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STM Assignment Workbook

INDUSTRY: CHEMICALS
Organization:Pidilite
Under
Faculty: Prof. Brajaraj Mohanty

Contents

Executive Summary......................................................................................... 4

Industry Overview........................................................................................... 5
2.1

Nature and Size of the Industry.................................................................5

2.2

Key Growth drivers for the Industry..........................................................6

2.3

Identification of Critical Success Factors (CSF)..........................................6

2.4

Market Analysis based on CSFs.................................................................7

2.5

Industry Benchmarks................................................................................8

2.6

PESTEL Analysis...................................................................................... 11

2.7

Porters Five Forces Analysis...................................................................15

2.8

Strategic Group Mapping........................................................................17

2.9

Competitive Landscape...........................................................................18

2.9.1

Low Cost......................................................................................... 18

2.9.2

New entrants must develop world-class capabilities..............19

2.9.3

Incumbents must reappraise their opportunities and adapt. 20

2.9.4

Riding the new market-growth waves.......................................21

2.10 Market Segmentation..............................................................................22


2.11 Buying Criteria Analysis of the Industry..................................................23
2.12 Key trends and future developments......................................................24
3

Company Overview....................................................................................... 25
3.1

Company background............................................................................. 25

PIDILITE....................................................................................................... 25
3.2

Timeline with key milestones and their strategic impact........................27

3.3

Vision, Mission, Goals, and Strategic Themes.........................................30

3.4

Key Product and Service Portfolio............................................................30


Presented by:

3.5

Section B Group: 2
Core Competencies of the firm................................................................31

3.6

Business Model of the organization.........................................................31


UM15082: Imtiaz Zafar
3.7 3rd Generation Balanced Scorecard (Amalgamation of 1st Generation
UM15094: Pankaj Gandotra
BSC and Activity System Map)..........................................................................32
3.8

UM15100: RaunakAvlani
SWOT Analysis........................................................................................
32

3.9

UM15102: Rajat Agarwal


Competitor Analysis (identify competitors).............................................34
UM15109: Sekhar Suman Mohanty

3.9.1

Based on Critical Success factors.....................................................34

3.9.2

Based on Financial indicators............................................................35

Future Growth Strategy for the organization.......................................................38


4.1Portfolio Analysis......................................................................................... 38
4.1.1Based on BCG Matrix............................................................................. 38
4.2

Companys Strategic Roadmap for future...............................................38

5. Reference

1 Executive Summary
The chemical industry in India is one of the earliest domestic industries,
contributing considerably to both the industrial as well as economic growth of
the country since it achieved independence. With around 70,000 commercial
products, which range from toiletries and cosmetics, to plastics and pesticides
Chemical sector contributes around 7% of Indian GDP today. The chemical
sector has witnessed growth of 13-14% in the last 5 years. Indian Government
has recognized Chemical Industries as a key sector and allowed 100% FDI.
With a growing market and purchasing power, the domestic industry is likely to
growth at over 10-13% in the coming years. Growing disposable incomes and
increasing urbanization are fuelling the end consumption demand for paints,
textiles, adhesives and construction, which, in turn, leads to substantial growth
opportunity for chemicals companies
The Indian chemicals industry has a diversified manufacturing base that
produces world-class products. There is a substantial presence of downstream
industries in all segments. Further, this large and expanding domestic
chemicals market also boasts of a large pool of highly-trained scientific
manpower. Chemicals constitute ~5.4% of Indias total exports. India already
has a strong presence in the export market in the sub-segments of dyes,
pharmaceuticals and agro chemicals. India exports dyes to Germany, the UK,
the US, Switzerland, Spain, Turkey, Singapore and Japan.
Indian chemical industry is rapidly growing industry and is estimated at $110
billion for fiscal year 2015. Specialty chemicals have observed a high growth
rate in the past and have grown at 11.5% per annum since fiscal year 2007
when the market size was $13.5 billion. Here in this report we have presented
our findings based on the findings we have derived using a number of strategic
tools.
Pidilite Industries (Pidilite) is engaged in the development, manufacture and
sale of chemicals, adhesives and sealing materials. The company's products
include adhesives and sealants, art material and stationary, construction
chemicals, automotive products, fabric care products, and wood finishes and
paints. Pidilite operates in Asia Pacific, the Middle East, the US, Brazil, South
Africa and Europe. It is headquartered in Mumbai, India, and employs around
4,904 people.
The company recorded revenues of INR48,441 million (approximately $793.9
million) in the fiscal year ended March 2015, an increase of 13.1% over 2014.
The company's operating profit was NR6,984.8 million (approximately $114.5
million) in fiscal 2015, an increase of 10% over 2014. Its net profit was
INR5,125.7 million (approximately $84 million) in fiscal 2015, an increase of
14% over 2014.
The companys industrial products segment includes organic pigments,
industrial resins and industrial adhesives. These products cater to industries
such as packaging, textiles, paints, printing inks, paper, and leather.
Pidilites others segment comprises manufacture and sale of speciality
acetates.
The company's brands include Fevicol, Dr.Fixit, FeviKwick, m-seal, FeviStik,
hobby ideas, Rangeela, Fine Art, Prime, Holdtite, Cheetah glue, Kids Art, Fevi

Gum, Ranipal, Fevibond, Terminator, Steelgrip, Wudfin, Piditint, and Pulvitec,


among others.

2 Industry Overview
2.1 Nature and Size of the Industry
Guidelines

Brief Description of the industry segment or sub segment


History and Evolution of the Industry
Position of Industry depending on Industry Life Cycle
(Introduction, Growth, maturity, decline)
Size (% of National GDP) of the industry

History and Evolution


of the industry

The chemical industry in India is one of the earliest


domestic industries, contributing considerably to
both the industrial as well as economic growth of the
country since it achieved independence. With around
70,000 commercial products, which range from
toiletries and cosmetics, to plastics and pesticides
Chemical sector contributes around 7% of Indian GDP
today.The chemical sector has witnessed growth of
13-14% in the last 5 years. Indian Government has
recognized Chemical Industries as a key sector and
allowed 100% FDI.

Key Consumers of this


industry and their
changing needs

Chemicals are a part of every aspect of human life,


right from the food we eat to the clothes we wear to
the cars we drive. Chemical industry contributes
significantly to improving the quality of life through
breakthrough innovations enabling pure drinking
water, faster medical treatment, stronger homes and
greener fuels. The chemical industry is critical for the
economic development of any country, providing
products and enabling technical solutions in virtually
all sectors of the economy.

Stage in the Industry


Life cycle

There are Five stages in Industry lifecycle namely


Development Phase, Introduction Phase, Growth
Phase, Maturity Phase and Decline Phase. The Indian
chemical industry has earned a revenues in the
range of $155-160 billion in 2013 and is expected to
grow at a rate of 11-12% in the next two to three
years according to Frost & Sullivan, a business
consulting group. This industry has also seen a CAGR
of 13-14% which indicates that this industry is in

Growth phase of Industry Lifecycle.

Total Available Market


Size (National and
Global)

Indian chemical industry is rapidly growing industry


and is estimated at $110 billion for fiscal year 2013.
Specialty chemicals have observed a high growth
rate in the past and have grown at 11.5% per annum
since fiscal year 2007 when the market size was
$13.5 billion.
Global chemical market size was estimated at $3.7
trillion in fiscal year 2012 and is expected to grow at
4-5% per annum over the next decade to reach $5.8
trillion by 2021.

