Cases

Assessing the Feasibility of Acquiring a Distribution Transformer Equipment Manufacturer

Challenge

The client, a leading business house in India with a presence in the electronics/ engineering products space was interested in entering the distribution transformer space through related diversification. It was looking at acquiring a suitable player and sought UC’s assistance in assessing the demand-supply gap for distribution transformers, the future growth for distribution transformers, competitive intensity and the industrial profitability.

Our Approach

To assess the feasibility of acquiring a distribution transformer equipment manufacturer, UC carried out in-depth market research with the following steps:

  • Estimated the current and future (2010) size of the distribution transformer market in terms of value and volume through

    1) New Demand

    2) Replacement Demand

  • Studied the state wise status on the implementation of power reforms as per the Electricity Act of 2003
  • Assessed growth prospects of transformer intensive industries
  • Conducted customer analysis and identified the current and future buying patterns and buyer values, along with key success factors
  • Studied the competitive intensity in the distribution transformer space and profiled key competitors
  • Computed the overall industry profitability

UC carried out basic financials of the target company after assessing its fit to cater to the growing transformer demand. We identified, evaluated and recommended strategic options.

Impact

The client received a deep understanding of the demand dynamics, the future buying patterns and the potential acqiree values. UC also delivered a competitive landscaping and an identification of strategic options, giving the client an idea of the feasibility of the acquisition.