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Strategic decision partner in a billion-dollar acquisition in India

How we helped a leading European wind turbine manufacturer in its decision to make a brownfield investment, to expand its base in the Indian wind market

THE CHALLENGE

The client is a leading global wind turbine manufacturer. MEC has been a regular strategic support partner to the client encompassing several engagements in the past.

As India’s wind market has strong future potential, the client is interested in expanding its market presence through brownfield investments in localized assets. The client reached out to MEC to conduct a full market and commercial due diligence of the target, answering two key questions-

  • How realistic is the quoted valuation of the target’s asset base?
  • What is it’s competitive and commercial positioning in the market?

OUR APPROACH

We leveraged our experience and knowledge to understand the key criteria to win in the Indian wind market. We started off by understanding the target’s land-banks and its commercial competitiveness in the market. In parallel, we gained an understanding of the target’s internal operations, bid strategy and customer landscape, and plotted these in the market frame. MEC adopted a 4-point approach, covering the target’s internal as well as external view with respect to the market dynamics. Accordingly, we broke down the questions as follows:

How realistic were the target’s assumptions for capacity growth in the market?

Comparing the target’s internal capacity forecast with our own by customer segment:

  • Capacity growth scenarios for each customer segment till 2022
  • Growth levers by customer segment
  • Risks and challenges to the anticipated growth
  • State-wise capacity split for each segment

How strong are the target’s asset claims?

Valuation of the target’s landbank:

  • Segmentation of the land-bank and relevant procurement models
  • State-wise landbank allotment and connectivity status
  • Player-wise landbank distribution with target’s position in it
  • Commercial competence of each site of the target against those of other players in the market
  • Site-wise connectivity status and fitment with demand

How are the target’s customer relationships and performance in the market?

Identifying the target’s strengths and weaknesses at customers:

  • Target’s client focus vs. customer segments driving capacity
  • Fitment test on client’s offering with the customer needs
  • Change in engagement models with changing policies and market regimes, and the target’s response to it
  • Market feedback on target’s products and services through customer interviews

How well is the target positioned to compete in future?

Understanding the target’s ability to win against the competition:

  • Performance and operational competitiveness against competitors
  • Comparison of the current and planned offerings
  • Share at the top customers in the market
  • Operational setup and land bank comparison

THE IMPACT

Based on our recommendations and interactions with the board, the client decided to change and optimize their acquisition plan. The client started renegotiations with the target company using the updated knowledge and understanding of the target’s market positioning, capabilities and future scope to win in the market.

Would you like to expand your organisation’s base in India market with brownfield investment?

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