Total Serviceable
Market Size (National
and Global)

National: 11 US Billion Dollar


Global: 5.12 Trillion US dollar

Source: Annual Reports of Top 5 Companies in Chemical Sector.

2.2 Key Growth drivers for the Industry


Key Growth drivers

Rationale

1.Huge growth
potential in domestic
market

100% FDI has been granted by Indian Government in


Chemical sector. This boosts the confidence of
foreign investor to carry out their business in India.
Easy availability of factor of production is one of the
key reason why it is always preferable to set up
industry in our country. Also industries enjoy low
operating and manufacturing cost here.

2.Rise in GDP and


Purchasing power
3.Low cost
manufacturing
4.Policies supporting
FDI

2.3 Identification of Critical Success Factors (CSF)


Critical Success Factor
identified

Rationale

CSF 1 : Developing
market in India

The developing market of India is taking a lot of steps


to make India better place for industry friendly by
allowing FDI.

CSF 2: Cost advantage


by investing in
production for export
and in R&D

Low Unit cost of production and export friendly


policies in India help investors to set up industries in
India.

CSF 3: Growth in

Dependence on agriculture, pharmaceutical, plastic,

associated (chemical
dependent) sector

polymer and cosmetics is contributing to the critical


success factors for the chemicals industry

CSF 4: Availability of
reliable and
competitive feedstock
supply

Availability of abundant raw materials across the


countries helps industries run smoothly.

2.4 Market Analysis based on CSFs


Region

India

CSF 1:
Developing
market

CSF 2: Cost
advantage by
investing in
production for
export and in
R&D

CSF 3: Growth in
associated
sector

CSF 4:
Availability
of reliable
and
competitive
feedstock
supply

The main
feedstock for the
chemical
industries are
natural gas for
fertilizers, coal
for power and
naphtha for
petrochemicals.
More than half of
production of
natural gas is
done by ONGC
and OIL3. ONGC
has significant
presence in
western region
of India and
several sites of
OIL is present in
Assam ( i.e.
North east
India). The main
naphtha
manufacturing
centres are India
RIL (Baroda),
HPL (Haldia) and
IOC Cracker
(Panipat) and
these sites are

Research and
development
opportunities in
India are limited
but it is
expected to
grow above the
rate of 2%
thereby
bridging the
competitive gap
with China and
other countries
to a certain
extent. India
has a vast pool
of scientists
which can be
leveraged to set
up R&D centres
in India. Major
specialty
chemical
companies
including BASF,
DuPont, DSM
and Dow
Chemical have
already set up
R&D or
technology

Indian
manufacturers
have been
developing
market access
quite strongly
with increased
understanding of
regional needs
and more focus
on brand
development.
Consumption of
major chemicals
has also
witnessed 6%
CAGR between
2009 and
20131.Bulk
chemicals form
the largest subsegment of
Indian chemical
industry with
40% market
share whereas
specialty
chemicals with
~19% market
share is the
fastest growing

Speciality
chemicals
have gained
great
importance
in the local
market. The
domestic
market is
achieving
critical
economies
of scale.
Product
sophisticatio
n is forcing
an
equivalent
chemical
usage. The
local
production
has been
positively
influenced
by these
trends.

spread out all


across the
nation.

centres in
India.5

segment.
Moreover India
has a very
strong outlook
for the key end
user industries

Note: Use data for the year 2013-14

2.5 Industry Benchmarks


Size of industry: 11 US Billion Dollar

Category

Industry
Level
(National
)

Activity
Ratios

Indicator

Market
Size

Industry Average of Top 5


Firms or players serving 7580% of the market
201112

201213

2013
-14

2014
-15
(till
Q3)

201
112

201
213

201
314

2014
-15
(till
Q3)

4976.
41

5533.
17

5728
.73

4963
.04

798
7.2
8

852
9.8
7

872
5.2
6

8689
.64

.041

.044

.041

.
070

.
076

.
077

.073

Size as %
of GDP

.035

Inventory
turnover

13.05
8

11.73
4

11.0
8

NA

6.3
8

9.2

10.
72

5.71

Receivabl
es
turnover

8.138

7.628

6.75
6

NA

7.6
4

5.2
2

4.8
4

NA

Payables
turnover

Liquidity
Ratios

Market Leader

NA

Asset
turnover

1.158

1.13

1.05
6

NA

0.8

0.7
9

0.8

1.15

Current
ratio

1.99

1.736

1.74
4

NA

1.2
1

1.5
3

2.0
2

1.78

Quick
ratio

1.404

1.176

1.14
2

NA

0.8
3

1.2
5

1.6
8

1.2

Cash ratio
Debt-toassets

NA
.341

.326

.368

NA

NA
.

.308

Category

Industry Average of Top 5


Firms or players serving 7580% of the market

Indicator

201112

201213

2013
-14

2014
-15
(till
Q3)

ratio
Solvency
Ratios

Profitabili
ty Ratios

Valuation
Ratios or
Price
Ratios

Debt-tocapital
ratio

Market Leader

201
112

201
213

201
314

332

326

368

NA

2014
-15
(till
Q3)

NA

Debt-toequity
ratio

1.546

2.503

1.58
66

1.98
7

0.4
9

0.4
6

0.5
3

.44

Interest
coverage
ratio

10.50

15.41

19.3
8

20.3
3

5.0
06

5.1
48

5.0
06

6.6

Gross
profit
margin

10.01

9.354

8.72
6

8.89

9.9
9

9.7
5

8.8
5

8.39

Operating
profit
margin

12.26
5

11.77
8

11.0
2

11.6
8

12.
8

12.
26

10.
67

10.3
0

Net profit
margin

6.42

6.47

4.69

5.63

7.0
6

7.2
3

4.9

6.32

Return on
assets
(ROA)

.0700

.
06587

.
0699
7

.067

0.0
728
35

0.0
748
45

0.1
046
29

0.09
7323

Return on
equity
(ROE)

15.99
2

16.17

7.15
6

8.69

12.
12

12.
56

7.9
4

10.5
5

Price to
Earnings
(P/E)

18.69

18.43

19.6
1

17.2
5

15.
01

12.
77

16.
76

17.8

PEG Ratio
= (P/E
Ratio) /
Projected
Annual
Growth in
Earnings
per Share

NA

NA

NA

NA

NA

NA

NA

NA

Price to

-7.024

-3.68

-39

-25.3

Category

Indicator

Industry Average of Top 5


Firms or players serving 7580% of the market
201112

Competiti
ve Ratios

201213

2013
-14

2014
-15
(till
Q3)

2.95
2

Market Leader

201
112

201
213

46.
91

12.
81

201
314

2014
-15
(till
Q3)

Cash Flow

14.03
2

Price to
Book
(P/B)

2.58

2.76

3.05
2

3.00
1

1.7
8

1.5
5

1.2
9

1.48

Price to
Sales

1.37

1.41

1.48

1.25

1.1

.
979

.84

.88

Dividend
Yield

1.79

2.322

1.61
4

2.63

2.8
9

3.1

3.4
9

3.6

Dividend
Pay-out
Ratio

29.65
6

30.44
6

28.0
3

29.6
3

43.
43

39.
6

58.
42

49.3
1

Enterpris
e value
(EV is
market
capitalisa
tion plus
debt
minus
cash)/
EBITDA

10.84

11.22

12.7
76

13.4
5

8.4
7

7.6
8

8.4
7

8.55

Staff
Turnover
or
Industry
Attrition
Rate

NA

NA

NA

NA

NA

NA

NA

NA

Staff
Cost/
Salary as
percentag
e of Sales

0.051
843

0.052
623

0.05
1266

.
0058
7

0.0
285
98

0.0
308
23

0.0
291
7

.
0285
4

Operating
Expenses
as
percentag

0.206
8

0.202
05

0.20
95

.
2156

0.2
104

0.2
247

0.2
082

.
2092

Category

Indicator

Industry Average of Top 5


Firms or players serving 7580% of the market

Market Leader

201112

201213

2013
-14

2014
-15
(till
Q3)

