SUMMER PROJECT REPORT

RELATED AND NEW PRODUCT DIVERSIFICATION AT NILKAMAL LTD.

Prepared for the Mumbai University in the partial fulfillment of the requirement for the award of the degree in

MASTERS OF MANAGEMENT STUDIES Su b m itted B y : N a m e: M ih ir S an gan i R oll N o.: 39 Y ear: 2011

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Acknowledgement

In the completion of the present work, there are feelings of achievement and satisfaction. In these moments of happiness, I would like to take this opportunity to record my sincere gratitude to all those who mattered. Foremost, I wish to express my deepest appreciation to my project guide, Mr. Karan Doshi, Manager (Project Department). I am extremely grateful for his professional guidance and support. Thanks are extended to Mr. Mihir Contractor, Senior Vice President (Project Department) and to my company guide, Mr. Karan Doshi, Manager (Project Department) for allowing me to do my project in Project Department, Nilkamal Limited. I would also like to thank Mr. Aditya Ahuja, Ms. Purtata Vaity, Mr. Jay Gandhi, Mr. Jude Almedia and Mr. Merrill Mathews of Project Department, Nilkamal Limited for their assistance and guidance throughout my project period. I am also thankful to all the teaching staff for their valuable help throughout the project. I would like to dedicate this success to my parents and family members who are a constant source of encouragement and mental support throughout the tenure of the project. They encouraged me at each and every point of my life and because of whom I am able to learn so much in my life. Thank you very much.

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Executive Summary

Due to globalization there arises a need for a company to grow. Product diversification is an option that can be use by the company to grow. Related product diversification was necessary in Nilkamal BITO Storage System due to its stagnant sales. That is the reason Nilkamal BITO Storage System did a study of banking sector so that it can target its products to that sector. Similarly the @home Nilkamal tried to grab the opportunity of growing retail sector by providing furniture and fit-outs for the retail shops. The new product diversification was thought of by selling Tai Twun Enterprise, a Taiwanese company¶s products in India. Tai Twun is leading manufacturer of Mobiles and personal computers components and connector. As the computer and mobile market is growing in India and Worldwide, Nilkamal did a study on Tai Twun Enterprise so that it can sign a joint venture with it.

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Table of Contents

Sr. No.
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Title
Introduction Organisational Chart Department Introduction and Organisational Chart Project Introduction Need for Study Objective of study Research Methodology Collection of Data Analysis of Data Finds and Interpretations Recommendations and Conclusion References

Page No.
7 10 11 12 13 15 16 17 35 36 37 38

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List of tables
Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. Table No. Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Table 7 Table 8 Page No. 17 18 19,20 21 26,27,28 29,30 32,33 35

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List of Figures
Sr. No. 1. 2. Figure No. Figure 1 Figure 2 Page No. 10 31

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Introduction
Nilkamal Limited is listed on the National Stock Exchange and Bombay Stock Exchange since 1991. Nilkamal¶s (FY 0910) turnover exceeds INR.1235 crores / US$.260 million. Quiet dynamism characterises the Company. Maintaining leadership in its market segments through core values and hard work is a basic tenet driving the Company. Founded by first generation entrepreneurs, the corporate leadership of the company is young and poised to lead the Company to greater heights. Nilkamal¶s Core Businesses Nilkamal is in 5 Key Businesses:
y y y y y

Material Handling Crates, Containers and Bins. Molded Furniture such as Chairs, Tables and Cabinets. Custom Moldings & OEM supplies for specific customers. @home, the Mega Home Store Retail Chain Service Products for Hospitality Industry

Manufacturing and Selling Strengths The Company has 7 large manufacturing plants in India: * North ± Samba (Jammu & Kashmir) and Greater Noida (Uttar Pradesh) * East - Barjora (West Bengal) * West - Sinnar, Nashik (Maharashtra) and Silvassa (Union Territory of Dadra & Nagar Haveli) (2 plants). * South ± Pondicherry (Union Territory)

