Bpl

STRATEGIC ANALYSIS OF

BPL & ADANI WILMAR

Submitted To: Submitted By:

Pro.Amita Sharma POOJA ARORA(P1102)

PUNYASHREE BHATT(P1108)

HARSHAVARDHAN DATE(P1110)

RIDDHI KANSARA(P1121)

PRAYAG MISTRY(P1127)

SUMIT PRAJAPATI(P1132)

Diminishing Company BPL

Introduction

BPL is a name that has almost become synonymous with electronics in India. BPL is the abbreviation for British Physical Laboratories India Private Limited. Counted amongst the most popular brands in the country the BPL Group was established in 1963 by TPG Nambiar

The BPL Group is an Indian electronics manufacturing company that has successfully ventured into various sectors such as consumer appliances like washing machines and refrigerators, health care devices, and entertainment home products. The company manufactures products under two broad labels; Consumer Products and Professional Products.

After the introduction of the television in India BPL joined hands with SANYO of Japan and launched the BPL brand of televisions in India. Today BPL under consumer appliances manufactures televisions such as flat TV, slim TV, and conventional TV.

BPL Label under health care devices manufactures multi- parameter monitors, wireless treadmill system, and dental x- ray machines. All the manufacturing facilities of the group are highly technologically advanced. In order to further improve the quality of its products, the Group BPL has entered into collaborations with foreign companies who provide technology to the group. This has helped BPL Group to set high quality of standard for its products which in turn has boosted the sale of the group's products. As a result the group has become the country's largest electronics consumer company.

The Group BPL has its head office in Mumbai and it employs more than 14,000 people. The group is worth around 4,000 crore. The Label BPL in order to further expand its business is planning to expand in the health care sector. The group plans to enter the areas such as dentistry, critical care, and home health care. BPL Group expects the revenue from the health care sector to amount more than 500 crore by 2010. The group in recent years has been facing equity revamp and major debt.

BPL Ltd has reported a net loss of Rs 34.76 crore in the second quarter of fiscal 2005-06, on gross sales of Rs 34.71 crore. Operating losses were at Rs 13.91 crore.

Gross sales were Rs 64.45 crore in the corresponding period during 2004-05 while net loss was at Rs 41.59 crore.

Joint Venture with Sanyo

The BPL Group and Japanese electronics major Sanyo Electric Company Ltd, formally started their 50:50 Joint Venture.

The partners, who had shared a long-standing relationship since 1982, had been off the market for about two years, going through some tough

times. This year, they decided to get back in action together to regain lost market share.

While unveiling the Joint Venture's plans, Sanyo-BPL Pvt Ltd Chairman and Chief Executive Officer, Ajit G Nambiar, said the company expected to post revenues of around Rs 2,000 crore by 2009 and lead the market in consumer electronics and white goods in five years.

They, however, decided to market their brands separately with BPL focusing on the volume segment while Sanyo brand positioned itself as the value driver.

Besides, Sanyo also planned to use India as its sourcing base and has already started sourcing slim TVs from India. It also expected India to contribute five per cent of its global revenues from its operations in India.

In May 2007 after the failure of Sanyo BPL venture. The attrition in rate in Sanyo BPL was 70%. BPL concentrated 100% on Healthcare Business group which has its own manufacturing of electromedical equipment such as Electrocardiography apparatus, Patient Monitors, etc. with a well established distribution and service network across the country. The company focusses on delivering to the customers a high degree of support reliability and has re branded its the Service offering under "SURE CARE" brand. Sure Care provides support for the complete range of BPL Healthcare products.

Strategic Advantage & Disadvantages

Pre Launch:

Research and Development.

Revolutionizing Technology.

System Upgrade.

Post Launch:

Sponsorship.

Penetrative Strategy

Gorilla Marketing.

Mobile advertisement.

MARKETING STRATEGIES

Disadvantages

Apart from falling production-levels, a strike is threatening BPL's advantage as a low-cost manufacturer.

Technology was a commodity and we could have sourced it. Where BPL failed was the lack in control on finances

PEST Analysis

Political

Lowering of customs/excise duties post 90’sGlobalization driving investment through FDI, FIIs & JV’s

Economic

Increased urbanizationIncrease in disposable personal incomeEasy & cheap availability of consumer finance

Social

Burgeoning middle classDouble income families

Technological

India becoming a manufacturing hub

Incorporation of top end technology across product range

SWOT Analysis

Strength

BPL Company has a brand name

Strong backward integration

Improved Technology

Innovative Products

Weakness

No exclusive showrooms

Fewer margins to distributors and dealers

Opportunities

BPL Going Global

Growing Semi Urban Market

Purchasing power of people increasing day by day. Movinginto new attractive market segments.

