for the client.
Approach:
Phase I:
The focus was to estimate the automotive market (OEM demand) for filters by considering a factor of
segment wise forecast based on econometric modeling and consumption norms for vehicle categories.
Similarly the replacement demand for filters was determined based on estimated replacement frequency
and total vehicle pool. IMaCS carried out a large scale primary survey consisting of more than 250 data
points, across 25 cities in India, targeted at various types of participants in the replacement market chain
including retailers, service centers, distributors and wholesalers, manufacturers and customers.
Phase II:
In the second phase, IMaCS estimated the size of the non-spurious replacement market in India based on
the inputs of Phase I and the primary survey conducted. IMaCS has also highlighted key trends in the
replacement market that would impact the performance of players in the future. Finally IMaCS has
recommended appropriate entry strategy for the client including approaches to enter the market, pricing
and product strategy, distribution network, strategies targeted at purchase influencers and commercial
terms.
Market Assessment of Commercial Vehicles Gearbox in India
Client: A leading Japanese auto-component manufacturer
Description:
The client was keen on capitalizing on the growth opportunity in the Automotive Industry in India by
introducing new products and entering new product segments. The clients asked IMaCS to evaluate the
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option of entering the market for Commercial Vehicle Gearbox market in India. Thus the client warranted
an industry analysis and demand estimation.
Approach:
IMaCS selected a top down approach for carrying out the study. At first, the Commercial Vehicles market
was analysed based on secondary data sources to size the market, understand the market structure, and
track trends, competition & product offerings in the market. Subsequently the future demand of
gearboxes was forecasted based on forecasted demand for vehicles. In the light of the forecasted data,
IMaCS studied the product plans of key OEMs, their broad gearbox specifications and their gearbox
sourcing patterns. At the end of the study, IMaCS presented estimated demand for gearboxes in different
segments.
Phase I: Industry Analysis
In this phase, IMaCS carried out an assessment of the gearboxes used by key CV manufacturers with an
aim to understand the broad product specifications, new products planned, capacity expansion plans and
sourcing strategies.
Phase II: Demand Estimation
IMaCS designed and conducted a primary survey at various dealerships in nine major cities, including the
four metros cities, wherein inputs were taken from dealership personnel on the mixes of various types of
gear boxes. The results of the survey were used as inputs to estimating model wise sales for various
gearboxes used by the CV manufacturers.
Market assessment of seatbelts
Client: A leading Japanese auto-component manufacturer
Description:
The client, a leading Japanese auto component manufacturer, recognised the potential of the automobile
market in India and desired to explore the possibility of entering the seatbelt market. The client
mandated IMaCS to identify the market potential for seatbelts for OEM sales in India.
Approach:
IMaCS approached the assignment in three phases.
Phase I Mapping the current and future market dynamics
In this Phase, IMaCS analysed the trends in the Indian automotive industry in terms of growth segments,
key players and feature content level of vehicles, regulations impacting seatbelt usage current and
likely future, profiled seatbelt manufacturers and identified their major customers, .
Phase II Forecasting the Indian auto market
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In this Phase, IMaCS developed an econometric model for future automobile demand based on factors
including disposable income levels, fuel prices, interest rates and duties and forecast the likely sales of
vehicles in the domestic market till 2010.
Phase III Assessing derived demand of seatbelts
In this phase, IMaCS assessed the timeframe of introduction of various seatbelt features in various
vehicle categories and estimated feature wise demand based on forecast of the auto sector and our
assessment of feature introduction.
Assessment of Replacement market for auto-batteries, India
Client: A leading auto-component manufacturer
Description
The client wanted to double its turnover in the span of 2-3 years by focusing on replacement market
thereby increasing its market share in the replacement market and also simultaneously developing the
market by changing its preference to branded products as against unbranded ones. Hence a thorough
assessment of the replacement market was warranted and accordingly IMaCS was to formulate a market
strategy for the same.
Approach
The study was conducted in four phases
Phase I Estimate the value of replacement market for auto batteries in India. Estimate replacement
frequencies for different categories of the vehicles and region wise market shares.
Phase II Map the purchase process of auto batteries, identify key purchase criteria and role of
influencers and various stakeholders in the process.
Phase III Assessment of client and its competitors on each purchase driver of the market.
Phase IV Formulation of market strategy based on strengths and weaknesses of client on the above
purchase drivers/criteria.