The Company has advanced machinery in Injection Molding, Rotational Molding, Vacuum
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Forming, Polyurethane Injection (of insulation) and capabilities for SMC and Blow Molding. Each of these plants has dedicated Tool Rooms. Occupying a massive total constructed area of 11,33,738 sq ft, all of Nilkamal¶s manufacturing plants are ISO 9001/2008 Certified and practice 6 Sigma manufacturing process. This extensive manufacturing infrastructure is ably supported by our wide and strong sales network, operating through 49 Regional Offices and 33 Warehouses spread across India. All the Nilkamal plants, warehouses and offices are connected to the Head Office in real time by ERP, SAP-R3. Joint Ventures The Company has a Joint Venture in Sri Lanka, near Colombo. It is a leader in the Sri Lankan market for Molded Furniture. The Company also has a Joint Venture with Bito Lagertechnik Bittman GmbH for the manufacture of Material Handling and Storage Systems in Metal, with a manufacturing plant at Samba, Jammu & Kashmir. The Company has also recently entered into a Joint Venture with M/s CAMBRO Inc, USA for manufacture of select products for Hospitality Service Industry, and marketing of the entire International range of Cambro throughout India, Sri Lanka, Bangladesh and Nepal. Nilkamal has exclusive tie ups with: * Hanel Buro-Und Lagersystems, Germany for Automatic Storage and Retrieval Systems. * ConTeyor Multibag Systems NV of Belgium for manufacture of Textile Partitions for Crates and Metal Racks to provide valuable in-transit protection for scratch sensitive products. * Plastic Omnium Systems Urbains, France, for supply of their International Standard Waste Binsof all sizes conforming to EN/DIN Standards. * CAMBRO Manufacturing Company, USA for Hospitality Products suited for large Restaurants and Hotels. Now further consolidated into a Joint Venture to market the entire range of CAMBRO products throughout India, Sri Lanka, Bangladesh and Nepal.

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Business Strengths. Nilkamal is the undisputed leader in the Indian market for molded plastic furniture, being the largest manufacturer and marketer of molded plastic chairs in India, and probably worldwide. We manufacture and sell over 1.4 Million plastic molded chairs in Indian markets, along with sofas as well as ready to assemble furniture too. In material handling, Nilkamal is a "One Stop Shop For Material Handling Solutions" and offers a comprehensive product mix right from bins, crates, pallets, Material Handling Equipment ranging from Pallet Trucks to Stackers, Forklifts, shelving and racking plus all equipment required for the logistics industry which is growing at a rapid pace in India. Nilkamal's quality is widely accepted internationally and we have an office in Ajman, UAE to cater to the Middle Eastern Markets. We also export to most major markets in Europe and Americas which are known for being sticklers for quality. We have consistently won prestigious export awards and are now an Export House The Company's New Venture @home, the Mega Home Retail Chain is recognized as a pioneer and leader in this category in India. @home is spread across the country with 16 large format retail stores with an average of 25,000 sq.ft. per store. @home, positioned as a Home Maker store, is a perfect one-stop solution store for home planning, with finest quality furniture, soft furnishing, home accessories and a plethora of a whole lot of services to enhance your indoor and outdoor spaces. The designs @home are contemporary yet practical, mirroring Indian taste & finesse.

Every @home store is a visual treat; the Visual Merchandising at every store is done in minute detail to suit the Indian taste. The Company has aggressive plans to build this business with a wide footprint across all major cities and towns of India. All the @home Stores are
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connected to the Head Office and the Distribution Centers by ERP, SAP Industry Specific and Retail. @home is the recipient of "Retailer of the Year 2008" Award for home and office improvement, by the Asia Retail Congress in February 2009.

Organisational Chart

*Figure No. 1

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Department Introduction and Organizational Chart
I worked in Project Department. This department is headed by the senior vice president Mr. Mihir Contractor, who has been associated with Nilkamal since January, 2010. Mr. Mihir Contractor has a master¶s degree in business administration from University of California, USA and master¶s of science in plastic engineering from University of Massachusetts, USA. Mr. Contractor is responsible for formulation of project strategy and new business developments for Nilkamal. He has experience of around 14 years in manufacturing sector. Before joining the Company, he was associated with Apple Inc. and General Electric. Mr. Karan Doshi is the manager of Project department. He leads the team of three MBA graduates which are responsible for the research and development. One of the team members has done MBA from prestigious Jamnalal Bajaj Institute of Management Studies. The team carries out surveys and research which helps in the business development of Nilkamal. This department gets projects that will help Nilkamal to grow. The department does extensive survey and research and prepares a report that is presented in front of the promoters of the company. I became part of this team and help them carry out various researches. The department also carries out various other works related to Nilkamal.