201
112

201
213

201
314

2014
-15
(till
Q3)

Depreciat
ion as
percentag
e of Sales

0.026

0.025

0.02
9

.
0035

0.0
32

0.0
34

0.0
32

.
0033

Fixed
Assets to
Sales
Revenue

0.428

0.405

0.40
7

.458

0.5
050

0.5
15

0.5
20

.522

Advertisin
g as
percentag
e of Sales

.51

.61

.75

.78

1.7

2.2

2.7

2.45

e of Sales

In case you come across other benchmark ratios used in particular Industry,
then please include them as well.
Source: http://www.gurufocus.com/, http://www.moneycontrol.com/

2.6 PESTEL Analysis


Category

Description

Political

Chemical sector is

greatly influenced by the


political forces. There is a

change in policies every


time the government
changes. The business
decisions are steered to

a great extent based on


the individual
preferences of the new
leadership.

Economic

Social

Key factors for analysis

The economic boom in


India particularly in the
last one decade has
played a significant role
in charting the success
of the company. Lot of
Industrialization has
been brought about,
which has always been a
catalyst for sectorial
sprinting growth

In India the whole


country and its people
are poised for a giant
leap towards economic
growth and prosperity.
People have realized how
important it is for the
economy to develop for
their own betterment.
Levels of awareness
have gone up drastically
and people are much
more open to industrial

100 per cent FDI is


permissible
government has been
encouraging R&D in the
sector
Setting up of PCPIRs

Rational

The cum
April 20
USD9.5
FDI have
of the it
fall unde
route fo
to 100 p
continuo
reserved
product
thereby
investm
gradatio
have be
integrat
Petroche
(PCPIR).

Increase in GDP growth


Rate

Increase in Global player

Liberal economic policies

Ease of doing business in


the country

Chemica
cent of n
chemica
by China
Overall
(IIP).
13 per c
cent of t
contribu
Strong g
chemica
CAGR of
Increasi
players
acquisit

Growth in dependant sectors


Huge growth potential for
the domestic market
Low-cost manufacturing

A large
agricultu
demand
for the c

Polymer
industrie
growth o

Per-capi
in India
peers an
demand

growth.

Technological

Environmental

Legal

Chemical Sector in India


is to a great degree
driven by technological
developments and
innovations and has its
earnest efforts directed
towards improving its
technological prowess to
meet the changing
requirements of a
growing economy.

Introduction of Green
Chemistry

R&D for new production


methodology for pesticides

Partnership with foreign


institution for symbiotic
development

Providing safe and


healthy working
environment to all its
stakeholders is one of
the most important
aspects of chemical
industries. The depleting
water and energy
resources are a cause of
concern for all. Yet with
advancements the
authority trying to check
the environment
degradation.

Possibility of environmental
damage

Waste Management and


clean development
mechanism

Introduction of carcinogenic
and related diseases

Location of the production


unit

These days no company


wants to be unethical in
its activities and be on
the wrong side of the law
books, as the media in
India is very active and
the smallest of
irregularities noticed and
reported by them can
ruin the image of the
company hugely.

High regulation in chemical


sector

Increase in legal expenditure

Comprehensive Legal
instruments for process
safety

Speedy resolution in IPR


issues in the legal system

A new m
product
waste a
now in p
Green c
like CIPE
partners
for susta
develop
sector. W
the pilot
techniqu

Majority
chemica
for envir
damagin
human r
entire p
industrie
industrie
for carci
diseases
has not
Tragedy.
technolo
and clea
reduce e
Location
a major
fails to c
product

The com
scores o
the acts
Act 195
Environm
Sale of G
high reg
sector. P
priority
This was
Bhopal g
have sp
which fa
industria

2.7 Porters Five Forces Analysis


Porters Five
Forces

Description

Buyer Power

Here we ask
how easy it
is for buyers
to drive
prices down.
If one deal
with few,
powerful
buyers, then
they are
often able
to dictate
terms to it.

multiple sources
of supply

long-term
contracts

pricing power

Here we
assess how
easy it is for
suppliers to
drive up
prices. The
fewer the
supplier
choices one
has, and the
more one
need
suppliers'
help, the
more
powerful
ones
suppliers
are.

Dependencies
on supplies from
larger plants

Not easily
substituted

What is
important
here is the
number and
capability of
competitors.
If one has
many
competitors,
and it offer
equally
attractive
products

Total No of firms
(Listed as well
as Unlisted):111
No of large
firms:17

Supplier Power

Existing
Competition

Key factors for analysis

Highly
fragmented
industries

Stiff competition
from foreign
competitors

low price

Rationale
Customers have
multiple sources of
supply. Chemical
companies are bound
by long-term
contracts. Niche
specialty chemicals
have some pricing
power

Small chemical
companies rely on
supplies from larger
plants, or
petrochemical units
Inputs for a chemical
plant cannot be easily
substituted

Chemical sector is
highly fragmented
with intense rivalry
amongst companies.
Since, 100 per cent
FDI is allow hence
domestic companies
face stiff competition
from foreign
competitors as well.
International
companies may also
dump chemicals at
low price

and
services,
then it will
most likely
have little
power in the
situation.
Threat to new
entrants

Threat to
substitutes

sensitivity

Power is
also
affected by
the ability of
people to
enter our
market. If it
costs little
in time or
money to
enter
market and
compete
effectively,
if there are
few
economies
of scale in
place, or if
there exists
little
protection
for key
technologie
s, then new
competitors
can quickly
enter our
market and
weaken our
position.

Entry/ Exit
barriers and
costs

Huge capital
requirements

Other barriers

This is
affected by
the ability of
customers
to find a
different
way of
doing what
you do. If
substitution
is easy and

Specific
chemical
requirements

No direct
substitutes

Here exists Entry/ Exit


barriers and costs.
Huge capital
requirements and
patent protection are
significant barriers.
Other barriers include
- R&D and personnel
requirements

Buyers tend to have


specific chemical
requirements .There
are no direct
substitutes for a
specific chemical
requirement.

substitution
is viable,
then this
weakens the
power.
Effect of
Complementor
s

2.8 Strategic Group Mapping


We have taken the first 10 listed companies out of the 94 companies in chemical
sector to construct strategic map. We have taken production category breadth in
horizontal axis and extent of market presence in the vertical axis to plot the
companies in a 2 dimensional graph. The size of the bubble represents the
relative market share of the particular industry in the segment.
Here is the detail representation.
Company
Name
Tata
Chemicals
UPL
BASF
PidiliteInd
India Glycols
AartiInd
Phillips
Carbon
Guj Heavy
Chem
Guj Alkali
Linde India

Net Sales

Product category
breadth

Market Presence(Scale
of 1 to 5)

8689.64
4968.27
4429.89
3878.24
2885
2632.78

10
1
5
5
3
7

5
5
4
3
3
2

2277.46

2224.21
1896.06
1428.46

2
1
3

1
1
1

6
5
4

Market Presence

3
2
1
0
0

10

12

Product Category Breadth

Inference from the Strategic Map:


1. Guju Heavy Chem, Guj Alkali and Linde India are having lower breadth and
relatively lower market segment. Hence they can be clubbed together in
one competition segment.
2. Similarly Philips carbon, India glycol, Pidilite, BASF and AratiInd can be
considered into another competition segment.
3. UPL is having high market presence and low product category breadth. No
other industry has the same composition and hence is enjoying absolutely
no competition in its place.
4. Tata chemical being the market leader is having both high product
category breadth and market share. Similar to UPL it is enjoying absolutely
no competition in the market.

