Identifying and Evaluating Potential Plant Locations for a Glass Manufacturing Company

distribution

Client Challenge

The client, a leading glass manufacturing company requested UC Strategy to identify locations for setting up its plants for future expansions. The company had chalked out its capacity expansion based on the five year business plan. However, the company wanted to conduct a thorough evaluation of all the possible options of plant locations. The top management was also evaluating of signing a long-term contract for Natural Gas.

Our Approach

To identify the plant locations for the client, UC Strategy adopted the following approach:

  • Assessed the existing plant infrastructure for the following parameters:
    • Extent of capacity expansion
    • Capital expenditure required for brown-field expansions
    • Estimated life of existing infrastructure
  • Defined the key parameters to be evaluated for glass plant location:
    • Raw material availability and cost (Quartz, Dolomite, Feldspar etc.)
    • Logistics cost (Sea port proximity, cost per ton per km etc.)
    • Power availability and cost (Availability of natural gas, HT power, etc.)
  • Evaluated the requirement of each of the above parameters for future capacities:
    • Tons of raw material required
    • Total outbound logistics requirement (In tons)
    • Requirement of natural gas (mmscmd) and power (KWH)
  • Evaluated the benefits of locating at SEZ
    • Direct tax benefits (Sales tax, excise, etc.)
    • Indirect tax benefits (100% income tax benefit for 1st 5 yrs., 50% for 6-10 yrs. and conditional 50% in 11-15 yrs., No MAT etc.)
    • Other benefits (Exemption from electricity duty etc.)
  • Identified and evaluated Multi product and Ceramic SEZ set up in the country (Evaluated credibility of developers, SEZ size planned, LOIs received etc.)
  • Evaluated economic benefits of locating at SEZ
  • Mapped overlaps of locations with raw material, power, port proximity and SEZs to identify attractive locations for setting up the future capacities

To evaluate the long term natural gas contract, UC Strategy evaluated the following approach:

  • Estimated future gas requirement for the location
  • Estimated demand and supply scenario of natural gas for the next 15 years
  • Evaluated financial implications of the gas contract for different market scenarios

Our Impact

The client received a detailed analysis of the attractive locations for setting up its future capacities and the evaluation of the long-term contract for the natural gas needed by the company.

Leave a Reply

Your email address will not be published. Required fields are marked *