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Project Introduction

Nilkamal is having a joint venture with a German company, BITO Storage System. The joint venture is known as Nilkamal BITO Storage System (NBSS). NBSS makes products like Universal Storage System, Compactors, and Storing Racks. It provides storing rack to the industries and shops which help them store their goods. NBSS has targeted few sectors like industries and few commercial shops. Also the sales of Nilkamal BITO Storage System are stagnant, 18 -20 Crores every year. So Nilkamal BITO Storage System has decided to explore new sectors like banks, hospitals etc. Market survey was done in banking sector to study which file storage system are current used in banks and can Nilkamal BITO Storage System enter this sector and dominate. The @home division of Nilkamal Ltd is spread across the country with 16 large format retail stores with an average of 25,000 sq.ft. Per store. @home is positioned as a Home Maker store and is a perfect one-stop solution store for home planning. It has finest quality furniture, soft furnishing, home accessories and a plethora of a whole lot of services to enhance your indoor and outdoor spaces. The designs @home are contemporary yet practical, mirroring Indian taste & finesse. As the retail sector is booming in India, @home Nilkamal thought it as an opportunity. @home thought of providing fit-outs for the retail store. Research was done to study which companies are into retail shop fit-outs and Nilkamal penetrate in this market. A Taiwanese company named Tai Twun Enterprise is planning a visit to Nilkamal and hoping to sign a Joint Venture with Nilkamal so that Nilkamal could sell it products in India. A detailed study was done on Tai Twun to know everything about the company and the products it makes. Even a Market survey was done as to which companies are into selling similar products in India. And can Nilkamal will be successful if signed a Joint Venture with Tai Twun.

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Need for study.
As the market grows so is the need increases for the company to grow. The company that doesn¶t grow die. Due to this reason the company finds various ways to increase its sales and grow. There are many ways of growing your business for example 1) Getting more customers and clients. 2) Getting your customer and clients buy more from you. Etc. One of best ways to increase your sales and grow is to go for diversification. Diversification has been an essential basis for the growth and survival of firms in the last half of the twentieth century, due to the vulnerability of the specialized firm to the fast and unexpected changes in the environment [1a, b, and c]. There are mainly three types of diversification 1) Concentric Diversification, Here the technology used in the industry remains the same, while the marketing plan changes to a significant extent. The technology remains same between two business ventures. Hence, technical knowledge remains a major advantage. 2) Horizontal Diversification, Technology is not a factor to consider in this. The products are related but the existing customer base is taken into account while coming up with new products. This strategy is advantageous if the company has a loyal customer base. 3) Conglomerate diversification occurs when a firm diversifies into areas that are unrelated to its current line of business. Synergy may result through the application of management expertise or financial resources, but the primary purpose of conglomerate diversification is improved profitability of the acquiring firm [2]. For going in for product diversification one have to conduct extensive market research into the viability of new products. Make sure new products align with different target markets than the customer base for your existing product to avoid eroding market share for your current product. Conduct surveys, focus groups and product trials to ensure product success prior to launching a new product [3]. According to Calori and Harvatopoulos (1988), there are two dimensions of rationale for diversification. The first one relates to the nature of the strategic objective: Diversification may be defensive or offensive. Defensive reasons may be spreading the risk of market contraction, or being forced to diversify when current product or current market orientation seems to provide no further opportunities for growth. Offensive reasons may be
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conquering new positions, taking opportunities that promise greater profitability than expansion opportunities, or using retained cash that exceeds total expansion needs. The second dimension involves the expected outcomes of diversification: Management may expect great economic value (growth, profitability) or first and foremost great coherence and complementary to their current activities (exploitation of know-how, more efficient use of available resources and capacities). In addition, companies may also explore diversification just to get a valuable comparison between this strategy and expansion [4]. Studies of diversification often analyse the ownership advantages that diversifying firms must possess, considering that the speed and the economic feasibility of diversification are to a large extent determined by those advantages. They also look at the mode by which firms diversify - through organic growth, mergers and acquisitions or alliances [5]. There are nine way to build demand out of which two are, Selling our existing products to new type of customers and Design new products to serve new type of customers [6]. Nilkamal choose this option of related and new product diversification. Nilkamal was already into the business of storage system it was providing products to industries and some commercial shops. It thought of diversification into new sector such as banks and hospitals. Both the sectors are in the growing stage and are going to experience growth along the years. As banking sector growing extensively, Nilkamal BITO Storage Systems decide to target this sector. Similarly @home Nilkamal which is into furniture business was planning to take the opportunity of providing furniture fit-outs to the growing retail sector. As there is synergy in current Nilkamal¶s business. So there aroused the need for study of the retail fit-outs market in India. One way of growing is new product diversification. Nilkamal thought of taking opportunities of the ever growing electronics industries in India. Tai Twun Enterprise is into making connectors used in mobile phone, laptops and computers. This company was expected to visit Nilkamal in July for negotiating on selling its products by Nilkamal in India. A detail study was necessary to understand Tai Twun and its products and its market in India.