2.9 Competitive Landscape


Value propositions ( Low Cost, Differentiation, Niche)
With significant cash reserves on hand, many global chemical companies are
developing or launching new products and services and appear optimistic
about increasing revenue in the short term. A major shift in the competitive
landscape of the worldwide chemical industry is under way as new players from
oil- and gas-producing countries and the high-growth developing markets of
China and India join the industrys top ranks in sales. The new players focus on
resource monetization and economic development, in contrast to the classic
shareholder value-creating goals that have historically informed the strategies
of top players.Not only are these newcomers playing by different rules, but they
are also better placed to benefit from two of the key dynamics driving the
industrys future: control of advantaged feedstock in a high-oil-price world, and
privileged access to the most attractive consumer-growth markets. If the
newcomers want to establish themselves as industry leaders in the coming
decades and fully realize the industrys wealth-creating and society-supporting
potential, they must evolve rapidly. They should move beyond simply
monetizing their cost- and market-advantaged positions to build capabilities
that will put them on more equal footing with incumbents when it comes to

management, innovation, and marketing performance. At the same time, to


assure continuing success in this new landscape, incumbents must reconsider
their position in the industry and adapt their strategies and priorities
accordingly. Newcomers and incumbents that can take these steps will be well
positioned to ride the global chemical industrys continuing profitable growth
trajectory.
2.9.1 Low Cost
Coming out of the financial crisis and economic slowdown of the past two years,
the global chemical industry is seeing major changes. The first relates to energyprice dynamics. The chemical industry is confronting unprecedented
hydrocarbon price volatility. In addition, energy prices are significantly higher
than they have been for the past two decadesand they are higher than they
were coming out of previous recessions. While there is little progress on climatechange regulation, which could add carbon taxrelated costs for chemical
companies in certain regions, the industry is nevertheless seeing increasingly
pronounced divergences in gas and electric power prices among regions. Overall,
the degrees of cost advantage and disadvantage among regions have increased.
Second, the economic downturn has highlighted the accelerating shift in the
growth of global chemical demand from developed economies to the developing
world.
The industrys leading incumbents have operated for the past two decades with
similar goals: striving to increase shareholder value based on their technology
portfolio and asset base, and making opportunistic excursions from traditional
home markets to tap emerging-market growth.
In contrast, for governments and their production subsidiaries from
hydrocarbons-rich countries, chemical manufacturing represents an opportunity
to monetize advantaged feedstock resources and build industries that will
provide jobs for their rapidly expanding populationseven if it will have a
detrimental effect on industry structure and profitability.
For leading companies based in fast-growing major emerging markets, chemical
production is seen as a necessity to provide the products needed for continued
economic expansion. Lower labor costs in these countries translate into
competitive capital-investment and operating costs for these companies, many
of which are owned by the state or by families that have close ties to the
government. These companies can establish production to capture local market
growth, and they are little concerned about any resulting global supply-demand
imbalances for the chemicals in question.
Importantly, both groups of newcomers include many government-backed
companies. As a result, these companies can invest on a scale that is much
greater than even the largest traditional chemical-industry players.
These changes have been building for years, but their importance is hard to
overstate. In summary, incumbents that have ridden growth in developed and

developing markets are now undercut by powerful new rivals with access to
cheap feed stocks and the most attractive growth markets.
The new competitive dynamics pose important questions for both newcomers
and incumbents about the steps they must take to assure their continued
success. For the newcomers, the choices are arguably more straightforward than
for the incumbents, which have large legacy businesses to reposition.
2.9.2 New entrants must develop world-class capabilities
For new producerswhether based in feedstock-rich countries or high-growth
emerging-market countries with low labor costsmarket entry has been built on
production, taking advantage of their lower cost base to establish a presence
based on price in their export markets. This is a logical approach and a natural
entry point. But it tends to result in the commoditization of the market and a
strict focus on the lowest price, and it therefore risks destroying a lot of the value
that exists in the market for the new entrants as well as for existing players.
There have been numerous examples of competition from new low-cost
producers that has reduced prices well below the level that would assure them a
foothold in developed markets, in products as varied as polyethylene
terephthalate and fluorochemicals. Similarly, Chinese specialty-chemical
products are often sold in developed markets in North America and Europe on a
specification basis through third parties, which means that the Chinese
producers are cut off from customers and have limited insights into market
dynamics.
As new players build their presence in the industry, they must develop
capabilities to sustain their growth and look more ambitiously at the kind of
profile they want to create. As a first step, they must establish their own R&D
and innovation capabilities, which will enable them to offer differentiated
products and make them less dependent on incumbents for technology.
Second, new producers must start to build marketing capabilities that will enable
them to move beyond selling simply on low price and reap the full economic
benefits from their products. They must develop expertise in approaches such as
differentiated marketing, transactional pricing and value pricing, and sales-force
management. This is a need shared by all new producers, whether they are
manufacturing for export or meeting surging demand in home markets.
Developing these capabilities will help new producers get better returns from
their current product range and avoid leaving money on the table from selling at
unnecessarily low prices. Doing so will become even more pressing as new
producers expand their portfolios to include more sophisticated and higher-valueadded products, from which they will want to extract maximum value.
Becoming worldwide suppliers will require new producers to establish marketing
and sales capabilities in developed markets that are sophisticated enough to
support this type of product. Many of these products will require a completely
different type of sales approachone that is capable of dealing with product-

approval registrations, gaining intimacy with customers product-development


programs, and getting products specified for these programs.
2.9.3 Incumbents must reappraise their opportunities and adapt
Chemical industries will have to take steps to adapt to lower overall demandgrowth rates for chemicals in their home markets. Clearly, there are segments of
the industry in mature, developed markets that continue to enjoy good prospects
and that are relatively safe in the new competitive landscape. These divide into
two main areas, upmarket and down-market, where there will be niches that are
relatively impregnable.
The first area is chemical-industry segments in markets that require customer
intimacy and a high level of service support. Examples include flavours-andfragrances companies that have developed superior customer insights and
exclusive manufacturing know-how to support customer demands; coating
companies that manage the painting of automobiles within the production line;
leather chemicals, where the producer works closely with luxury-goods makers;
and water-treatment and construction chemicals. In all these cases, customer
intimacy makes them less vulnerable to inroads from low-cost offshore
competitors. The second area is a group of basic chemicals where the low prices
mean that importation is not viable; this includes such products as sulphuric
acid, hydrogen peroxide, industrial gases, and, to an extent, caustic soda. These
are, and will continue to be, regional markets.
Where incumbents must look especially carefully is at the many market
segments between the two poles. In many of these segments, lower demand
growth is likely to translate into the consolidation of players in certain sectors
and capacity closures.
Companies must bear in mind that as the industry landscape shifts, the relative
attractiveness of products will change, with some more vulnerable to the trends
in the industry than others. They must look at their portfolios accordingly.
Established markets are becoming net importers of a growing range of
chemicals, as new feedstock-advantaged producers can profitably serve these
markets. While imports frequently lead to lower prices and reduced margins in
the short term, this is not always the case in the long run, particularly if
incumbents are willing to shut part of their capacity. Imports are rarely able to
cover all domestic demand volumes, and for the surviving incumbents that can
manufacture domestically at below the cost of imports, this evolution can be
positive if it results in a more clearly structured and disciplined market with
pricing based on import-price parity.
2.9.4 Riding the new market-growth waves
The chemical companies must look beyond their home markets and consider
how they can ride the dynamics that are transforming the industrythe rise of
chemical production in feedstock-advantaged countries and the shift in demand
growth to emerging markets. Incumbents must ask themselves how they can join
up with the new players, whether by establishing a presence in a resource-rich