Mergers joint ventures of strategic alliances

Threats

Competitors having innovative products

Acceptance of re-launch

Porter’s Five force Model

Five forces analsysis looks at five key areas namely the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes, and competitive rivalry.

The threat of entry.

Economies of scale e.g. the benefits associated with bulk purchasing.

The high or low cost of entry e.g. how much wills it cost for the latest technology?

Ease of access to distribution channels e.g. Do our competitors have the distribution channels sewn up?

Cost advantages not related to the size of the company e.g. personal contacts or knowledge that larger companies do not own or learning curve effects.

Will competitors retaliate?

Government action e.g. will new laws be introduced that will weaken our competitive position?

How important is differentiation? e.g. The Champagne brand cannot be copied. This desensitises the influence of the environment.

This is high where there a few, large players in a market e.g. the large grocery chains.

If there are a large number of undifferentiated, small suppliers e.g. small farming businesses supplying the large grocery chains.

The cost of switching between suppliers is low e.g. from one fleet supplier of trucks to another.

The power of suppliers.

The power of suppliers tends to be a reversal of the power of buyers.

Where the switching costs are high e.g. Switching from one software supplier to another.

Power is high where the brand is powerful e.g. Cadillac, Pizza Hut, Microsoft.

There is a possibility of the supplier integrating forward e.g. Brewers buying bars.

Customers are fragmented (not in clusters) so that they have little bargaining power e.g. Gas/Petrol stations in remote places.

The threat of substitutes Where there is product-for-product substitution e.g. email for fax Where

there is substitution of need e.g. better toothpaste reduces the need for dentists.

Where there is generic substitution (competing for the currency in your pocket) e.g. Video suppliers compete with travel companies.

We could always do without e.g. cigarettes.

Competitive Rivalry This is most likely to be high where entry is likely; there is the threat of

substitute products, and suppliers and buyers in the market attempt to control. This is why it is always seen in the center of the diagram.

Competitive Strategies

Sanyo-BPL repositions strategy to beat competition

In what is seen as a clever repositioning of strategy, Sanyo-BPL Pvt. Ltd., which makes colour television sets, has decided to push the Japanese brand Sanyo in a big way. Currently, the company makes two brands –Sanyo and BPL.The move comes in the wake of intense competition for Sanyo from foreign brands such LG, Samsung, Panasonic and Sony.

The move should also be read in the backdrop of the joint venture seeing a greater growth and brand loyalty for its BPL brand of CTVs in India, especially in the South. “Promoting BPL is an easy task. Marketing Sanyo is, however, challenging,” says Toshiaki Iue, President, Sanyo TV International Corporation.

Sanyo-BPL Pvt. Ltd. was formed as an equal joint venture between Sanyo Electric Company Ltd. of Japan and BPL India. Under the agreement, BPL transferred its colour television business into the joint venture. This also saw BPL brand for CTV come under the joint venture fold.

Mr. Iue said the Indian plant, located in Bangalore, was manufacturing one million colour televisions per annum under single-shift. This comprised both BPL and Sanyo brands. If the demand increased, the plant could double its production. The company produced 6.2 lakh CTVs last year.

Mr. Iue said the dual brand strategy was beneficial to the company. It was working out various business strategies to promote both the brands

simultaneously across various geographical locations. It would be introducing various models under both the brands. He said Sanyo would use the BPL platform for promoting the CTVs in India. However, it would be importing other Sanyo consumer durables from China and Thailand. At present, both Sanyo and BPL put together have 29 CTV models in India, including LCDs. To a question, he said it did not make sense for Sanyo to have a production base of its own in India because of the scale limitation. Should the demand increase over a period, Sanyo would look at a similar strategic alliance with BPL for other products, he added.

Growing Company Adani Wilmar

ADANI GROUP

FORMAL ORGANIZATION STRUCTURE – BUSINESS UNITS & CORPORATE UNITS

Businesses Corporate

Group HR

Corporate Finance

(Legal & Secretarial,

Corp. IT, Internal Audit)

Corporate Communications

Corporate Affairs

Coal Mining and Trading

Power

(Projects/Generation/

Transmission/Trading)

City Gas Distribution

Oil & Gas Exploration

Agro

Ports & SEZ

Logistics

Real Estate Development

ADANI GROUP: BUSINESS PROFILES

(1) Coal Mining:

Adani group has coal mining business divided into two horizons :

Domestic

Parsa East & Kente Basan Coal Blocks – 450 MT Chendipada Coal Block – 1600 MT Machhakata Coal Block – 1400 MT Lohara (W & Extn) Coal Block – 170 MT Agarzari Coal Block – 137 MT

Overseas

Australia Indonesia Bunyu Inland Coal Mine South Sumatra Coal Mine

(2) Coal Trading The largest importer of coal in India Entered in to long-term exclusive coal supply

arrangement with largest mining company of Indonesia.

