Financing of Business Plan for production in India

A/S Jydsk Aluminium received full financing of a thorough analysis of the opportunities for establishing production in India.

- This programme is fantastic. It has helped solving a number of important questions for us, and has given us excellent sparring – including detailed budgets for establishment in India, says Kenn Christensen, Managing Director of A/S Jydsk Aluminium.

Kenn Christenen has just completed a feasibility study in cooperation with DI International Business Development (DIBD), who also provided the access to various aid schemes that financed the preparation of the business plan.

Customers pushing for establishment in India
A/S Jydsk Aluminium is situated in Herning, Denmark, and produces aluminium components. The company’s main customer segments are the commercial vehicle industry and the high voltage industry. For a while, a number of A/S Jydsk Aluminium’s customers had urged the company to establish local production in India. At the same time, an Indian company contacted A/S Jydsk Aluminium to discuss the possibilities of a co-operation.

Consequently, A/S Jydsk Aluminium decided to thoroughly investigate the opportunities before plunging into local production. The considerations had to include a number of questions:

• What would be the best location of a production in India?
• What are the costs for building resp. renting suitable premises – and are there any?
• Are there relevant sub-suppliers with regards to quality and capacity?
• Is sufficient, well-educated labour available – and what is the wage level?
• Which investments are necessary to establish the best possible set-up?
• How large will the total investment have to be, and is it at all feasible compared to increased investments and optimisation of the production in Denmark?
• Which legal entity should be chosen?
• Are there relevant external financial partners, and what do they require in order to consider entering into the project?
• What is the realistic implementation plan for the establishment?

In other words, A/S Jydsk Aluminium needed a business plan that could be used internally as a control tool, and externally towards customers, co-investors, and banks. However, A/S Jydsk Aluminium did not have the resources in-house to investigate all these aspects, and therefore chose to cooperate with DIBD.

100 percent financing is an additional value
- We would never have been able to do this without external assistance. It would have taken way to many internal resources. I can only recommend that other companies also take advantage of these opportunities. You get both the professional sparring, and a very fine idea of whether or not local establishment would be an option. Your project ideas become very real. And obtaining 100 percent project financing was a tremendous additional value, Kenn Christensen concludes.

30 January 2009