country or by building capacity in China and other high-growth marketsor by


doing both.
They must then consider what they can do to enhance and maintain their
attractiveness as a partner. Many incumbents operate broad portfolios of
businesses; these companies must think about how they can clarify and best
articulate the value proposition that they bring to their potential partners. High
on any list will be innovationcreating new technologies and productswhich
has always been a route to profitable growth in the chemical industry and
remains an area of strength for incumbent chemical companies. Companies that
have technology that is needed by oil-producing countries to use in their new
petrochemical plants will be best placed in any contest to participate in joint
ventures. And companies with know-how that is much in demand in rapidly
growing emerging markets will be of greater interest to those countries
governments; they are thus better placed to gain access to such markets.
The number of exceptionally resource-advantaged countries is finite, and major
emerging markets such as India and China may pursue a policy of favouring
domestic champions. Incumbents should use any momentum gained from
recovery in their traditional businesses to advance their positions in the new
industry landscape.

Competitive Strength Assessment (Normal and Weighted)


Tata
Chemicals

Measures/Stren
gth
Product
performance

Wei
ght
0.1
5

Brand Image
Manufacturing
capability

0.1
0.1

UPL

India
Glycol

Pidilite
BASF
Sc
Sc
Rati Sco Rati Sco Rati Sco Rat or
Rat or
ng
re
ng
re
ng
re
ing e
ing e
1.
1.
8 1.2
8 1.2
6 0.9
7 05
8
2
0.
0.
9 0.9
8 0.8
8 0.8
5
5
6
6
0.
0.
7 0.7
7 0.7
6 0.6
6
6
7
7

Technological
skills
Distribution
channel
New product
innovation
Financial
resources
Relative cost
position
Customer
service
capability

0.1

0.7

0.8

0.7

0.1

0.8

0.7

0.5

0.1

0.6

0.5

0.6

0.2

1.6

1.4

1.2

0.1

0.7

0.6

0.5

0.
7
0.
8
0.
6
1.
4
0.
8

0.0
5

0.4

6.5

0.3
25

0.4

0.
35

Sum of weights

0.
7
0.
5
0.
7
1.
6
0.
6

0.
35

7
5
7
8

Overall
strength rating

7.6

7.0
25

6.2

6.
8

6.
95

Rating Scale: 1 = very weak; 5 =


average; 10 = very strong

2.10

Market Segmentation

Key Products and/or Services

Sub-Segment

Pharmaceuticals

Prescription and over-the-counter drugs; in-v


substances, vaccines; serums, plasmas and o
vitamins and other pharmaceutical preparati
veterinary use.

Basic chemicals/Commodity Chemicals

Inorganic chemicals, bulk petrochemicals, org


plastic resins, synthetic rubber, man-made fi
printing inks,

Specialty chemicals

Paint, adhesives, electronic chemicals, water


oilfield chemicals, flavours & fragrances, rub
paper additives, industrial cleaners, and fine

Agricultural chemicals

Fertilizers and crop protection chemicals, i.e.

Consumer products

Soap, detergents, bleaches, laundry aids, too


hygiene products, shampoos and other hair c
products, cosmetics, deodorants and other b
perfume and cologne, among others

2.11

Buying Criteria Analysis of the Industry

Parameter

Details

End-user Segments

Consumption Pattern

It describes the consumption


pattern of consumers.
Consumption pattern depends
upon proximity, demographic
and behaviour of the user

Individual Customers

It describes the purchase


policy of customer. In case of
B2B sales this is a
consideration for a number of
companies.
It describes the quality of the
product and service provided
by the vendor to the end user.

Credit Policy

Quality

SMEs
Corporate

Business User
Retailers
Everyone

Impact of buying criteria on consumer choices


Listing of key buying criteria for different consumer segments

The impact of the buying criteria is graded on the basis of the intensity and
duration of their impact on the current market landscape. The magnitude of
the impact has been categorized as described below:
Low - Negligible or no impact on the market landscape
Medium - Medium-level impact on the market
High - Very high impact with radical influence on the growth of the market

2.12

Key trends and future developments

Key Trend

Impact on Industry (Low, Medium,


High)

Certainty o
medium pr

Competitive Price
Product line extension
Diversification

High
High
High

High
Medium
High

Analysis of Trends with High Impact and High Certainty to be carried out
Impact on strategies or business models to be highlighted

3 Company Overview
3.1 Company background
PIDILITE
Pidilite Industries Limited is the largest adhesive manufacturer in India. It also has
worldwide presence in adhesives, art material, construction chemicals and other industrial
chemicals. The company was founded in 1959 Pidilite Industries was incorporated in

1969 is a well-known name in adhesives market. Pidilite is the market leader in


adhesives and sealants, construction chemicals, hobby colours and polymer
emulsions in India. Its brand name Fevicol has become synonymous with
adhesives to millions in India and is ranked amongst the most trusted brands in
India. Fevicol, the premier brand of the company ranked among the Top 15 Indian
brands by FE Brandwagon Year Book 1997.

The Company's product range

includes Adhesives and Sealants, Construction and Paint Chemicals, Automotive


Chemicals, Art Materials, Industrial Adhesives, Industrial and Textile Resins and
Organic Pigments and Preparations. Pidilite was the first company in India, which
started production of violet pigment in the year 1973. In 1984, the company's
consumer product division was born and on 1989 entered into fevicryl acrylic
colours transform fabric and multi-surface painting market. The Company made
its maiden public offering of equity shares in the year 1993. During the year
1995, plants of the company in Mumbai and Vapi acquired an ISO 9001
certification. Also the plant at Mahad received an ISO 9002 certification in the
same year. In 1999, Pidilite had acquired 'Ranipal', leading brand of optical
whitener and subsequently acquired 'M-Seal', leading brand of epoxy compounds
in the year of 2000. In the identical year of 2000 itself, Fevicol campaign won the
Silver ABBY for the Campaign of the Century in India. The Company had launched
Dr.Fixit range of Construction Chemicals in the year 2001 and had acquired
'Steelgrip', leading brand of PVC insulation tape in India during the year 2002.
Pidilite had again acquired the Roff' brand of Construction Chemicals in the year
of 2004. A wholly-owned subsidiary in Singapore, under the banner 'Pidilite
International Pte Ltd was incorporated by the company in the year 2005 for its
international operations, encompassing the acquisition of overseas companies

and joint ventures. Also in the same year 2005, Pidilite had acquired Chemson
Asia Pte Ltd, an existing Singapore-based in the business of manufacturing
waterproof coating and emulsion paints, thereby adding to its existing, and
rapidly-growing construction chemicals and paints range and the company had
took over Jupiter Chemicals in Dubai. During the identical year of 2005, the
company

had

incorporated

subsidiary,

namely

'Pidilite

Do

BrasilDesenvolvimento De Negocios Ltd', in Sao Paulo, Brazil and 'Pidilite Middle