Assessment of Replacement market for other auto components, India
Client: Component Industry Association
Description:
Sales in the replacement market form a significant part of the total auto component industry turnover.
The industry association wanted to carry out an assessment of the size of the non-spurious replacement
market and identify the prevailing business practices, in addition to identifying key trends that would
impact the potential of this segment in the future.
Approach:
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IMaCS carried out the study in two phases i) evaluating the market for replacement parts and ii)
estimating the market for replacement parts. The first phase was aimed at gaining a thorough
understanding of the dynamics of the replacement market such as industry trends and characteristics,
customer behaviour, supply chain characteristics, prevalence of spurious parts and proportion of
imported parts. IMaCS carried out a large scale primary survey consisting of more than 1000 data points,
across 20 cities in India, targeted at various type of participants in the replacement market chain
including retailers, service centers, distributors and wholesalers, manufacturers and customers to identify
factors such as replacement frequency of parts, key purchase criteria, value addition and margins at
various parts of the value chain.
In the second phase, IMaCS estimated the size of the non spurious replacement market in India,
(presently and for 2010 and 2015) based on the inputs of Phase I and the primary survey conducted.
IMaCS carried out an in-depth analysis of the impact of key trends such as improvement in technology,
OEM component manufacturers relationship, FTAs etc on the market for replacement parts in the
future.
Competitiveness of the Indian Automobile Industry
Client: Two Auto-Industry Associations in India
Description:
The automobile industry worldwide is passing through a phase of consolidation and cost reduction. Auto
majors are looking at emerging markets like India and China in order to access new markets and create
low cost manufacturing bases. Keeping this in mind, two large automobile industry associations in India
engaged IMaCS to assess the competitiveness of the Indian automobile industry from the point of view of
manufacturing costs and to benchmark its performance with that of China.
Approach:
IMaCS conducted this study based on extensive primary research in India and China as well as secondary
research. IMaCS analysed the structure of the Indian and Chinese Auto Industry. The performance of the
Indian automobile and auto component industries were compared vis--vis that of China. The key drivers
of competitiveness for Indian OEMs and auto component manufacturers from the input side of the value
chain were identified and evaluated. These drivers were then benchmarked with respect to China to
arrive at the competitive strengths and weaknesses of the Indian industry vis--vis China. Accordingly,
IMaCS recommended interventions for the auto and auto component industry by the government and by
the industry.
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Preparation of Detailed Project Report for setting up an Apex Skill Development body for
the Automotive Sector in India
Client: Two apex associations of the Automobile Industry
Description:
The clients recognised that the need for skill development in the Indian Automobile Sector was
mandatory for its sustainable growth and took up lead in garnering cooperation and focus of various
stakeholders in ensuring human resource development. To this end, the client decided to set up an apex
body to focus on skill development for the automotive industry as well as coordinate the efforts of
various agencies in the area of skill development. IMaCS was mandated to prepare a Detailed Project
Report for setting up an apex body that would conduct research in the field of skill development,
establish standards and evolve a qualifications framework, and build a system to improve the quality of
training and its delivery in the industry. IMaCS completed the assignment using primary as well as
secondary research and came out with a report detailing the roles and responsibilities of the apex body,
framework of its operations, course offerings, organisation structure, manpower and infrastructure
requirements, project cost, streams of revenue, operational cost estimates, complete financial
assessment and the implementation roadmap.
Assistance in search/induction of an investor for a car leasing company
Client: Fast emerging leasing and transport solutions provider
Description:
The scope of work for the engagement was to assist the client in finalizing the business plan, identifying
suitable investors to participate in the fund raising exercise and the eventual consummation of the
transaction.
Approach:
We approached the engagement under two distinct modules.
Module 1: Structuring the investment
The focus of the engagement under this module was to complete the various activities necessary to
approach investors for raising funds. The starting point was to understand the strategic imperatives for
the client and the future business model. Subsequently, we fine-tuned the business model and finalised
the capital structure based on the pre-money valuation of the client to arrive at the premium for the
proposed equity stake that could be offered to the strategic investor.
Module 2: Induction of Strategic/financial Investor
Under this module, the focus was to conduct the process of managing the induction of the investor.
Based on the outcome of Module 1, we approached strategic/financial investors with an appropriate
pitch to enable them evaluate the investment opportunity.
