Cases

Conducting a Strategic Diligence of a Diesel Genset Original Equipment Manufacturer in India for a large Private Equity Firm

Challenge

The client, a large private equity firmwanted UCto validate certain assumptions made by the OEM in the three year business plan:

  • The end user application industries would grow in demand and would have multiplier impact on the revenues of the OEM
  • The high competitiveness of the company on certain performance benchmarks including cost leadership

The decision whether to invest or not and the valuation, was notpart of the engagement scope.

Our Approach

To conduct a diagnostic study of the diesel genset OEM in India for the client, UC adopted the following approach:

  • Conducted secondary and primary research with more than 50 respondents across customer segments, principals and traders/ dealers of diesel genset and developed perspective on the following parameters -

    1) Market share of various principals across product segment, Kilo Volt-Ampere(KVA) wise

    2) Market sizing (year wise) in value and volume for each customer segment and product segment (KVA wise)

    3) Growing competitive intensity between the existing and focused new players

    4) Key buying criteria of the initial equipment cost and efficient service support of the customer segment

    5) Narrowing gap in the prices of key principal competition

  • Analysed and compared the cost structure with other original equipment manufacturers.

Impact

The client received facilitation on the decision making by providing perspective on the following issues:

  • Break up of genset market size KVA wise (in value and volume)
  • Validation of the sectors growth opportunity over a three year horizon
  • Possibility of achieving the business plan target for each of the revenue stream was projected