CASE STUDY

You are a consultant.

Your client (Super Coils Limited) has a manufacturing facility for mosquito coils in the
outskirts of Hyderabad. The facility is 8 years old. Mosquito coils are commoditized, and
margins are tight.

Key raw materials are saw dust, wood powder, pesticides actives, specialty chemicals and
packaging materials. Bulk of the material used to produce coils is saw dust and wood
powder and is available in abundance in South India. Manufacturing process is labor and
power intensive.

In recent times, your client is facing stiff competition from new manufacturers who have set
up facilities in low-cost remote areas of the country (mainly North and North-East India)
where there are many fiscal benefits offered by the Government.

Your Consulting firm has various other clients in different sectors that have also set up
manufacturing facilities in remote areas to take advantage of fiscal benefits. You know from
them that in these remote areas there are issues of inadequate infrastructure like roads,
power, and labor availability.

TASK

Your client (Super Coils Ltd) wants your help in strategizing as to how to improve his cost
competitiveness with new competitors. Specifically, he wants your inputs on:
1. What should he do with the Hyderabad facility?
2. Should he consider setting up a unit in a remote area?
3. Rationale for your recommendations