Saint-Gobain Pakistan

The case presents a capital budgeting scenario in which students will have the opportunity to calculate the Net Present Value of a proposal to establish a factory in Pakistan. Details of costs and revenue projections are given in the case; however, there is uncertainty surrounding the expected market share likely to be captured, which opens up the discussion. After five successful years, Usman (the country head of Saint-Gobain Glass Pakistan) had to decide whether to continue with the same business of performance glass, which though profitable was still a small business or to venture into the main glass market, i.e., float glass, by investing a major sum of money to establish a completely new glass manufacturing facility with a 350 tons per day capacity (the minimum plant capacity recommended by glass industry standards). If such a production capacity was installed, would the company make a profit? What will the payback be? What is the Net Present Value (NPV) of the proposal based on different sensitivities?