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Objectives of Study

The objectives are diversification of related and unrelated products. The storage system division of Nilkamal i.e. NBSS (Nilkamal BITO Storage System) are into making products such as racks and cabinets for the storage for goods and inventories. Its sales are stagnant and are explored to very few sectors such as Industries for their storage facilities. Now Nilkamal is trying to target new sectors and increase its sales by selling its USS (Universal Storage System) product. The target sectors were banks, hospitals and hotels. My objective was to do a detail survey on which type of storage system used at banks and can Nilkamal sell its product and fit into that sector. The @home division of Nilkamal is into making furniture for home. As the retail market is growing so is the market for the fit-outs at retail is growing. There are very few players in retail shop fit-outs and as the market opportunities are huge. I have done a research on the market of retail shop fit-outs. The research involved whether how can Nilkamal @home fit into this market and provide fit-outs to the retail shops. The other objective was about unrelated product diversification. The electronics manufacturing services industry is growing due huge demand for Electronics products. A company name Tai Twun Enterprise Co. from Taiwan is going to visit Nilkamal in July. My part was to research everything about the company, its products, financials, customers etc. Even the companies in India who are into similar business and the market in India for these products. And can Nilkamal sign a Joint Venture with Tai Twun and sell its products in India.

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Research Methodology

Research methodology is a collective term for the structured process of conducting research. There are many different methodologies used in various types of research and the term is usually considered to include research design, data gathering and data analysis. I have done exploratory research. Exploratory research is a type of research conducted for a problem that has not been clearly defined. Exploratory research helps determine the best research design, data collection method and selection of subjects In the case of Nilkamal BITO Storage System I did a secondary as well as primary research where in I prepared a questionnaire for different banks where I conducted a in-depth interview with the premises department so that I could know what kind of storage system they use. My target group was Nationalized Banks situated in Mumbai. The Questionnaire is as follows 1. 2. 3. 4. 5. 6. 7. 8. Which type of file storage system does their bank use? Which company¶s file storage system they are using? What is the price of each rack? Of what material is the rack made? How many years are they using this product? What are the Advantages and Disadvantages of the product that is currently used? How many racks do you have per branch? How many branches do they have?

In case of @home Nilkamal and TaiTwun Study, secondary research was done through internet so that I could find out which companies are into similar business, what the market in India is and who all their customers are.

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Collection of data
Nilkamal BITO Storage System.
Nilkamal BITO Storage System is into manufacturing storage system in India. They manufacture products like Universal Storage System, Compactors etc. These products can be used to store goods. Nilkamal BITO Storage System sales were stagnant and so Nilkamal thought of diversifying the products to different sector. The sector selected was banks. The Banking sector is currently growing in India and it needs the racks and storage system to store its files and documents. A study and survey was required to understand what kind of storage system is currently being used in the sector and to understand the market properly. From a sets of many banks a sample was chosen. The following banks were chosen.

Banks IDBI DBS Corporation Bank Federal Bank Kotak Mahindra Bank Bank of India Indian Overseas Bank State Bank of India

*Table No. 1
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A short but precise questionnaire was prepared. The questionnaire contained all the necessary question required to collect data. There were approximately 7to 8 questions. The questions are as follows. Questionnaire for Banks regarding the file storage system. 1. Which type of file storage system does their bank use? 2. Which company¶s file storage system they are using? 3. What is the price of each rack? 4. Of what material is the rack made? 5. How many years are they using this product? 6. What are the Advantages and Disadvantages of the product that is currently used? 7. How many racks do you have per branch? 8. How many branches do they have? These questions were asked telephonically. The calls were made to the premises department of the banks. Following table will show the people called to be interviewed.

Banks IDBI DBS Corporation Bank Federal Bank Kotak Mahindra Bank Bank of India Indian Overseas Bank State Bank of India

Contact Person Mr. Sudhir Kulkarni Ms. Karnika Dubey Mr. Bhattacharya Ms. Raut Ms. Chardrakala Mr. Patki Mr. Nicolus Menezes Mr. Donald Colaco

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*Table No. 2

A detailed database was created that contained all the answers to the asked question. The following table shows the data collected from eight banks.