Having long standing relationships with over 12 large miners of Indonesia and 4 miners of China.

(3) Power To be a leader in power sector with interest in

thermal, hydro, gas, solar, wind, transmission & distribution.

To be 20,000 MW power organization.(4) Power Trading

No.1 Private Power Trading Company. Commenced operation in 2003 following reforms to

the Electricity Act, Highest “F” Category License. One of the leading private sector power traders in

India with a significant market share.

Future initiatives to include the trading of surplus

power from the operating power plants to the power

deficit states.

(5) Oil & Gas

Distributing CNG & PNG in Ahmedabad, Vadodara & Faridabad.

Steel ring network of c.328 km and PE network of c.1,800 km.

To commence operations in next couple of years – Noida, Khurja, Lucknow, Udaipur and Jaipur.

Adani Welspun Exploration Ltd – Oil Exploration.

Domestic Onshore – 2 blocks in Nelp VI (one at Marghreita,

Assam & another at Palej, Gujarat ) Offshore – a new block located at northwestern part of

the Surat depression of Mumbai Basin 2 blocks in Kutch , Gujarat through consortium – one

through AWEL, ONGC, IOC & GSPC and 2nd through AWEL, ONGC & IOC.

Overseas – Onshore – awarded 2 blocks in Thailand. Offshore – a block awarded at Gulf of Suez,

Egypt, in partnership with GSPC. Dubai’s Black Pearl Co. engaged for drilling operations.

(6) Mundra Port & Special Economic Zone Limited (MPSEZ)

Domestic

Mundra Port:o Largest all weather, deep draft, private port in

the country.o Handled the largest container vessel in India.o Connected to the national railway network by

57km railway line between Port and nearest

railhead Adipur – started doubling this railway line to meet the growing demand of the port.

o Building world’s largest dedicated coal import terminal having 60MMTPA coal handing capacity.

o Developing terminals for handling cargo at Hazira, Gujarat, & Marmugoan, Goa.

SEZ:o India’s largest and first port based SEZ

spread over 13000 Ha.

Overseas:

Australia: Dudgeon Point Indonesia (South Sumatra) : Coal Terminal

Adani Logistics Limited (ALL) – Container Train Operations

First company to operate double decker container rakes.

In land container terminal. Network of rail-linked inland container depots

spread across India.

Adani Agri Logistics Limited (AALL) – Transportation and Storage of Food Grains.

Food Grain Handling, Storage & Transportation facility – BOO arrangement.

2 Base Depot in Kaithal (Haryana) & Moga (Punjab).

5 Field Depot in Chennai, Coimbatore, Bangalore, Navi Mumbai & Hooghly.

Adani Shipping Pte. Ltd and Libra Shipping Pte. Ltd.

Wholly- owned subsidiaries in Singapore to manage shipping and freight operations.

Shipping operation aims to capitalize on the Group’s trading business to charter freight for the cargo of the various group companies.

(7) Real Estate

Adani Infrastructure & Developers Pvt. Ltd (AIDPL)

Business Activity: Realty Development in Mumbai, Cochin and Surat.

Developing Bandra – Kurla complex and mill land development.

Samundra Township – Mundra

Adani Township & Real Estate Co. (ATRECO) Business Activity: Realty Development in

Ahmedabad. “Shantigram” – Integrated Township, Ahmedabad. Commercial, Retail, Residential, Integrated

Townships.

(8) Agro Adani Wilmar Limited (AWL) – Edible Oil

50:50 joint venture with Wilmar Group, Singapore Refining capacity of 4040 TPD, crushing capacity

of 5750 TPD and hydrogenation capacity at 575 TPD across India at 16 locations.

Fortune, India’s largest selling Edible oil brand Adani Agri Fresh Limited (AAFL) – Fresh Fruits

Controlled Atmosphere Technology for increasing shelf life of fruits.

3 sites located in Dist Shimla (HP) – Rewali, Saing & Rohru.

Handled 18000 tons of apples and 1000 MT of fruit exports.

“FARM-PIK” – the retail brand of AAFL.

