Fabrication & Forging Items to be used in Indian Railway

Opportunity Snapshot

Investment Opportunity in India - Railway Parts Manufacturing Image Courtesy: Ray Forster, 2013, Flickr CC.

Investment Opportunity

I am looking to set up a new Fabrication & Forging Factory for items to be used in Indian Railway coaches & wagons starting from Kolkata, India.

Sales forecast for Year 1 is US$ 2-4 Million.
The proposed products to be manufactured are as follows:

• Forging Items for Coaches - Lower Spring Seat, Guide, Collar, Retaining Ring, Footsteps etc.
• Forging items for Wagons - Door Chainless Cottar, Door Hinge Foot etc.
• Fabrication Items for Coaches - Brake Beam, Brake Head, Lower Spring Beam, Brake Shoe Key etc.
• Fabrication Items for Wagons – Flap Doors, Side Body, End Body, Crossbar etc.

The price range will be between INR 250 and INR 50,000 for a total of 20 products (proposed till now).
We have 4 contract manufacturers. My company focuses on marketing and distribution.

In the 1st year we will target the 16 Zonal Railways & the 4 manufacturing units of Indian Railways. We plan to expand to the rest of the PSU’s and Private Wagon Manufacturers in the future. We would also like to expand our network offices globally.

Competitive Advantage

Quality is sensitive subjects in this industry; hence we are focused on maintaining the quality of the goods. The price is always a tactical issue so in the 1st year we will focus on only marginal profits. Our focus on service will also ensure the timely delivery of goods.

The main highlights of our company:
• We have good contacts with Railway Officials
• We have approx. 15 years of experience in dealing with similar items

Rationale for the deal

We will focus on Fabrication & Forging items to be used in Indian Railway Coaches & Wagons.

Our target revenue in the 1st year is more than INR 2 Crore or approx. $ 2-4 Million. The revenue expands exponentially every year and by 2020 we will be targeting at a revenue of approx. $ 20-25 Million with addition of items in product baskets. We aim to acquire 20-25% market share in this industries by 2020.

Sales Forecast
Our Sales forecast is prepared based on quaterly projections. The forecast is based on our historical sales, the marketing strategies that we have just described our market research, and industry data.

We have the following forecasts:
1) A ʺbest guessʺ, which is what we really expect, and
2) A ʺworst caseʺ low estimate that we are confident we can reach no matter what happens.

The forecast is based on our plans to cover 16 Zonal Railways & 4 manufacturing units.

Best Guess Forecast:
• Business of approx. $ 2 million in 1st year

Worst Case Forecast:
• $1 Million Business in 1st Year

Use of financing

We are looking for $2 Million of capital to be used for:
• Startup expenses
• Building inventory
• Purchase of raw materials
• Purchase of Machineries
• Other

Opportunity for the investor

• The investor can take shareholding in the company.
• The investor will get an assured return of 12% annually and profit sharing.
• The investor can decide after 1st year whether to exit or continue.

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