Contact Banks Contact No. 022-66552277 Person Mr. Sudhir Fort Location

Type of File storage used Drawer, Cupboard Wooden Fort Furniture Godrej Godrej Made of.

IDBI

Kulkarni Ms. Dubey Mr. Bhattacharya Karnika

DBS Corporation Bank

022-66388818

022-22693453

Churchgate

FRFC Cabinet Wooden

Steelage

Federal Bank Kotak Mahindra Bank Bank of India Indian Overseas Bank State Bank of India

0250-2333496

Ms. Raut

Vasai

Furniture

Godrej

7798982408

Ms. Chardrakala Vasai Bandra

Wooden Furniture Cabinet Storewell Godrej

9892499061 9892610694

Mr. Patki Mr. Nicolus

Menezes Mr. Colaco Donald

Fort

Furniture

Godrej

9833877471

Fort

FRFC Cabinet

Methodex

*Table No. 3
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Years since they are using Material of this Banks Price. Racks Steel IDBI NA Wood Steel DBS NA Wood Steel Corporation Bank NA Wood Steel Federal Bank Kotak Bank Mahindra NA NA Wood Steel Wood Steel Bank of India Indian Bank State India Bank of NA Overseas NA NA Wood Steel Wood Steel Wood and NA and NA and NA and NA and NA and NA Ease of handling, Cheap Strong and and NA and NA Product Advantage /Disadvantage How Many Racks per branch 7-8 Racks 7-10 Racks 7-8 Racks 4-5 Racks 6-7 Racks 8-9 Racks 7-8 Racks 7-10 Racks 250 55 119 34 20 69 1 65 How Many Branches in Mumbai

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*Table No. 3 continued

The above table showed the Name of the banks, contact no. , contact person, location, type of file storage system currently using, the current storage is made by which company, the price of the storage system, material of which the system is made, years since they are using the products, the advantages or disadvantages of the current product used, how many racks that are used per branch, and how many branches in Mumbai.

@home Nilkamal.
@home Nilkamal is vertical of Nilkamal Limited that is into the business of furniture for homes. It has around 16 stores all over India. Nilkamal decided to grab the opportunity of rapidly growing retail sector and thought of diversifying the product for different sector. The sector it thought of targeting was retail sector. As there are many retail stores opening across the nation, @home thought of providing shop fit-outs to these retail stores. To understand the market a detail survey was done where in all the major companies that are into retail shop fit-outs were studied. The following table shows the companies that are in retail shop fit-outs, their services, their location, their customers, and are they in manufacturing or fixing it. Company Clients Nokia, Future Group, Jockey, Featherlite Fabmall, Fossil, Shell Products Fashion, Food & Electronics Supermarket Shelving, Modern Trade Display, Garments Display Racks, Electronic Product Display Racks, Books Gv Display Solutions Pvt. Ltd Coca Cola, Lays And Music Racks, Pop Dispensers, Customised Display Racks, Counter Yes Delhi
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Manf.

Location

Yes

Karnataka

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Top Dispenser

Apollo Tyres, Brand Rollouts, Cafe Ritazza, John Player, Khadims, Levi's, Reliance Sansar, Service One Motorola, Shoe Tree, Sree Glue Design Leather, Toshiba, W For Pvt. Ltd Woman, Wills Lifestyle All Customised According To Requirements Brochure Display ,Cosmetics & Perfume Display, Heel Rest Shoe Display, Acrylic Display, GH Graphics Pvt Ltd Chivas, Coca Cola, Pepsi Koutons, les femme, T.N.G, BRV Solutions Siyaram, Eagles, Ritu Wears, Liberty Banner Stand, Tower Display, Shelves, Brochure Display All Customised according to requirements from start till the end Display Counters, Pegboard Display, Glass Tata, faber, samsung, siemens, LG, United colours of benettom, elica, Hamleys, Haier, Modi care, Reliace, Walmart bharti, Bose, Bata, Electrospark Croma, Sony, Sony Ericsson Displays, Kiosks Display, Pamphlet Display, Modular Shelving, Panel Display, Portable Display, Display Stands, Slat Display Systems YES Manesar YES Sahibabad Yes Gurgoan No Noida