East Limited', as an offshore company in the Jebel Ali Free Zone of Dubai. During
the year 2006, Pidilite had acquired Tristar Colman brand and business, Tristar
Fine Art, is a market leader in brushes for drawing and painting and Bamco
Thailand, a Construction Chemical company. Also Pidilite had acquired the
business and assets of Sargent Art Inc through a subsidiary Pidilite USA Inc,
Delaware. The Company had established its R&D centre in Singapore under the
banner 'Pidilite Innovation Centre Pte Ltd.' Pidilite had de-merged VAM
manufacturing unit at Mahad of Vinyl Chemicals (India) Ltd into the company
with effect from 2007. During 2007-08, Fevicol 1K PUR and FevicolKwikgrab were
introduced by the company to take care of special applications in building
construction segment. Pidilite with its wholly-owned subsidiaries had acquired
assets and business of branded sealants and adhesives from Hardcastle&Waud
Manufacturing Co. Ltd and associates. The Company had acquired Bhimad
Commercial Co. and Madhumala Traders by investing Rs 170,000 each in
February of the year 2008. Fevicol has been ranked No. 1 in Household Care
Segment in June 2008.

3.2 Timeline with key milestones and their strategic impact


Ye
ar
19
59
19
69

Pidilite
Founded in 1959
The Company was incorported as a private limited company on 28th July
under the name of Parekh Dychem Industries Pvt. Ltd., to acquire and
take over on a going concern the business carried on by a partnership
firm M/s. Parekh Dychem Industries established in 1961 and having a
factory in Mumbai. The Company was promoted by BalvantrayKalyanji
Parekh along with his brothers. The brand names, are being Fevicol,
Fevibond, Fevigum, Pidifix, Pidivyl, Pidicryl, Acrolise, etc.
- The Company undertook to set up synthetic resin project with a
capacity resin project with a capacity of 3000 TPA at Mahad
Industrial area in Raigad district, Maharashtra. Also undertook to set up
a constructions chemicals project at Taloja industrial area,

19
84

19
85
19
86
19
89
19
92

Taloja, Maharashtra.
Three other companies in the same group viz., Kodivita Pvt. Ltd.,
erstwhile Pidilite Industries Ltd., and Triveni Chemicals Ltd. were
amalgamated with the Company effective 1st July, 1st April 1989 and 1st
April 1992 respectively.
- Effective 1st July, Kondivita Pvt. Ltd. amalgamated with the Company
after necessary approvals. The shareholders of erstwhile
Kondivita Pvt. Ltd., were allotted 41,000-15% preference share of Rs 10
each and 19,500 shares of Rs 10 each.
- 54,000 I and II Pref. - 4% shares allotted to promoters. 26,000 No. of
equity shares allotted to promoters originally: 26,000 Rights
Shares issued in prop. 1:1 in 1980, 52,000 bonus shares issued in prop.
1:1 in 1981.
I & II Pref. 4% shares redeemed. 12% redeemable shares upgraded to
15%. 19,500 No. of equity shares and 41,000-15% Pref. shares allottee
to Kondivita Pvt. Ltd. on amalgamation. 54,000-15% Pref. shares allotted
to promoters & in lieu of 1st and 2nd 4% Pref. shares.
The Name of the Company was changed to PDI chemicals private limited
on 1st July, and then to PDI chemicals limited, on 28th October, 1988.
Name was once again changed to Pidilite Industries Ltd., on 21st
February, 1990.
Effective 1st April, Pidilite Industries Ltd. was amalgamated with the
Company. As per the scheme of amalgamation, 1,93,500 No. of equity
shares of Rs 10 each and 72,000-15% preference shares of Rs 10 each
were allotted to the shareholders of erstwhile Pidilite Industrial Ltd.
As per the Scheme of Amalgamation approved by High Court of Mumbai,
Triveni Chemicals Ltd., (TCL) was merged with the Company effected 1st
April. Accordingly 90588 No. of equity shares of Rs 10 each and 40,00015% preference shares of Rs 10 each were allotted to the erstwhile
shareholders of TCL. 38,49,034 shares allotted in prop. 72:10 to
promoters on 29.1.93.

19
93

19
94

19
95

19
96

19
97
19
97

19
98

19
99

15,36,378 shares issued at a premium of Rs 100 per share in October. Of


which 1,50,000 shares issued on preferential allotment basis to Viny
Chemicals India Ltd. (only 1,35,000 shares taken up). Balance 13, 86,
378 shares along with 1,50,000 shares not taken up were issued to the
public (all were taken up).
The projects for SBR Latices, AZO Pigments and CarbazoleDioxiene
Violet Pigments were commissioned.
- Apuraj Chemicals Ltd., was amalgamated with the Company. As per
the scheme of amalgamation, 66,000 No. of equity shares of Rs 10 each
were allotted to the shareholders of erstwhile Apuraj Chemicals Ltd.
- Vapkon Finance & Industries Ltd., Fevicil Adhesives & Chemicals Ltd.
and Pidifin Finance and Investment Ltd., are subsidiaries of the Company.
- 60,000 No. of Equity shares of Rs. 10 each to be issued and allotted to
equity shareholders of the erstwhile Apuraj Chemicals
Ltd. pursuant to the scheme of amagalamtion.
Expansion project at Taloja was commissioned with an overall plant
capacity of 2400 TPA of construction chemical.
- The Company's technical collaboration agreement with Schomburg&
Co., KG. Germany for transfer of technical process know-how and
specifications of the plant etc., was extended till 8th September.
The first phase of grass root plant for manufacture of synthetic resins of
various types was commissioned in March at Mahad with a capacity of
7800 TPA. In the second phase, a loop process plant for continuous
emulsion polymerisation was to be commissioned.
- Introduction of several new products in technical collaboration with
M/s. Crown Berger Ltd., U.K.
- The Company allotted 61,17,200 No. of equity shares of Rs 10 each as
bonus shares in the ratio of 1:1. 3,800 shares were kept in
abeyance due to dispute relating to the title of the same.
600 bonus shares allotted from Bonus Share Issue Suspence Account.
- The company has set up three wind mills of 230 kv each at Village
Pransla near Dhank In Gujarat.
- The Pedilite Industries Limited, manufacturer of the popular Fevicol
brand of adhesives, is actively scouting around for buyers
For its chemical and specially resins business. The company has been in
talks with several international players in a bid to either sell
Off the business or enter into a joint venture.
Triveni Chemicals, another group company was also merged with PIL in
1992. PIL's consumer products division was set up in 1984.
- The Board of Directors gave their approvals for the amalgamation of
PGP Engineering works Ltd and Pidilite Finance Ltd. with the company
itself effective 1-4-99. Also, Nebula Chemicals Ltd. manufacturers of
certain grades of adhesives, was to be amalgamated with the company
subject to necessary approvals.
- 2,800 bonus shares kept in abeyance allotted.
Pidilite Industries is re-engineering itself into a pure brand-oriented
marketing company and is hiving of its manufacturing
facilities into a joint venture with a strategic partner.

