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Telecommunications Cable Due Diligence

In October 2007, Navigator was commissioned by the European Bank for Reconstruction and Development (EBRD) to conduct a detailed due diligence for an Uzbek manufacturer of telecommunications, power and electrical cables and wires.

Based in eastern Uzbekistan, the enterprise is a Russia-Uzbek joint venture which exports some 75% of its products, mainly to Russia, Turkey and Kazakhstan.

A site mission to Andijan, Tashkent and Samara was implemented from November 18-27 by Navigator  consultants Philip Ammerman and Maria Arkhangelskaya. This was followed by a comprehensive due diligence report, which provided the Bank with an in-depth sectoral and corporate analysis and professional evaluation of the company.

Key strategic issues included the availability and pricing of raw materials, primarily copper rod, and market viability in the region. These issues were analysed in depth. Interviews with leading customers in Russia and Uzbekistan were held to model future market demand and supplier suitability.

The loan application was successful: the loan was granted to the cable manufacturer: the investment plan is currently underway.

Key strategic issues included the availability and pricing of raw materials, primarily copper rod, and market viability in the region. These issues were analysed in depth. Interviews with leading customers in Russia and Uzbekistan were held to model future market demand and supplier suitability.

The loan application was successful: the loan was granted to the cable manufacturer: the investment plan is currently underway.

The analytical components of the report included the following:

Executive Summary

Investment Project Analysis

  • Corporate strategy and growth objectives
  • Description and budget of investment project

Uzbekistan Sectoral Analysis

  • Macroeconomic development of Uzbekistan
  • Copper suppliers: Almalyk Mining and Smelting Factory
  • Copper price analysis and national supply trends
  • Copper Wire & Cable Production, National Market Share
  • National Competitor Profiles: Andijan Cable, Deutsche Kabel, Uzkabel, Hitek Cabel
  • National Copper Wire & Cable Demand: Telecommunications, Construction & Property; Railway; Automotive
  • Russian Copper Wire & Cable Production
  • Russia Copper Wire & Cable Demand
  • Russian & CIS Cable & Wire Producers

Marketing and Sales Analysis

  • Historical sales growth, 2002-2007
  • Sales by product, country, sector and customer
  • Organisation of marketing and sales function
  • Main Business Processes

Customer Survey

  • Market research interviews were held with
  • Price-Quality Relationship
  • Main Advantages & Disadvantages
  • Competitor Benchmark

Technical Analysis

  • Description of Factory Lay-Out & Major Production Areas
  • Equipment List & Utilisation Rates
  • Bottlenecks

Quality Analysis

  • The Quality Management System (Finished Products & Processes)
  • Technical Quality Standards
  • Customer Quality Acceptance

Raw Materials & Production Inputs

  • Main Volumes of Raw Materials & Inputs
  • Forward Purchases
  • Price Movements
  • Production Planning & Procurement Systems

Organisational Analysis and Other Business Functions

  • Human Resources Management
  • Finance & Accounting
  • Procurement
  • Information Systems

Financial Analysis

  • Operating Profitability
  • Transfer Pricing Operations
  • Trade House Operations
  • Profit/Loss Account
  • Cash Flow Analysis
  • Balance Sheet Analysis
  • Financial Benchmarking: Nexans, Tyco, Halcor

Consultant Assessment

  • Strategic Assessment
  • Project Assessment
    • Project Implementation Plans
    • Additional Investment Needs
    • Cost Structures of New Products
    • Working Capital Needs
    • Marketing Strategy
    • Ability to Sell in Target Markets
    • Competitors
    • Product Substitution Risk
    • Implementation Capacity
  • Main Risks Identified
  • Main Recommendations on Risk Mitigation and Loan Structuring

 

All information relating to the client, the specific investment project and its sponsors collected by Navigator Consulting Group Ltd. during this due diligence project is strictly confidential and will not be released by Navigator  Consulting Group Ltd. to any third parties. This information appears here as an indication of Navigator's consultancy capabilities in this field.