Evangeline Caedo

José Gálvez Carazo

Sven Johannsen

Tamara Franco

Pedro Gonçalves

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

Structure of Business

Mission, Vision

Licensing / Niagara

Objectives, Values

Background

Product

PEST Analysis

Porter’s 5 Forces

Comparative Advantage

Competitor Landscape

Sales Projection

Pricing Strategy

Source of Business

Value Chain

Brazilian added value

Production Process

Objectives, Values

Capital Investment

Break-even Analysis

Financial Statements

Financial ratios

WACC & ROI

CSR

19871978 2005 2012 2014 - ?2004

• Tecnilab was founded • Certification – ISO 9001 quality management system

• New branch facilities Tecnilab North / 2L

• Opening branch in Porto • Starting to export • Further Internationalisation

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

NIAGARA VALVESManufacturing Valves

Since 1942

MANPOWER CAPABILITY

FACILITIES & MACHINERYVALUES SYNERGY

MARKET SYNERGY

STRENGTH OF COMMERCIAL CHAIN

0

1

2

3

5

4

Eduardo Carvalho NiagaraOrion

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

“We aim to anticipate our customers’ needs and maximize the stockholders’ return through enhancing the quality of our products and expanding to new promising markets.”

VISION

“To produce high quality water control valves that foster the reduction of water wastage globally.”

MISSION

Qualitative

• Help reduce water wastage from leaks

and cracks in pipes that existing old-

fashioned valves cannot address.

• Bring new technology and innovation

to the Brazilian valve industry.

Quantitative

Gain 15% of volume share in Brazil by

start of 2020

Achieve a minimum 35% overall

profitability

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

Click to view video

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

PARALLEL ENTRY CONNECTORS

STAINLESS STEEL (ST) PILOT BODY

FILTER MANUAL DRAIN

TRANSPARENT FILTER BOWL

EASY PRESSURE CONNECTIONS

(ST) FILTER BODY

(ST) RESTRICTION ORIFICE

(ST) PIPEOPENING, CLOSING

SPEED CONTROL

(ST) FASTENERS

FUSION BONDED EPOXY COATING

PEST ANALYSIS OF BRAZILHow could the country itself affect our Business?

PESTAnalysis

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

SEESAW

• First level bullet

- Second level dash

Third level arrow

PESTAnalysis

ECONOMICAL FACTORS

High inflation rate

TECHNOLOGICAL FACTORS

Low availability of engineers and scientists

POLITICAL FACTORS

Corruption

SOCIAL FACTORS

Declining labourparticipation rate

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

POLITICAL FACTORS

Threat to the freedom of speech

Corruption

Strong presence of violent crime

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

SEESAW

ECONOMICAL FACTORS

Improvement and further development of infrastructure

Rising household debt

High inflation rate

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

SEESAW

SOCIAL FACTORS

Declining labour participation rate

Enhancement of sanitation and housing

Actions to reduce poverty and hunger

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

SEESAW

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

TECHNOLOGICAL FACTORS

Low availability of high skilled engineers and scientists

Currently low R&D expenditure

Expansion of higher and vocational education

OPPORTUNITIES THREATS

WEAKNESSESSTRENGTHS

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

SEESAW

STRENGTHS

• Most advanced technology quality and performance of valve

• High capacity of valve full lift and full port single chamber (required for firefighting flow rates)

• Pilot system automatism and control of water flow

• Protection filter can be cleaned without stopping the valve (unique) saves money and time in maintenance

STRENGTHS WEAKNESSES

THREATSOPPORTUNITIES

Fac

tors

Factors

Extern

alIn

ternal

HarmfulHelpful

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

SEESAW

• First level bullet

- Second level dash

Third level arrow

WEAKNESSES

• Strong focus on the German market 60% of productionexported to Germany

• non-existence of a purchasing department lack of bargaining power

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

STRENGTHS WEAKNESSES

THREATSOPPORTUNITIES

Fac

tors

Factors

Extern

alIn

ternal

HarmfulHelpful

SEESAW

• First level bullet

- Second level dash

Third level arrow

OPPORTUNITIES

• Valves are in need, where loss of water (liquid) through leaks, is relevant. (38% water loss in Brazil)

• Market segmentation demand for valves in the oil industry

• Start exporting to surrounding countries special focus to “Alianza del Pacífico” members

• Promising demand for valves inBrazilian “Favelas” locking valves remotely

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

STRENGTHS WEAKNESSES

THREATSOPPORTUNITIES

Fac

tors

Factors

Extern

alIn

ternal

HarmfulHelpful

SEESAW

THREATS

• Brazilian market for valves could already be mature denial of importance of leaks reduction

• Strong probability of Brazilian’s housing bubble to burst credit crunch decrease of demand

