| INVESTMENT OPPORTUNITY STUDY – EXISTING CEMENT
PLANT(S) |
|
Holderbank Financiere Glaris Ltd. (HOFI) –
Plants in Russia, Uzbekistan, Azerbaijan, Georgia |
| HOFI, is the investment arm of Holderbank, which has, as one of its objectives,
identification of new investment opportunities. This includes acquisition/ participation
in existing plants. Towards the objective of enhancing presence in Russia and the CIS,
HOFI commissioned Holtec for evaluating the attractiveness of investment in 4 plants in
Russia and one each in Uzbekistan, Azerbaijan and Georgia. These evaluations encompassed
all investment-related parameters including country economic environment, cement industry
outlook, market assessment, plant raw material status, plant technical evaluation,
transportation access, human resources, operating costs & other financials, and
overall plant valuation. |
| A view of the Akhangaran Cement, Uzbekistan 
|
Key Assignment Information
- 4 plants in Russia and 1 each in Uzbekistan,
Azerbaijan and Georgia evaluated.
- Evaluations carried out by team of experts
for raw materials, plant operation, marketing and finance and human resources
- About 10 consulting days spent per plant by
the team of experts
- About 60 consulting days spent at the home
office by the team
- Out of the seven, 4 plants were identified
as being attractive for investment
|
Objective and Coverage
- The key objective of the assignment was to do a valuation of
each of the 7 plants under consideration to identify those with a potential for
investment incorporating all relevant decision-making factors.
- The first steps involved an assessment of the existing and emerging
economic and cement industry scenario in each of the countries. The attractiveness
of the plant capacity and location with respect to the emerging regional demand-supply
situation was assessed.
- The existing situation of each plant in its markets
was evaluated. This included market share in target markets, brand perception, price
level, distribution network and customer segmentation. The ex-factory realisation (in USD
per ton of cement) was arrived at to estimate net market revenue.
- The raw material availability at each plant was
estimated, in addition to assessing ease of mining and mining methods for limestone.
Availability and costs of other raw materials such as iron ore, slag and gypsum was also
done.
- Plant operations were evaluated in detail. Operating
capacity and status of all main machinery was assessed. Operating parameters pertaining to
power & fuel consumption and other key parameters was studied. Status on pollution
control and various contracts & clearances was additionally investigated. All the
above were used to derive the likely initial investment to streamline operations.
- Transportation
to and from the plants were assessed
- Human resources
at each plant were ascertained with
respect to manpower status, operating structure and labour issues.
- The financial status of each company with respect
assets & liabilities, revenue & costs and profitability was assessed. All the
above led to the financial valuation of each plant.
The above plant evaluations provided
HOFI with critical inputs and key recommendations on investment possibilities and their
likely values in the given region. Investments have since been made in three units
Holtec has carried out over 35 such
investment opportunity evaluations. |