Navigator Consulting Group has been selected to implement a detailed due diligence study and business plan verification for a Ukrainian merchandising and point-of-sale promotional equipment manufacturer.
Based in eastern Ukraine, the manufacturer has a national sales office in Kiev, and further sales offices in Moscow and St. Petersburg. This is the largest CIS manufacturer of draught beer cooling systems, as well as tents, lighting, refrigerators, and furniture.
Its customers are a who's who of the drinks and food sector, and include Carlsberg (Baltika), SunInbev, Heineken, Obolon, Coca Cola, Pepsi Cola, Kraft Foods, Nestle, and others. It exports to over 25 countries, including Russia, Belarus, Kazakhstan, Czech Republic, Canada and the United States.
Our objective is to help our client, an International Financial Institution, assess the commercial and financial risks of participating in the investment project, by providing an independent opinion of:
The sustainability of the manufacturer's competitiveness and profitability
The quality of the management team, organizational structure and systems
The market potential for the manufacturer's existing and new products (e.g. open fronts, toppers, cooled and non-cooled shelves) in its chosen markets
The return on investment from the proposed Project capex and the required level of working capital
The manufacturer's strategy and business plan (which will involve helping to express these in detailed financial projections to be initially developed by the manufacturer's).
The due diligence project includes an in-depth assessment of marketing and sales operations in Ukraine and Russia, as well as an assessment of competition and profitability in the market.
As such, we are assessing planned new products as well as existing promotional and point-of-sales merchandising and products:
End-user markets
Customers and sales contracts
Suppliers and supply/raw-material contracts
Raw material price volatility and pass-through
Competitors
Product quality and alternatives
Pricing
Profitability / margins
Plant efficiency
Management
Organisation and systems
Strategy
Investment Programme and Project implementation arrangements
Business plan and forecasts
Although both Ukraine and Russia are recovering fast from the 2008-2009 recession, demand remains fragile and marked by uncertainty. In Ukraine, summer demand from the Euro 2012 is expected to boost beer sales, particularly for global sponsors of the event. Nevertheless, political and economic risks are growing, and create uncertainty over the longer term.
Navigator has been working in the Ukrainian food and beverage sector since October 1999, when we supported an international bank monitor the disbursement of a $ 60 million loan in Ukraine's largest brewery. Since then, we have implemented over 40 projects in segments such as glass containers, flexible plastic packaging, corrugated packaging, steel wire, ceramic tiles, bricks, pharmaceuticals, automotive batteries, and others.
The due diligence project will be completed within 6 weeks.
For further information on our investment advisory and due diligence work in Ukraine and the former Soviet Union, please contact us.