Business Case of New Product

Challenge

A leading steel manufacturing company was 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, they needed a comprehensive, bottom-up business case to validate market demand, assess investment viability, and establish financial returns before seeking board approval.

Approach

1. Assessed the addressable opportunity through a TAM-SAM-SOM framework across the target casting product basket, mapping demand from end-use industries (railways, wind turbines and other OEM castings).
2. 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. 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. Prepared 3-statement financial model with five-year projections, capturing sensitivity to input cost and sales volume.
5. 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.