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Business planning and valuation roadmap of an Auto Engineering Design Services company in India
Client A US-based investor having investments in the Auto Engineering Design Services company in
India
Description:
The client company, who had investments in an early stage Auto Engineering Design Services company in
India, targeted increasing the valuation of the subject company from 2 to 8 times its then valuation. The
client approached us to analyse the business and it current resources and chart out a clear valuation
roadmap for meeting its target. IMaCS used a top-down approach for carrying out the assignment. The
first step was to work out the requirements of target valuation in terms of the topline and profitability
required for reaching the desired range of valuation. In the next step, we worked out the business
requirements by scanning the market and identifying the opportunities to grow the business profitability
with the given resources and business strengths. IMaCS made a detailed matrix of the services that the
firm could provide in identified markets and regions. Based on the business plan, we laid down a detailed
implementation roadmap to operationalise the plan in terms of the marketing and sales strategy to befollowing, operational processes and resources to be developed, hiring and recruitment strategy, funding
requirement and options for raising funds etc. IMaCS then prepared a detailed financial model and
information memorandum to facilitate operationalisation of the charted business plan.
Study on the Indian Passenger Car Industry
Client: An all India Financial Institution
Description:
An all India financial institution appointed IMaCS to conduct a study on the Indian passenger car industry.
IMaCS was required to study the potential for passenger cars in India in various segments, assess thefinancial viability of integrated car manufacturing units versus assembly units, study the process of
indigenisation, and forecast the demand for the cars by segment.
Approach:
IMaCS analysed the policy framework governing the car industry, identified the key factors affecting the
demand and the issues in manufacturing and conducted a financial viability of the integrated
manufacturing units and assemble units. Since most of the manufacturing facilities were new, the
analysis drew on the experiences of Indo-Japanese joint ventures in the two-wheeler industry and LCV
manufacturers
IMaCS studied the experience of Maruti Udyog Limited, the only joint venture car manufacturer with a
significant track record, to understand the likely indigenisation strategy. IMACS also analysed the export
prospects for the new manufacturers and their ability to meet targets. IMACS then forecasted that
distribution costs were likely to emerge as a significant component of cost and studied the experience in
other countries. IMaCS also forecasted the demand for passenger cars in India.
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Review of Automotive Plastic Fuel Tank Project
Client: Diversified Indian group
Description:
The project was to carry out an independent review of the proposed plastic fuel tank project envisaged
by the group. This included forecasting the demand for automotive plastic fuel tanks in India till 2010 and
estimating per unit revenue in order to establish the financial viability of the project. IMaCS also
identified the risk associated with the project that could have an impact on the financial attractiveness of
the project and determining the financial viability of the project.
Approach:
IMaCS identified key risks that the project faces based on an in-depth study of the market for plastic fuel
tanks in India and review of the status of the project in two phases which included understanding the
market scenario for Plastic fuel tanks, its alternatives, volume potential and pricing. The second phase
included review of the project status i.e., project timelines, plant readiness, engineering support,
marketing plans, manpower recruitment and training. IMaCS also identified the risk factors and
recommended appropriate risk mitigation strategies for the group. As a part of the exercise, the IMaCS
team has had extensive discussions with key executives of the group in order to understand the status of
the project and the issues faced in implementation. The team also visited the proposed manufacturing
site to review the status of the work at the site. Based on the market estimate for fuel tanks estimated by
IMaCS and an assessment of the revenue potential for fuel tanks, IMaCS evaluated the financial feasibility
of the project.
Assessing the Feasibility of a Turnaround Plan
Client: A Large Tyre Manufacturing Company
Description:
A leading tyre manufacturing company of India with a well-recognised brand had fallen into bad times. It
steadily lost market share over a number of years, and eventually plunged deeply in the red. Being
completely cash strapped, both its factories had to be closed down. The company was referred to the
Board for Industrial and Financial Reconstruction (BIFR), which declared it as a "sick industrial company".
As per the direction of BIFR the company prepared a turnaround plan, which hinged on the sale of
surplus assets. The company mandated IMaCS to give an independent view on the viability of this plan.
Approach:
IMaCS executed the assignment in three stages. Firstly, it estimated the net worth of the company on a
given date, and then projected the quarterly erosion in net worth if status quo was maintained. It was
necessary to carry out this estimation since reliable accounting data was not available, as both the
factories of the company were closed and the operations were highly irregular. Secondly, the prospect of
selling the surplus assets was evaluated. This was done by assessing critical contributory factors such as
property market dynamics, physical condition, legal status, extant court orders and directives, opinion of
the bankers, creditors, Government, financial institutions and employee unions. Finally, the above
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information was synthesised to arrive at a considered view on whether the companys net worth would
become positive as a consequence of this divestiture.