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Accessories, Heavy Duty Big Bazaar, Staples,Spar, DMart, Vijay Sales, Star Bazaar, Arcus, Hyper City, Retail Detaliz More Mega Store,Spinach,Carrefour Akbarallys, Amul,Pantaloons, Apna Bazaar, Godrej & Boycle MFG, Globus, Shopper Stop, MetaWood Reliace Retail N/A Display Showcases, Racks, Electronics Racks, Garment Racks,Architects Designs Racks,Leather Bags Racks,Shop Fittings,Display Counters,Store Fixtures,Depatmental Krishna Engineers Bata Metro, Reliance Apparels, Fossil, Max Value, Metro, Triump, life style Grottini Dalziel + Pow Shark Design Studio GAP, Mom & Me, Sony Godfrey Philips India, Frito Lays, Yahama, Lenovo, All,Baggit Full store YES Noida Full store NO Mumbai India Full store YES Italy Rack, Garment Racks, Shoes Racks YES Malad YES Daman & Vasai Storage Systems,Customised Solutions,Fashion Display,Hypermarket Shelving. YES Mumbai

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Supermarket Shelving, Garment Reliance Retail Ltd, Shelving,Slatwall Board,

Spencers, Vishal Mega Mart, Base Shelve, Gandola Big Apple, Dollar Store, Unit, Corner

Spinach, Hyper City,Sabka Racks,Garment Shelving Welworth Bazar, In & Out, Carnation. Raymond Brands Like Color Plus, Park Avenue, Zap & Parx,Levi's,Lawman, Lee Rigved (turnkey Interiors) Ramms Motorola, tata indicom, william penn, banglore central, kodak, levi,s health Dove Tail & glow Fullstore YES Bangalore Cooper, Nike, Swaranjali, Bizarre, Spykar,Ruff Kids,Marco Ricci Fixed Furniture,modular Store fixtures, visual merchandising solutions Full store NO NO Chennai Racks, YES Mumbai

*Table No. 4

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Tai Twun Enterprise.
Tai Twun is a Taiwanese company that is into manufacturing and trading of computer and mobile connectors this company is visiting Nilkamal in July to negotiate on signing a joint venture with Nilkamal so that Nilkamal can sell its products in Indian market. A detail study was needed to understand Tai Twun Enterprise and all its products. And whether it¶s possible for selling Tai Twun¶s products in India. The data collected are as follows. Company:- Tai Twun Enterprise. Year since:- 1988 Products:1) USB Hubs 2) Hard disk enclosure 3) GPS antennas 4) WLAN antennas 5) USB connectors and cables 6) HDMI connector and cables 7) RF connectors and cables 8) Multi card readers Products used in sectors:1) Consumer Electronics
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2) Telecommunication. 3) Instrumentation 4) Railways 5) Automobiles 6) Military 7) Medical

Customers:1) Compal 2) Sandisk 3) Samsung 4) Sony 5) Flextronics Area served:1) Eastern Europe 2) North America 3) Western Europe 4) Some parts of Asia

Balance Sheet:Consolidated

Balance Sheet

In Cr INR

As On

31/12/2010 31/12/2009 31/12/2008
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A] Fixed Assets Land

ASSETS :

6 6 79 21 1 5 4

6 6 80 16 1 6 3

6 6 80 13 1 6 3

Buildings and Structures Machinery and Equipments Molding equipment Transportation Equipment Office Equipment Other Facilities Construction in process and prepayment for equipments Total Fixed Assets

9 132

2 119

4 120

Intangible Assets Patents 1 1 0

Total intangible Assets *GROSS BLOCK

1 134

1 121

0 120

**Less : Depreciation

50

41

34

NET BLOCK

84

79

86

Total Net Fixed Assets

84

79

86

Funds and Long Term Investment

0

0

2

Current Assets,Loans, & Adv. Inventories 21 23
27

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Total Inventories

21

23

35

Sundry Debtors

70

115

101

Cash & Cash Equivalents

152

81

60

Other Current Assets Total Current Assets

7 250

7 226

11 207

TOTAL ASSETS

334

305

294

B] Share Capital & Liabilities :

Share Capital Reserves & Surplus NET WORTH

153 105 257

109 91 200

110 74 183

Long Term Loans: Short term borrowing Long Term Debts 0 9 6 11 21 7

Total Loans

9

18

28

Current Liab. & Provisions : Sundry Creditors Current portion of long term debts Other Liabilities Accrued Expenses Total Current Liabilities 34 3 13 19 68 39 3 12 34 88 50 1 10 23 83

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Deferred Tax Liability

Total Capital and Liabilities

334

305

294

*Table No. 5

Profit and Loss Account:Consolidated

Profit & Loss A/c. In Cr INR Year Ended A] Sales Revenue Gross Revenue Sales Returns Sales discounts and allowance Net Sales 319 319 5 4 310 324 324 4 2 319 334 334 4 2 328 SALES : 31/12/2010 31/12/2009 31/12/2008