20
00
20
01
20
02

20
03

20
05

20
06

20
07

20
08
20
09
20
10
20
11

The Company has acquired from Mahindra Engineering & Chemical


Products Ltd (MECP), subsidiary of Mahindra & Mahindra Ltd, their
adhesives and sealants business consisting of the brand M-Seal and Mr.
Fixit along with goodwill of MECP's adhesives and sealants business.
Pidilite Industries Ltd has posted 5.76% lower net profit at Rs.12.76cr for
the second quarter as compared to Rs.13.54cr in the
same period last year.
Income Tax Department has issued a notice to Pidilite Industries Ltd, for
an additional income tax liability of Rs.16cr.
-Pidilite Industries has taken over an insulation tape brand called Steel
Grip, for Rs.8cr from Bhor Industries.
-Pidilite Industries is expanding its presence in Fabric care, car care and
stationery segments as part of its strategy to broadbase
itsprodut portfolio.
Pidilite Industries has tied up with ChotaJadugar, the 3D movie
distributed by Srinagar films to help its new launch
AcronRangeelaColours
-Pidilite unveils new liquid pipe sealant
-Pidilite unveils Fevicol Marine
Pidilite enters into snack market with 'Chikkers'
-Pidilite Industries has acquired Dubai-based company UCC,
manufacturer of construction chemical brand Probuild for an undisclosed
amount.
-Company has splits its Face value of Shares from Rs 10 to Re 1
Pidilite Industries Ltd has informed that the Board of Directors of the
Company at its meeting held on October 17, 2006 has noted the
resignation of Shri Amit Roy, Director and Whole time director with effect
from December 31, 2006.
-Pidilite Industries Ltd has informed that the Board of Directors of the
Company at its meeting held on December 02, 2006, Shri. V S Vasan has
been appointed as an Additional Director and also as Whole Time
Director of the Company with effect from December 02, 2006.
Pidilite Industries Ltd has appointed Mr.MandarM.Tambe as the Company
Secretary, Compliance Officer under Clause 47(a) of the Listing
Agreement and Compliance Officer under SEBI (Prohibition of Insider
Trading) Regulations, 1992 in place of Mr.P.C.Patel, who was holding the
said position till 30/11/2007.
Pidilite Industries Ltd has appointed Shri. Bharat Puri as an Additional
Director of the Company with effect from May 28, 2008.
Pidilite Industries Ltd has informed that Shri. Debu Bhattacharya has
been appointed as an Additional Director of the Company with effect
from February 26, 2009.
Pidilite Industries has given the Bonus in the Ratio of 1:1
-Ms. Savithri Parekh has been appointed as the Company Secretary and
Compliance Officer.
PidiliteInds - Appointment of Foreign Currency Convertible Bonds (Share
Allotment).
-Shri Sanjeev Aga has been appointed as an Additional Director of the
Company.

20
12

Pidilite Industries Ltd has entered into a Joint Venture Agreement with
Hybrid Coatings for manufacture of construction chemicals and to
establish a JointVenture Company in India for this purpose.
-Pidilite Industries Ltd has the name of the Registrar & Share Transfer
Agent (RTA) of the Company has been changed from TSR

3.3 Vision, Mission, Goals, and Strategic Themes

Pidilite
Vision
To Be The Most Innovative Research and Technical Competence Center for
Sustaining Innovation-Driven Growths for Pidilite Group of Companies
globally.

Mission
Invite, invest, and embrace talented people and scientists for great challenges
ahead
Support, serve, and satisfy all valuable customers with our innovative products
and excellent technical competency
Innovate with our customers to provide total product satisfactions and business
growths

Goals
Be a business leader by promoting innovation and achieving Global Standards.
Delight customers by offering quality products and services.
Instill a 'Can Do' attitude, nurture team spirit, learn continuously and achieve a
high level of employee satisfaction.
Adopt ethical, safe and environment-friendly practices.

Strategic themes
To enable industrial product like Fevicol to carve out its niche as a consumer
brand. To focus on future outlook of the company to retain its dominating
position in the Indian market in light of increasing competition from
multinationals and the unorganized sector.

3.4 Key Product and Service Portfolio


Pidilite: The product portfolio of Pidilite is:

Adhesive and Sealants

Construction and Paint chemicals

Art materials and others

Industrial resins

Industrial Adhesives

Organic pigment and preparations

3.5 Core Competencies of the firm


Pidilite: Pidilite Industries, one of the biggest companies in the adhesives
industry, has stuck to its core competency of manufacturing various kinds of
adhesives used across different industries. With a portfolio of brands including
Fevicol, Dr Fixit, M-seal and Fevistik, the company has been able to carve out a
market share of close to 45% in the adhesives and sealant market.

3.6 Business Model of the organization


Key Partners:

1. Vendors
2. Inventory
intelligen
ce
agency
3. Distribut
ors
4. Retailors
5. Custome
rs
(MSMEs
and
Standalo
ne)

Key
Activities:

1. Vendor
Base
develop
ment
2. Custom
er Base
develop
ment
3. Market
based
develop
ment
4. Quality
check
5. Marketi
ng
(Digital
and
Social
Media)
Key
Resources:

1. Sales
Team
2. Wareho
use or
store
3. Vendors
4. Website
5. Variety
of
product
s
offered
6. Procure

Value
Proposition
s:

1. Singl
e
stop
point
or
porta
l for
all
MRO
need
s.
2. Quali
ty
check
ed
prod
ucts
whic
h
helps
maint
ain
conti
nuity
of
servi
ce or
manu
factu
ring
proce
ss.
3. Less
hassl
e
acqui

Customer
Relationships
:

1. Faceto- face
interacti
on
2. Custom
er
complai
nt
redress
al team
3. Online

Channels:

1. Website
2. Sales
Team
3. Supplier
s
4. Retailer
s
5. Distribu
tors

Customer
Segments:

1. MSMEs
a. Manuf
acturi
ng
b. Ancilla
ry
2. Standalo
ne
customer
s

ment
team

Cost Structure:

1.
2.
3.
4.
5.
6.
7.
8.

ring
items
, less
pape
rwork
, cost

Revenue Streams:

Web hosting costs


Marketing and sales costs
Quality check costs
Vendor development costs
Administrative costs
Delivery Costs
Warehousing cost
R&D Cost

1. Offline sales(Mainly bulk)


2. Online sales (Bulk and single)
3. Personalised product sales

3.7 3rd Generation Balanced Scorecard (Amalgamation of 1st


Generation BSC and Activity System Map)
Aspects

GOAL

MEASURE

Target

Increase in IMC Spending

50%

Key
Expand Sales Increase in Customization Level
Stakeholder
by 50%
Perspective
No of new market Penetration per
year

Customer
Retain
Perspective Customer

20%
5

Increase in Annual After Sales


Expenses

10%

Increase in Amount for Discount and


Promotion

10%

Build to Order

Implement

Flexible Manufacturing System


Learning and Product
Growth
Enhancement Increase in R&D Spending

Implement
20%

Increase in Market Research Spending 20%

Improve
Internal
Margin and
Perspective
Cash Flow

3.8 SWOT Analysis

Increase in Cost Cutting

20%

Increase in Resource utilisation

20%

decrease in Employee Attrition rate

5%

SWOT Analysis:Pidilite
Strength

1. The advertising and marketing of Pidilite has been very strong,


especially the Fevicol ads have become a viral hit among the
masses.
2. The name Fevicol has become synonymous with adhesives and
has almost become a generic for anything that sticks. This also
has helped other brands of Pidilite such as Fevistik, Fevikwik, etc.
in their sales.
3. Fevicol and M-seal alone account for more than 50% of the total
revenue of Pidilite, which eases the pressure on the sales of other
brands and businesses.
4. Brand recall and value are extremely strong for Pidilite and
have become the star attraction for many television commercials.
5. Fevicol ads have also won accolades and awards at major
advertising award festivals and shows.