Results:
IMaCS concluded that even under ideal assumptions, the net worth of the company could not become
positive by sale of real estate alone. A significant gap would continue to remain uncovered.
Valuation of two auto ancillary majors and determination of fair swap ratio for merger
Client: A large auto ancillary company in India
Description:
The client, a company in the Indian auto component sector, proposed to acquire a Chennai based Auto
Components Company (the target company) by way of a merger. The Client already held about 75%
equity stake in the target company and commissioned IMaCS to estimate the value of both companies
and arrive at a fair share swap ratio for the merger.
Approach:
We segmented the engagement into two phases:
Diagnostic phase to formulate and test assumptions and
Synthesis phase, to discuss findings with the Client and finalise our report.
The two phases included the following tasks:
Industry analysis comprising of an evaluation of current and likely future demand-supply conditions,
regulation and other drivers impacting industry fortunes. The objective of the task was to arrive at the
revenue and cost projections for both the client and the target company
Financial modelling - projecting the financial performance of the companies over a five-year horizon.
Valuation IMaCS employed a combination of the Discounted Cash Flow method and the Earnings
Multiple Method (Price to Earnings Ratio and EBITA/EV) for valuation purposes. The swap ratio was
estimated on the basis of the valuation exercise.
Impact of FTA between India, Thailand and ASEAN on Indian auto industry
Client: Industry Associations
Description :
A Free Trade Agreement (FTA) has been signed between India and Thailand as well as ASEAN. IMaCS was
commissioned to formulate a framework for evaluating the FTAs and applying the framework to Thailand
and ASEAN in order to assess the impact on the Indian automotive and auto component industries.
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Approach:
A study of this kind calls for an in-depth understanding of the structure and characteristics of the
automobile and auto component industry in the countries under evaluation and of factors affecting
competitiveness of the automotive industry. We accordingly studied the following factors for formulating
an appropriate RTA/FTA evaluation framework and applying it to Thailand and ASEAN:
a. Macroeconomic indicators
b. Other FTAs and RTAs that the countries are party to
c. Likely business potential including an in-depth review of the auto industry in these countries
d. Cost advantages/ disadvantages as a result of Govt policies/ external environment/internal issues
e. Possible tariff adjustments depending on Rules of Origin and their mode of implementation
Results:
IMaCS conducted primary research in India and ASEAN countries and secondary research on WTO,
NAFTA, AFTA and Indian Automotive industry while applying the framework and formulated a set of
recommendations on Tariff structure, rules of origin and export incentives that Indian industry should
seek from Government in order to improve competitiveness. IMaCS also assisted the Industry
Associations in making suitable representations to Government Bodies on the study.
Impact of Preferential Trade Agreement between India and MERCOSUR on Indian auto industry
Client: Industry Associations
Description:
India and MERCOSUR became joint signatories to a Preferential Trade Agreement (PTA) in January 2004.
The list of products on which India and the MERCOSUR countries would offer tariff concessions under the
PTA was under finalisation. IMaCS was commissioned to evaluate the impact of this PTA on the Indian
automotive and auto component industries and identify the auto components and vehicle categories on
which India could seek or offer tariff concessions.
Approach:
As for the ASEAN and Thailand study, we studied the following factors in order to evaluate the impact of
the MERCOSUR PTA on the Indian automotive and auto component sector:
Macroeconomic indicators
Other FTAs and RTAs that the countries are party to
Likely business potential including an in-depth review of the auto and auto component industry in
these countries
Cost advantages/ disadvantages that either country could have as a result of Government policies/
external environment/internal issues
Possible adjustments that may be made to tariffs depending on Rules of Origin and their mode of
implementation
IMaCS conducted primary research in India and MERCOSUR countries and extensive secondary research
while applying the framework and formulated a set of recommendations on Tariff structure, rules of
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origin and export incentives that Indian industry should seek from Government in order to improve
competitiveness. IMaCS also assisted the Industry Associations in making suitable representations on the
tariff list to the Government of India.
