Investment Due Diligence, Steel Wire
Within the terms of the European Bank for Reconstruction and Development's Local Private Sector Framework, Navigator Consulting implemented a commercial and technical verification of a major Ukrainian producer of steel wire parts, including low carbon wire, zinc-coated wire, steel bolts, nails and other products.
Our client was the largest Ukrainian producer of metal wires and hardware with annual installed capacities of 720,000 tonnes. Their market share in Ukraine was approximately 20% of metal wires and hardware, while nearly 70% of total production was exported to Greece, France and other countries.
The objective of the project was to implement a commercial due diligence assessment on behalf of the European Bank for Reconstruction and Development. The client had approached the EBRD to apply for a USD 7 million loan, which would be used in production capacity expansion to achieve better economies of scale and increase market share of high quality metal wire production. The Ukrainian market was characterised with unmet demand for high quality galvanised metal wires; and the client is not able to meet all incoming overseas orders due to production capacity constraints.
Navigator Consulting implemented an in-depth commercial and operational due diligence, including:
Commercial due diligence, including customer survey, sales analysis, review of marketing & sales departmental structure and operations, budgets, etc.
Technical due diligence, including factory planning, materials resources planning (MRP), operations, raw materials purchasing and storage, inventory management, occupational health and safety, production finance, etc.
Financial analysis, review of 2002-2003 IAS accounts (the latest years available); Business plan review.
Review of corporate structure, management, corporate governance, organisational structure and human resources capacity.
Investment Plan Analysis;
Development of Base Case and 2 Scenarios;
Risk Analysis and Recommendations for Loan Structure and Disbursement
Technical & Operations Due Diligence and Analysis: Factory Lay-out, Equipment & Utilisation Rates; Bottlenecks and Major Issues; Quality Analysis: QMS; Defect Rates;
Market Research and Commercial Due Diligence; Sales & Profitability Analysis
Raw Materials Analysis: Modelling of Global and European Steel Wire Supply and Demand; Price Sensitivity; Main Volumes & Prices; Security of Supply; PPS; Forecasting
Organisational Analysis: HRM; Finance & Accounting; Procurement; IT;
Financial Analysis: Operating Profitability; Transfer Pricing Operations; Trade House Operations; Profit/Loss Account; Cash Flow Analysis; Balance Sheet Analysis.
All information relating to the client, the specific investment project and its sponsors collected by Navigator Consulting Group during this due diligence project is strictly confidential and will not be released by Navigator to any third parties. This information appears here as an indication of Navigator’s consultancy capabilities in this field.
International Financial Institution
Date of Engagement:
February 2003 - January 2004
Countries of Operation:
Investment Advisory Services, Marketing
Industry & Manufacturing, Wire & Cable