Weaknes
s

Opportun
ity

Threats

6. Strong R&D center to cater to the growing need for innovative


products and services.
1.Acquisition of the Cyclo brand of car care products is a weak
factor as India exhibits a very fragmented market for the same
with very little customer loyalty.
2. Revenue generation is over dependent on Fevicol and M-seal
which results in reduced investments on other brands and
businesses.
1.Pidilite organizes many creative competitions for students and
young scholars, such as the 'International Creative Contest' where
approx. 800,000 students from 3000 schools participate.It also
helps in promoting the brand very well.
2. The chemical industry in the world in growing very strongly and
focus on emerging economies in other parts of the world such as
Brazil, South Africa, China, Singapore, Thailand and East Africa is
a great opportunity to establish stronghold in the international
market.
1. The manufacturing cost of Pidilites products is largely
dependent on crude oil and petroleum prices which are
fluctuating by the minute.
2. Competitors are equally hard pressed on delivering innovative
products and services.

3.9 Competitor Analysis (identify competitors)


3.9.1 Based on Critical Success factors
1. Developing market in India
Pidilite

Analysis
Net sales of the Company grew by 13.5%. Sales of Consumer & Bazaar products
grew by 15% while growth in Industrial Products was slower at 6.6%. Margins
were impacted in the first half of the year due to the steep increase in prices of
key inputs like VAM. Selective price increases were taken during the year and
with input prices softening in the second half, margins in the fourth quarter were
higher than the rest of the year. Due to the slowdown in the sales growth, the
Company undertook several cost conservation initiatives so as to limit the
increase in costs. Consequently EBIDTA (earnings before interest, taxes,
depreciation, exceptional items and foreign exchange differences) excluding nonoperating income grew by 12.5%

2. Cost advantage by investing in production for export and in R&D


Pidilite

1. Specific areas in which R&D is carried out by the Company


R&D activities are continued for development of new products, improvement of
existing products in the category of Adhesives, Art Materials, and Construction
Chemicals for water proofing, flooring and surface coating solutions, Synthetic

Resins, Sealants, Pigments and Pigment Dispersions, Intermediates, Surfactants,


Coatings, Fabric Care Products, Maintenance Chemicals, Emulsions Polymers etc.

2. Benefits derived as a result of the above R&D


Increase in sales due to product improvements and introduction of new products,
reduction in cost due to formulation, optimisation, process improvements and
cycle time reduction.
3. Future Plan of Action
Future R&D efforts will continue along present lines.
4. Expenditure on R&D (in million)
Year ended 31st March 2014

Year ended

31st March 2013


I) Capital
9.44
ii) Recurring
164.17
Total
173.61

28.82
199.95
228.77

iii) Total R&D Expenditure as a Percentage of total turnover 0.56 0.49

3.9.2 Based on Financial indicators


STANDALONE

Dec'15

Sep'15

Jun'15

Mar'15

1,169.93

1,158.61

1,298.36

962.44

8.22

11.98

9.41

7.80

PBDIT

286.80

280.56

327.84

139.25

Net Profit

185.70

182.76

219.54

77.22

Net Sales
Other Income

Balance Sheet
Mar'15
(In Rs Cr)

Total Share Capital

51.27

Net Worth

2,349.45

Total Debt

5.78

Net Block

827.84

Investments

690.49

Total Assets

2,355.25

Balance Sheet of Pidilite Industries

------------------- in Rs. Cr. ------------------Mar '15

Mar '14

12 mths

12 mths

Total Share Capital

51.27

51.26

Equity Share Capital

51.27

51.26

Share Application Money

0.00

0.00

Preference Share Capital

0.00

0.00

Reserves

2,298.18

1,988.25

Networth

2,349.45

2,039.51

Secured Loans

5.78

7.68

Unsecured Loans

0.00

0.00

Total Debt

5.78

7.68

2,355.23

2,047.19

Mar '15

Mar '14

12 mths

12 mths

1,416.98

1,102.32

0.00

0.00

Less: Accum. Depreciation

589.14

491.03

Net Block

827.84

611.29

Capital Work in Progress

460.31

431.09

Investments

690.49

573.80

Inventories

534.72

508.20

Sundry Debtors

514.58

453.60

58.10

145.18

Sources Of Funds

Total Liabilities

Application Of Funds
Gross Block
Less: Revaluation Reserves

Cash and Bank Balance

Total Current Assets

1,107.40

1,106.98

181.04

166.05

0.00

0.00

1,288.44

1,273.03

0.00

0.00

Current Liabilities

689.51

637.92

Provisions

222.32

204.09

Total CL & Provisions

911.83

842.01

Net Current Assets

376.61

431.02

0.00

0.00

2,355.25

2,047.20

222.33

168.93

45.83

39.78

Loans and Advances


Fixed Deposits
Total CA, Loans & Advances
Deferred Credit

Miscellaneous Expenses
Total Assets
Contingent Liabilities
Book Value (Rs)

Source : Dion Global Solutions Limited

Future Growth Strategy for the organization


4.1Portfolio Analysis
4.1.1Based on BCG Matrix

Product Portfolio: Pidilite

4.2

Companys Strategic Roadmap for future

Pidilite

Near Term (<- 2


years)
Operational
Efficiency

Mid Term (2-5


years)
Corporate
Governance

High Level Tasks

Develop the
ability to keep the
cost under check
coupled with
sound sales
strategies.

Potential Benefits
to be achieved

Improved
circulation
mix,
better control on
costs of sales,
control
over
newsprint
cost
fluctuations could
be established.

Adhere
to
the
highest levels of
transparency,
accountability
and ethics in all
its operations, at
the same time
fully realizing its
social
responsibilities.
Improved Trust
and better returns
to shareholders,
satisfied
customers and
better business.

Growth Areas

Long Term (5-10


years)
Sustaining the
strength of its
contents and
getting grip over
newer channels
Changing
with
time,
timely
identification
of
need
gap
of
customers
and
embracing
the
technology.
Strengthening the
digital presence.
Competitive
advantage from
peers, by
sustaining the
strength of its
contents and
brand and always
be a winner.
Improved ranking

Rewards

Average Revenue
per User

Business model
innovativeness,

and market
position
Churn rate, Core
technology
innovativeness

5. References
http://profit.ndtv.com/stock/
http://economictimes.indiatimes.com/pidilite-industriesltd/infocompanyhistory/companyid-10460.cms
http://www.moneycontrol.com/annualreport/pidiliteindustries/PI11/2015
http://www.pidilite.com/
https://en.wikipedia.org/wiki/Pidilite_Industries
http://www.fundsindia.com/
http://articles.economictimes.indiatimes.com/2012-1219/news/35912506_1_cash-flows-pidilite-industries-net-profits
https://hbr.org/1999/03/competing-with-giants-survival-strategies-forlocal-companies-in-emerging-markets
http://www.investindia.gov.in/chemicals-sector/
http://ficci.in/spdocument/20325/India%20chem.pdf