How MEC+ helped an investor evaluate the assets of an Indian wind OEM

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Commercial Due Diligence on a Wind
OEM in India
How we helped an investor evaluate the assets of an Indian wind OEM
The Challenge
India’s wind market has strong potential. Our client a leading wind player, wanted to grow its
presence in India through acquisition. The client reached out to MEC+ to conduct a full market and
commercial due diligence of the target, asking two key questions-
a) How realistic is the quoted valuation of the
target’s asset base?
b) What is its competitive and commercial
positioning in the market?
Our Approach
We started off by mapping the target’s landbanks with the total asset base in India and benchmarked
its commercial competitiveness. In parallel, we built an understanding of the target’s internal
operations, bid strategy and customer landscape. Accordingly, we framed the analysis around four
issues:
1. How realistic were the target’s assumptions for capacity growth in the market?
To answer this question, we compared the target’s internal forecast with our own at four
different levels:
• customer segment
• state of installation
• state-utility which will sign PPA
• incentive mechanism of reverse auctions vs. feed-in-tariffs
For each of the forecast, we outlined scenarios to identify the risks. This provided deep insight
into the business planning assumptions of the target.
2. How strong were the target’s asset claims?
To qualify the claims made on the quality of the assets, we first established truth about the status
of landbank by doing:
• Segmentation of the landbank into private and public land
• Assessment of maturity based on state-wise status of allotment of land and connectivity
to grid
• Benchmarking of resource potential of the landbank
• Assessing the extent to which ‘right of way’ and ‘clearances’ have been secured
Then, we assessed the competitive position of sites allocated to its competitors by doing:

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• Competitive benchmarking of the target’s landbank with that of the competition
• Assessing competence of the competitors to commercialise the landbank available to
them in the vicinity of the target’s landbank
• Probability of securing PPA within the timeframe in which the site can be made ready by
the target
And, we quantified the value of this landbank by estimating the cost of acquiring such sites either
through purchases in the open market or by developing sites by applying to state governments.
3. How were the target’s customer relationships and performance in the market?
To identify the target’s strengths and weaknesses in terms of securing higher orders from
customers over the next three years we:
• Compared target’s current market share at distinct customer segments with the growth
forecast of these segments
• Assessed concentration of revenue and profitability by each customer
• Measured ability to change engagement model in line with changing govt. policies
• Took market feedback on target’s products and services through customer interviews
4. How well was the target positioned to compete in future?
We assessed the ability of the target to commercialise its product pipeline by:
• Benchmarking of performance and operational competitiveness against competitors
• Comparison of the current and planned offerings with that of the competition and customer
needs
• Test of strength of relationship with the top customers in the market
• Assessment of the ability of the team to develop projects
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.
About MEC Intelligence
MEC Intelligence is a market advisory and consulting firm with vast experience in the wind energy
sector. In power sector services, we have worked with leading utilities, energy retailers, industrial
companies, turbine OEMs and private equity firms on projects like strategy support, opportunity
scanning in regional markets and business model assessment. MEC Intelligence has conducted an
analysis of ~15 countries on nearly 10 attributes to determine the renewables’ impact on the power
mix.
To know more, please visit www.mecintelligence.com

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www.mecintelligence.com
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www.mecintelligence.com
DENMARK
Nordre Fasanvej 113, 2
2000 Frederiksberg
Copenhagen, Denmark
T: +45-3543-3277
INDIA
510, Suncity Business Tower
Sector 54, Golf Course road
Gurgaon, Haryana
T: +91-124-480-2700