Visionary Chairman of Adani Group: SHRI GAUTAM ADANI

Visionary – able to spot scalable businesses Uncanny ability to convert adversity into opportunity Risk-taker Focused on long-term sustainability Trusts own intuition Down to earth

Group Vision – 2020

To be one amongst top 5 diverse corporate conglomerates of the country with capacity of 20,000 MW Power, 200 MT Coal Mining and 200 MT Port Facilities

To be an important player in energy and infrastructure business in South East Asia.

To be country’s no. 1 private player in all our core businesses. To be major infrastructure player of our nation.

Mission

To assimilate knowledge, develop capabilities and manage collective enterprise to profitably tap global business opportunities for the maximal benefit of everyone associated with Adani.

Vision Statement A globally competitive, India focused MNC, with leadership in

edible oil businesses providing branded products and services to the delight of customers and stakeholders.

KEY MILESTONES ACHIEVED BY ADANI GROUP

1988 Adani Exports starts trading as Partnership Firm

1993 Adani Enterprise Ltd. becomes a Public Ltd. Company and a

famous trading house

1998 Mundra Port fully operationalized and AEL commences Coal

trading

2001 Sets up Edible Oil Refinery in Joint Venture with Wilmar Group

of Singapore

2006 Coal Mining starts in Indonesia

2010 Adani Ports Ltd: 2nd and 3rd unit of 330MW power generation

operational; Acquired Linc Energy Coal Mind in Australia which is

largest Coal mine acquisition by any Indian Company.

2012 Infrastructure: 100 Mega tonnes Cargo Handling Capacity;

Energy: 10,000MW power generation, 70MT coal mining

Strategic Advantages to AWL

1) Adani Wilmar Limited is a 50:50 joint venture between two

recognized Multinational Corporations – the US$7 Billion Adani

Group, the leader in International trading, Power Sector and

Private infrastructure, and Wilmar International Limited,

Singapore, Asia’s leading Agri business group with revenues

exceeding US$ 44.7 Billion.

2) Adani Wilmar Ltd.'s flagship brand Fortune has been repositioned

with a new mantra of 'Joy of Eating'. The objective of this exercise

is to craft a unique value proposition for the brand. Fortune, which

has maintained its market leadership for last 7 years, hope to

further strengthen its market share with this re-positioning.

3) Catering to the burgeoning middleclass, core of Indian consumer

market, AWL introduces King's range of refined oils. It will have

under its portfolio, Soya. Coming from the house of Adani Wilmar,

coupled with the planned 360 degree Marketing Support, King's is

set to be the king of its own turf.

4) AWL also has as part of its edible oil portfolio, Bullet brand mustard

oils and a Refined Palmolein Oil under the brand name of Raag

Gold, a premium vanaspati brand called Raag, special frying oil

called Fryola and Speciality Fats range under brands like Jubilee

Master chef, Aadhaar Bakewell, Alpha Cookwell & A-Kote.

5) Adani Wilmar Limited has a strong distribution network, consisting

of Company Distributors and Super Stockists, in place that reaches

out across India. This enables the end-users of our products -

households and institutional buyers - to receive our offerings

speedily. Small retailers and traders also benefit greatly from this

arrangement.

6) Our distribution footprint spans the length and breadth of the

country, AWL has 85 stock points catering to more than 5000

distributors, 600 Super Stockists and numerous brokers and other

trade associates. Our retail reach is more than 1,000,000 outlets

and we continue to cater to an ever-growing customer base of over

80 million Indians.

7) "Fortune" also became the 1st edible oil brand to be associated

with major sporting events of Common Wealth Games 2010 and

ICC Cricket World Cup 2011. It roped in the Ace Badminton

champion of India – Saina Nehwal as brand ambassador of its

Fortune brand cooking oil.

8) The company also provides contract manufacturing/private

labelling services for various companies.

S.W.O.T. Analysis of AWL

Strengths

Joint venture with Asia’s largest edible oil company. Wilmar International Ltd. having expertise in crude &

refined edible oil. Oil refineries at key locations of the country catering

edible oil markets across the country. With 80 branches, 5000 distributors to 1 million outlets,

AWL’s products reach to 20 million households across India.

AWL introduced based Soya bean oil to Middle – East and is now exporting its products to more than 19 countries in the Middle-East, South-East Asia & East Africa.

Combined refining capacity of 3200 TDP including major share of 2200 TDP from State-of-the-art refinery at Mundra, Kutchh.

Weaknesses

AWL is in Growth stage whereas Saffola, Sunflower, etc brands have been in the market from a long time.

Existence of small local players in the market. Insufficient rains in 2012.