Vision for Indian Automobile Industry
Client: A leading Auto-Industry associations in India
Description:
The Govt. of India, in the process of developing a 10-year vision for the development of the Automotive
Sector, realised the need for industry-government partnership in developing the vision. Thus working
closely with SIAM, TMA and ACMA, Govt. has set up a Task Force for defining the vision, identifying issues
and suggesting suitable interventions. We assisted the Task Force in the development of the vision by
providing inputs on policy initiatives and industry efforts that need to be undertaken to realise the vision.
Approach:
Module I - includes a brief on the as is status of the Indian automotive industry focusing on the evolution
of Indian automobile industry and auto component industry, size of the industry, leading players and
their market shares, key global automotive trends impacting Indian automotive industry etc.,
Module II - focuses on the growth potential of the Indian automotive industry vehicle category wise,
export opportunities for Indian automobile industry, incremental investment requirement, future
challenges for Indian automobile industry.
Module III - highlights the issues that need to be addressed to achieve the targets set out in the vision
and suggest preliminary interventions
Impact of dismantling of Administered Price Mechanism on the Indian automotive industry
Client: A leading auto industry association in India
Description:
The client was a leading auto industry association in India. The Administered Price Mechanism (APM)
governed the Indian downstream oil industry until March 1998. The mechanism ensured uniform pricing
and addressed certain socio-economic needs of the country. However, the regulated regime led to
inefficiency and uncompetitiveness in the downstream oil industry. Therefore, a road map was laid down
to dismantle APM completely by April 1, 2002. The automobile industry is the single largest consumer of
petroleum products. The client being an apex association representing the automobile industry in India
was concerned about the possible changes in the prices of retail petroleum products (post APM
dismantling), mainly Motor Spirit (MS) and High Speed Diesel (HSD) and their relative prices. IMaCS was
appointed to conduct a study to analyse the possible implications on the auto industry following the
dismantling and forecasting demand for automobiles.
Approach:
The study was divided in two phases.
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Phase 1: The focus in this phase was to forecast the prices of automotive fuels, consequent to the
dismantling of APM, under different possible scenarios (phased transition/soft landing). The analysis took
into consideration the understanding of current stage of the APM dismantling process. It also took into
consideration various socio-economic issues linked to removal/reduction of subsidies on LPG and
kerosene, political compulsions, expected movement of international crude oil prices and possible
depreciation/appreciation of the Rupee vis--vis relevant currencies. An assessment was done of the
various change drivers post-APM dismantling and their likely impact on the Indian automobile industry.
Phase 2: The focus of this phase was to analyse the possible factors that explain present and future
automotive (two-wheelers, three-wheelers, passenger cars, commercial vehicles, tractors, MUVs)
demand, in addition to automotive fuel prices. It involved the identification of key demand drivers for
various categories of automobiles and formulating econometric models both on time series and causal
factors model to determine automobile demand for the categories until April 2007.
Results:
The conclusion of the study was the suggestion of the possible scenarios post dismantling and their
probability of occurrence. The study also forecasted likely auto fuel prices (MS & HSD) post APM
dismantling and its impact across automobile categories. The econometric models were developed for
each of the categories and their demand forecasted till 2007.
Assessment of Transportation & Logistics Infrastructure for Auto and Auto Components export, India
Client: An Industry association
Description:
The project included assessing the current status of infrastructure availability in terms of port facilities
and hinterland logistics, reviewing the plans for up-gradation, assessing the existing logistics and
transportation related issues faced by the industry that impact supply chain efficiency and export
performance of auto and auto component industry. IMaCS also reviewed the export targets for
automobiles and auto components over a ten-year period and assessed the cluster wise export growth
potential and arrived at targets for clusters and cluster-port linkages and identified gaps/bottlenecks in
infrastructure and recommend interventions for addressing the same.
Approach:
Phase I: This is done primarily through secondary research and primary surveys which include meeting
around 30-35 contacts in association, Ministry of Roads, Shipping, Transport and Highways, ports and
infrastructure agencies, automobile industry players, and logistics service providers. IMaCS used export
targets of the auto / auto components industry as the base for arriving at the cluster wise export
potential.
Phase II: In this the output from phase I regarding to available infrastructure and projected automotive
trade was combined to map out the desired levels of transportation infrastructure. The gaps in
transportation infrastructure were identified along the following lines:
Hinterland logistics covering rail-road connectivity between clusters and gateway ports
Intermediate storage - covering availability of CFS/ICDs across clusters
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At port facilities - covering capacities for storage and berthing
Results:
The gap analysis with regards to desired levels of infrastructure availability and service standards in
conjunction with the various developmental interventions by the state and central governments to
improve roads, ports and other transport infrastructure. Having identified the requirement for such
infrastructure, we suggested various models for implementing such projects such as pure public, public
private partnerships (PPPs), industry initiatives etc.
