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Capital for enlargement of production

Task

Shareholders of the machine engineering plant have planned the project of enlargement of oil-refinery equipment production and asked the Bank of Development of Kazakhstan for long-term financing of this project. In order to justify investment project, the planthad to satisfy requirements and conditions provided by the bank and to conduct an independent assessment of marketing risks for this project.

Due to specifics of oil and gas industry, contracts for perspective supplies of products, which were not yet produced, cannot be signed in advance. This has become the main obstacle inthe way of competitiveness justification for manufacturers from China and Russia, however, the feasibility of plans concerning the production load and sales was also a matter for concern.

Spot opportunities

IGM is one of the accredited experts at Development Bank of Kazakhstan for more than 10 years now, and we have implemented gathered rich experience and connections in finding the suitable solution. Having consulted with international experts in the area of machine engineering for needs of oil and gas industry, there were defined several key factors, which had the most influence on the success of the enterprise, and relying on which it was possible to justify and diminish investment risks in this project.

Solutions

IGM consultants have cooperated with a project team of the plant in the systematization of available information and documentation, which characterize features of production and schemes of interaction with customers from oil and gas sector. It was discovered that even though such clients as Chevron give their preference to the leading world players of oil & gas service, the latter consider options of orders placement at local facilities, which correspond to their strict requirements and industry standards.

Based on mentioned facts, there was a preliminary map of marketing risks designed for this investment project with decryption of influence degree and statement of opportunities for risks diminishment.

New products should meet worldwide standards accepted in oil & gas industry, that was the priority in the realization of this project. There were performed marketing studies on perspectives of market enlargement, performed the calculation of logistics costs of competitive enterprises, were gathered expert opinions, developed plans of risk management and formed the justification of its influence decrease.


Results

Plant’s managers have achieved remarkable results in defense of investment project with the help of IGM team. They have shown a highlevel of risks management and offered a convincing strategy of diminishing those risks. According to results of the internal expert study, the Bank of Development of Kazakhstan has made a positive decision and provided financial support worth more than 32,0 million USD for this project for 14 years.

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