Automotive Battery Commercial Due Diligence and Business Plan Verification
Navigator Consulting implemented a due diligence and business planning project for Ukraine's second-largest automotive battery manufacturer. The project was implemented with the objective of securing a EUR 37 million loan from the European Bank for Reconstruction and Development (EBRD). The project included a comprehensive automotive battery market analysis in Ukraine, Russia, Belarus, Kazakhstan, Italy, France and Germany; a competitive analysis of battery production, pricing and segmentation; and a detailed investment risk analysis and financial sensititivity analysis.
In February 2011, Navigator was selected by competitive tender by the second-largest Ukrainian manufacturer of automotive batteries to implement a commercial due diligence for expanding automotive battery production. This study was commissioned as part of a wider process of gaining a EUR 37,000,000 loan from the European Bank for Reconstruction and Development for factory modernisation and capacity expansion.
The study was designed to answer the following questions:
What are the automotive market segments targeted by the manufacturer’s products? What is the potential for the Group’s products in each of those market segments?
How competitive are the manufacturer’s battery products compared to the products of its competitors in terms of suitability for their intended application, quality, price and reliability?
Is the manufacturer’s marketing strategy for domestic and export markets appropriate, well supported and well substantiated and how can it be improved?
Are the manufacturer’s marketing/sales budget, structure, staff experience, as well as know-how appropriate?
What are the advantages/disadvantages/threats for the manufacturer to be affiliated with a wider group of companies?
Navigator Consulting mobilised a team of three consultants with existing experience in the automotive components and car battery sectors. The study includes the following components:
A site tour to Dnepropetrovsk, Ukraine and a review of client factories, automotive battery production capacity and technology and sales operations;
Implementation of detailed telephone and face-to-face customer interviews with OEM and after-market battery customers in Ukraine, Russia, Moldova, Belarus Italy, France, and Germany to gather marketing intelligence and implement a competitive benchmarking of the Ukrainian automotive battery manufacturer. Customers interviewed included Autoprezent, Autospace, Bost Trading, Bagoria, Batavtotrade, Agropiese TGR Grup, Magneti Marelli, Mez Aniv, Mimoza, Automotive Parts Worldwide, Polus +, Rimbat, Sever Yug, Nizhegorodagrosnab Tagaz, Stolichnaya Akumulyatornaya, Tandem PV, Tegeta Motors, Torgservice, Sultanov, Povolzhie Avto, Yugsnab Holding, Armtek Group, Kyitransgroup, Minsk Tractor Factory , and Ukravtozapchasti;
Development of a dynamic model for automotive parc growth and battery demand in the seven countries under study to 2017. This was based on population and GDP growth; automotive parc growth by passenger sedan, motorcycle and heavy duty (truck) parc growth; battery replacement rates; and battery demand by category; OEM and after-market supply of batteries;
Competitor and market share analysis of main automotive battery suppliers in Ukraine, Russia and regionally, including operations and sales of Johnson Controls, FIAMM, Exide, Varta, Ista, Westa, Megatex, Vlardar, Tyumen Battery Plant, Russian Accumulator Plant, Alkor, Aktex, Tubor and others;
A comprehensive analysis of operations and business processes of the Marketing and Sales department, including distribution arrangements, battery brands, research and development, pricing, quality management, etc.
A detailed analysis of management and staff operations in the Marketing and Sales department, including organisational structure, staffing, staff competencies and staff development requirements;
A detailed analysis of planned capital expenditure to establish two new automotive battery production lines , including cost and supplier analysis, likely raw material availability, cost and efficiency improvements, supplier contracting arrangements, and suitability of the planned technology to the sales plan;
A detailed analysis of sales turnover and profitability; cash flow; and balance sheet forecasts to 2017; as well as key financial indicators (debt service, liquidity, ROI, ROE, IRR, NPV, etc) as well as verification and analysis of other business plan assumptions and workings
A strengths-weaknesses-opportunities-threats (SWOT), Porter value chain analysis, and Porter competitive forces analysis of the company and the planned investment
This was our second engagement for this automotive battery manufacturer, and our sixth overall project in automotive battery due diligence and business planning. The project was implemented successfully with the delivery of the Automotive Battery Due Diligence and Business Plan Review.
For further information, please contact:
Greece: Automotive Battery Feasibility Study, 2010
Technology and European Market Review for Lithium-ion Battery Technology, 2012
Ukraine: Due Diligence and Business Plan for Automotive Battery Production, 1999
Date of Engagement:
February - April 2011
Countries of Operation:
Ukraine, Russia, Kazakhstan, Belarus, Italy, France, Germany
Investment Advisory Services