Process improvement and benchmarking study of vehicle financing business
Client: A large Indian automobile manufacturer
Description:
A large Indian Original Equipment Manufacturer (OEM) wished to benchmark the functioning of its
vehicle financing division and assess opportunities for improvements in its existing business processes.
IMaCS was commissioned to identify opportunities for process improvement, benchmark the processes
of the OEM along operational and financial indicators and suggest improvements in the existing MIS.
Approach:
IMaCS executed the assignment in three modules:
Module 1: Review the business processes at branches & dealerships and suggest process improvements
The main objectives of this Module was to review the business processes of the vehicle financing
division of the OEM at branches and dealer locations and identify the processes where the OEM needs
to improve its efficiency and the processes that offer scope of rationalization
Module 2: An industry study to identify key competitor attributes and benchmarking.
In our approach to the benchmarking exercise, we identified indicators critical for monitoring
operational and financial performance of the company. These indicators were identified after an
extensive discussion with top management, dealer, customer, channel partners, competitor review,
review of industry best practices and understanding possible future business requirements
Module 3: Review existing management information reports and suggest improvements
The objective of this module was to review the current Management Information System (MIS) and
identify possible improvement opportunities at operational and senior management level.
Financial Evaluation of Vendors
Client: A Japanese Automobile Company setting up a Manufacturing facility in India
Description :
The client was a Japanese automobile company, which was in the process of setting up a joint venture in
India. As a part of its understanding with the Government of India, the joint venture was expected to
attain pre-determined levels of indigenisation as per a phased manufacturing programme. The client
wished to conduct a survey of the automobile component vendors to assess several parameters, such as,
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their financial capabilities to augment capacity, their abilities to withstand a downturn in the industry,
their organisation structures and expected financial performance for the following two years.
Approach:
IMaCS classified the automobile component vendors on the basis of their scale of operations. The
financial statements of each company were analysed to understand the trends in historical performance
and financial strength. IMaCS visited the manufacturing facilities of each vendor and met the
management of the company. This was done to gain firsthand experience of the scale of operations,
assess their physical limitations to undertake capacity expansion, evaluate their working capital
requirements, understand the management structure including succession plans, and collect data for
projecting their financial performance over the next two years.
Results:
IMaCS made its recommendations on the risks factors affecting each company, the possible risk
mitigants, and steps being planned by the management to address the risk factors.
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ICRA Management Consulting Services imitedwww.imacs.in
I M a C S
Corporate Office:
Logix Park, First Floor,
Tower A4 & A5, Sector - 16,
Noida - 201 301
Tel: +91-120-4515 800
Fax: +91-120-4515 850
Registered Office:
1105, Kailash Building, 11th Floor26 Kasturba Gandhi Marg
New Delhi 110001
Tel: +91-11-2335 7940-50
Fax: +91-11-2335 7014
Contact:
Mr. V Sriram
Chief Operating Officer
IMaCS
5th Floor, Karumuttu Centre
634 Anna Salai, Nandanam
Chennai - 600035
Tel: +91-44-24333293/3294/0724
24340043/8080/9659
Mobile: +91 9840088273
Fax: +91-44-24343663
Email: [email protected]
Mr. B V Rajesh
Head Automotive and Industrial Goods
M-01, Mezzanine Floor
Prestige Infantry Court
130, Infantry Road
Bengaluru 560 001
Tel: 91 80 4093 4100 / 4123
Fax: 91 80 4093 4111
Email:[email protected]
Mr. Vageesh NigamConsultant
4th Floor, Electric Mansion
Appasaheb Marathe Marg
Prabhadevi
Mumbai 400 025
Tel : 91 22 3047 8659
Fax: 91 22 3047 0081
Email: [email protected]
Mr. Abhishek Nandi Roy
Consultant
Logix Park, First FloorTower A4 & A5, Sector - 16
Noida - 201 301
Ph: +91 120 4515800
Fax: +91 120 4515850
Email: [email protected]
http://www.imacs.in/mailto:[email protected]:[email protected]:[email protected]:[email protected]://www.imacs.in/