Business Case of New Product
Challenge
The client a leading steel manufacturing company evaluating a greenfield investment to establish manufacturing capability for basked of steel casting products. Given the scale of capital commitment involved in a greenfield project, the client needed a comprehensive, bottom-up business case to validate market demand, assess investment viability, and establish financial returns before seeking board approval.
Approach
1. Market sizing and competitive landscape – Assessed the addressable opportunity through a TAM-SAM-SOM framework across the target casting product basket, mapping demand from end-use industries (auto, capital goods, railways, wind turbines).
2. Competitive and business model benchmarking – Conducted financial benchmarking of existing players in the casting industry, analyzed their margin profiles, capacity utilization, and capital intensity, supplier/raw material availability (scrap, alloys, Mn steel) to understand the cost and operating dynamics.
3. CapEx, OpEx, and profitability estimation – Developed a detailed capex estimate covering land, plant and machinery, utilities, and pre-operative expenses, along with a phased operating cost build-up, to arrive at a realistic profitability trajectory as the plant ramped up to full utilization.
4. Financial modeling – Prepared 3-statement financial model with five-year projections, capturing the capital structure, working capital cycle, sensitivity to input cost and sales volume.
5. Investment returns analysis – Evaluated project returns using Payback Period, ROCE, NPV, and IRR.
Impact
1. Validated market and financial viability of the proposed project
2. Identified key risks and prepared mitigation plan