Total Sales[A]

310

319

328

EXPENSES

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Operating COGS Selling Expenses General and Administrative Expenses R&D expenses

240 18 28 4

234 21 29 4

247 22 31 5

Total Expenses

289

288

305

EBITDA Add: Other Income Less : Interest Currency exchange gains/Loss Less: Other Loss Profit Before Tax (PBT) Less : Provision for Tax including FBT Profit After Tax (PAT)

21 4 0 9 1 15 1 13

31 4 0 2 2 30 7 23

24 4 0 2 2 23 7 16

*Table No. 6

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Sales drop as per month:November 2010:- 51.51% Drop as compared to November 2009 [8]. December 2010:- 45.73% Drop as compared to December 2009 [9]. February 2011:- 56.2 % Drop as compared to February 2010 [10]. April 2011:- 46.74% Drop as compared to April 2010 [11]. May 2011 :- 48.1% Drop as compared to May 2010 [12].

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Sales in thousand TWD
180000 160000 140000 120000 100000 80000 60000 40000 20000 0

Sales in thousand TWD

*Figure No. 2

More Information:As per J P Morgan report Tai Twun¶s revenue breakdown in 2009 is 88.7% connectors, 6.5% others and 4.6% hardware terminal[7]. Tai Twun has three manufacturing units in China.

Competitors of Tai Twun in India:-

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Area Company Products USB connectors, SIM Tyco Electronics card connectors, Memory Card connectors, RF connectors. HDMI Connectors, RF connectors, USB Molex connectors. USB connectors, HDMI FCI OEN Connectors Amphenol Interconnect India Amkette (Delhi) Synergy Telecom Pvt Ltd MDR Electronics USB cables, USB 1969 India RF Connectors 1994 GPS antennas, RF Connectors. USB hub, Memory card reader. 1985 Ericsson, Siemens, Nokia, Bharti, Hutch, Military, Aviation, Railway, ONGC India India 1972 India Connectors, Memory card connectors. 1982 India 1985 India 1993 India Year Customer Served

(Maharashtra) connectors. Adbs Electronics (Haryana) Belkin (Haryana) SIM card connector USB hub, Memory card reader, HDMI cables.

2008

India

2009

India

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Nuclear Fuel Complex, Ship Building, Indian Railways,Bharat Heavy Electricals Limited, Bharat Electronics Limited, Hitech India Pvt Ltd (Andhra Pradesh) Anand Technologies (Karnataka) RF connectors GPS Antennas, RF cables/connectors, WLAN Antennas. 2006 India 1975 Electronics Corporation of India, Instrumentation Ltd., Cine Production equipment/Flood Lights. India

*Table No. 7

Other findings:1) Major producer and exporter of connectors are China and Japan in Asia. 2) As the electronics market is growing there will huge demand for its components. 3) Most connectors sold in India are imported and not manufactured locally. The ratio is about 60/40. 4) PCB, circular, RF, and rectangular I/O connectors are dominant connector types on the Indian connector market.
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5) Mumbai, Pune, Bangalore, Chennai, and Delhi NCR (National Capital region) are major production hubs [13]. 6) India expects growth rates for the connector industry around 16% to 18% per year for the next five years [14].

Analysis of Data.
Tai Twun Enterprise.
From the balance sheet and profit and loss account collected we need to analysis the financials of the company, which will help us understand the performance of the company. The financials collected were of last three years, 2008, 2009 and 2010. From the balance sheet and profit and loss account ratios were obtain.
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Following table shows the ratios.

Ratios EBIDTA To Net Sales EBIDTA To Total Sales PBT To Total Income PAT To Total Income Return on Capital Employed Return on Average Capital Employed Return on Net Worth Return on Average Net Worth Total Debt - Equity Ratio Current Ratio Quick Ratio

2010 7% 7% 5% 4% 6% 6% 5% 6% 0.04 3.68 3.37

2009 10% 10% 9% 7% 14% 14% 12% 12% 0.10 2.58 2.32

2008 6% 6% 7% 9% 12%

8% 0.60 2.5 2.08

*Table No. 8 From the calculated ratios it is observed that ratios such as EBIDTA to Net Sales has decreased by 3% similarly EBIDTA to Total sales , PBT to Total Income , PAT to Total Income, Return on capital employed, Return on average capital employed, Return on Net Worth and Return on average net worth are decreased drastically in 2010 as compared to 2009. On the other hand Total debt ± equity ratio, Current ratio and Quick Ratio all have changed drastically.