STRENGTHS WEAKNESSES

THREATSOPPORTUNITIES

Fac

tors

Factors

Extern

alIn

ternal

HarmfulHelpful

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

WEAK STRONG

BUYER POWER

DEGREE OF RIVALRYSUPPLIER POWER

NEW ENTRANTS

SUBSTITUTES

0

1

2

3

4

5

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

NICHER

FOLLOWER CHALLENGER

LEADER

Competitors’ Profile

Valloy:o 100% local companyo First mover & market

leadero Old-fashioned, standard

product offering

Bermad:o A multinational company

from Israelo Offers comprehensive

water works solutions

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

Bermad Tecnilab BrasilValloy

INNOVATIVENESS

STRATEGIC ALLIANCE

BRAND EQUITY ORGANISATIONAL CAPABILITY

TECHNOLOGY

PHYSICAL FACILITIES

FINANCIAL STANDING

0

1

2

3

5

4

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

Previous public bids by COMPESA

Investment aligned with UN Millennium Goals

Population growth

1

2

3

4

(~7,400 valves purchased)(24 contractors)

~6,200 valves purchased(21 contractors)

~560 valves(10 contractors)

70% REACH

82% PI

6% SHARE

584 valvesFor year 1

9% of total reach

Case Study by Portugal

5 Market research (PI)

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

Year 1 Year 2 Year 3 Year 4 Year 5

Conservative 584 1,091 1,746 2,444 3,142

Optimistic 1,000 1,211 2,038 2,792 3,770

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

EX

PE

CT

ED

UN

ITS

SO

LD

6%

7%10%

9%

14%

12%

16%

18%

14%

15%

MARKET GROWTH: +20% YOY

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

Year 1 Year 2 Year 3 Year 4 Year 5

Valloy 4,365 4,850 5,238 5,587 5,657

Bermad 2,425 3,274 4,074 5,063 6,286

Dorot 1,358 1,698 2,037 2,444 2,933

Technilab 584 1,091 1,746 2,444 3,142

Others 970 1,213 1,455 1,921 2,933

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

EX

PE

CT

ED

UN

ITS

SO

LD SOURCE OF VOLUME: VALLOY

MARKET GROWTH: +20% YOY

6% 9% 12% 14% 15%MARKET SHARE:

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

DN50 13% DN65 14% DN80 16% DN100 15% DN125 12% DN150 10%

DN200 7% DN250 5% DN300 2% DN350 2% DN400 1% DN500 2%

+88%

+60%

+40%

+29%

+79%

+68%

+37%

+35%MARKET GROWTH: +20% YOY

Yr1 Yr2 Yr3 Yr4 Yr5 Yr1 Yr2 Yr3 Yr4 Yr5

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

85%

15%

Contractors & Distributors

Direct Buyers

Sales Managers handling key Brazilian regions

(contractors)

Water State company

1.8 billion R$ investment in past 5 years

Distribution networks in Latin America

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

STARS UNKNOWN

CASH COWS DOGS

Relative Share

HIGH LOW

HIG

HL

OW

Gro

wth

Rat

e

DN50, DN65DN80, DN100

DN125, DN150

Approach:1 – Price competitiveness (<100% in price benchmarking)2 – Margin play depending on the role of SKU in the portfolio

SKU % Margin Benchmarking

DN50 35% 97%

DN65 50% 67%

DN80 30% 94%

DN100 35% 90%

DN125 35% NA

DN150 50% 86%

DN200 60% 81%

DN250 60% 79%

DN300 60% 80%

DN350 60% 61%

DN400 60% 59%

DN500 40% NA

PRE-SET VALVE

DIAMETERS

PRODUCTION OF PARTS &

PILOTSSHIPPING

PRODUCTION & ASSEMBLY

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

OUTSOURCED

60% OUTSOURCED

OUTSOURCED

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

MACHININGCASTING PAINTING MOUNTING TESTING

PRODUCTION & ASSEMBLY

DELIVERY COLLECTIONAFTERSALES

SERVICES

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

SEESAW

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

76%

24%

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

Liabilities O. EquityCurrent Assets LT Assets

€ 203

€453

€ 174

€1,231

€ 145

€3,143

€ 661

€ 286

€ 373

€ 283

€1,030

€ 374

€ 160

€2,152

€ 189

€ 758

€1,675

€ 637

€2,665

€ 622

Assets Assets Assets Assets AssetsL&OE L&OE L&OE L&OE L&OE

YEAR 5YEAR 2 YEAR 3 YEAR 4YEAR 1

5-year cum. NI: 4.3Mn €Initial Investment: 631,250€

Payback period

COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY

CONSERVATIVE SCENARIO YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Cost of Debt 10.40% 10.40% 10.40% 0.00% 0.00%

Corporate Tax Rate 15% 25% 25% 25% 25%

Total Debt 283,294.63 € 285,339.26 € 374,241.01 € 636,857.03 € 1,317,214.05 €

Total Equity 372,818.63 € 661,225.66 € 1,030,350.19 € 1,674,930.75 € 2,665,390.62 €

Total Firm Value 656,113.26 € 946,564.92 € 1,404,591.20 € 2,311,787.77 € 3,982,604.67 €

Cost of Equity 13.56% 13.56% 13.56% 13.56% 13.56%

WACC 11.52% 11.82% 12.30% 11.97% 11.65%

THANK YOU !