Finding and Interpretations
Nilkamal BITO Storage System.

Based on my finding and interpretations I have found out that as the banking sector is growing and there are few companies such as Godrej, Methodex and Storewell etc that provide file

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storage system to banks. It is a good option for Nilkamal BITO Storage System to target banking sector. Even Nilkamal has good brand name so it will be easy for Nilkamal to penetrate.

@home Nilkamal.

As per the survey and findings my interpretations are that the demands by different retail shops for the furniture are different. Even there is lots customization in the products there are no standard products as such.

Tai Twun Enterprise.

As per my finding the sales of Tai Twun are decreasing consistently. Even the CEO of Tai Twun who had 7 out of 8 patent of Tai Twun under his named resigned in June 2010. As per the ratios EBIDTA to Net Sales has decreased by 3% similarly EBIDTA to Total sales , PBT to Total Income , PAT to Total Income, Return on capital employed, Return on average capital employed, Return on Net Worth and Return on average net worth are decreased drastically in 2010 as compared to 2009. The other ratios such as Total debt ± equity ratio is 0.04, Current ratio is 3.68 and Quick Ratio is 3.37 so it means the company is unnecessarily blocking its funds. There are also many multinational companies which are already based in India from past few many years and have good amount of market share. The market for connectors is growing extensively. These connectors are used in Electronic products, whose market is also growing consistently. There is lot of scope for this business in India.

Recommendations and Conclusion

To conclude as in the case of Nilkamal BITO Storage System there is a good scope for Nilkamal to target the banking sector as there are few players those who provide file storage system to
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banks, as shown in Table No. 3. Nilkamal BITO Storage System can use the advantage of Nilkamal brand name and try to penetrate the banking sector. Nilkamal BITO Storage System can use its products like Universal Storage System and Compactor to target the banks. As per the finding in Table No. 4 there is lots of customization in the shop fit-outs and the product design and need differs from company to company it is difficult for @home Nilkamal to enter this market. As there is no standard product involved in shop fit-outs and @home sells standard set of products, it will be difficult for @home to set up a different setup altogether. In the case of Tia Twun, selling its product in India by Nilkamal is a difficult option. There exist no synergies between Nilkamal and Tai Twun. Even after studying the financials as show in Table No. 5 and 6 of Tai Twun it is clear that the company is losing its sales over the years and even the ratios as per Table No. 8 are not satisfactory.

References

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1a) Penrose, E. (1959/1995). The theory of the growth of the firm. Oxford: Oxford University Press. Pernod Ricard. (1991). Annual Reports and Accounts. 1b) Marris, R. (1964). The economic theory of managerial capitalism. London: Macmillan. 1c) Whittington, R. and M. Mayer. (2000). The European corporation. Oxford: Oxford University Press. Williamson, O.E. (1975). Markets and hierarchies. New York: Free Press. 2) http://www.enotes.com/management-encyclopedia/diversification-strategy 3) http://www.ehow.com/way_5272073_product-diversification-strategy.html 4) http://www.absoluteastronomy.com/topics/Diversification_(marketing_strategy) 5) Vachani, S. (1991). Distinguishing between related and unrelated international geographic diversification: A comprehensive measure of global diversification. Journal of International Business Studies, 22/2, 307-22. 6) Kotler on Marketing: How to Create, Win and Dominate Markets By Philip Kotler 7) https://mm.jpmorgan.com/stp/t/c.do?i=3F434-3&u=a_p*d_529944.pdf*h_-kiuhmt2%0D%0A 8) http://www.bloomberg.com/news/2010-12-08/tai-twun-enterpr-november-sales-fall-51-51table-3432-tt.html 9) http://www.bloomberg.com/news/2011-01-10/tai-twun-enterpr-december-sales-fall-45-73table-3432-tt.html 10) http://www.bloomberg.com/news/2011-03-08/tai-twun-enterpr-february-sales-fall-56-20table-3432-tt.html 11) http://www.bloomberg.com/news/2011-05-09/tai-twun-enterpr-april-sales-fall-46-74-table3432-tt.html 12) http://www.bloomberg.com/news/2011-06-09/tai-twun-enterpr-may-sales-fall-48-10-table3432-tt.html 13) http://www.connectorsupplier.com/tech_updates_AV_India_1-18-11.htm 14) http://www.connectorsupplier.com/tech_updates_Visser_India_Part2_4-5-11.htm
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