Opportunities

High volume business with low margin. Competition with local players amounts to 90% of

domestic market. Effective Management of Logistics. Adherence to quality standards. Highly competitive Branded Edible Oil Market. Highly volatile Pricing Structure. Highly dynamic business conditions based on

agricultural market. Growing consumer demand for branded edible oil. Huge untapped local edible oil market. Demand for vegetable oil exceeds the National

Production. Highly growing bakery / confectionary & food industry

requires specialized fats. Import benefits on crude palm oil. Export incentives under various export promotion

schemes by government. Agriculture market has become more stable & growing

at a higher rate.

Threats

Shifts in consumer tastes.Tough competition to the

competitive brands like Saffola, Sunflower, Ruchi

Soya, etc.

Global or National economic downturn may force

consumers to buy the local brands.

New Government regulations.

Threats from local edible oil brands which are

normally lesser price than Fortune products.

PEST Analysis

1) Political Factors

The edible oil sector has been fully liberalized to create competition

in production, processing and marketing.

The taxation system is being harmonized so that millers operate on

a level playing field.

Institutions that promote raw material production have been set up

and adequately financed. [National Agricultural Research

Organization (NARO), Cotton Development Organization (CDO)]

The Government, with a view to avoiding scarcity of this items and

consequential price rise, has been allowing import of edible oils.

Import duty on edible oils has been reduced to 15%.

Permission has been accorded on experimental basis for

manufacture and marketing of a new product category distinct

from vanaspati so as to help product diversification and meet

changing consumer needs.

2) Economic Factors

India is 4th largest oilseeds and edible oils producing country in the

world next to USA, China and Brazil contributing to 9.3% of world’s

total oilseed production.

Adani has 50:50 Joint venture with Asia’s largest edible oil

producing company – Wilmar International (Singapore).

India’s GDP was 7.5% in 2004-05 which fluctuated and finally came

down to 6.5% in 2011-12.

India’s inflation rate was recorded at 7.45% in October, 2012 by

Ministry of Statistics and Programme Implementation. The inflation

rate has been fluctuating mostly on increasing pattern. This has

impacted Edible oil industry and ultimately agricultural sector.

Addition to this, there was comparably insufficient rainfall in 2012

which has triggered the rise in inflation rate.

The depreciation of the rupee has considerably affected the price of

the edible oil complex in a big way, as we import 60-70% of our

requirement. For instance, in November-December 2011, the price

of refined soya oil shot up by Rs 75 per 10 kg from Rs 651 to Rs

724," says Hanish Kumar Sinha, head, trade and commodity

intelligence group, NCMSL

AWL’s refined oils meet the CODEX, WHO and FAO standards. We

also meets the standards set by AOCS, and have also applied for

HACCP and ISO9001 certification.

Adani Wilmar Limited's Export division was started in 2004, and

our exports markets are the Middle East Countries, South-East

Asian Countries, Africa, Ukraine, etc. AWL has been awarded the

status of Trading House, by the Government of India.

“Fortune” was awarded as India’s no.1 Edible Oil brand by Nielsen

Retail Audit Index (March-2012)

3) Social Factors

Fortune brand reflects healthy, young and urban middle-class

families.

Fortune promoted guilt-free eating, supported by finest oils, giving

consumers a healthier way to indulge.

First this positioning was strengthened by the campaign “Thoda

Aur Chalega”. But due to constant changes in consumer habits, the

campaign has been revamped as “Joy of Eating” and “Ab Bas, Toot

Pado”.

At AWL, the goal is to help consumers rediscover the happiness of

eating a good, home-cooked meal and enjoy the food.

4) Technological Factors

Refining capacity of 4040 TPD, crushing capacity of 5750 TPD and

hydrogenation capacity at 575 TPD across India at 16 locations.

AWL’s distribution footprint spans the length and breadth of the

country, AWL has 85 stock points catering to more than 5000

distributors, 600 Super Stockists and numerous brokers and other

trade associates. Our retail reach is more than 1,000,000 outlets

and we continue to cater to an ever-growing customer base of over

80 million Indians.

Combined refining capacity of 3200 TPD including major share of

2200 TPD from State-Of-The-Art refinery at Mundra, Kutch

Porter’s Five Forces Model

Threat of Substitutes

The products in FMCG industry are highly substitutable.

For every single product there are many players giving almost the

same product or with some differentiation.

Threat of New Entrants

The well-established brand like Fortune has very huge base of loyal

customers, which will create entry barriers for new entrants.

Also products from Marico can be a threat to the Fortune brand.

Determinant’s of Supplier’s Power

This industry is dependant mostly on the local players for the

supply of raw materials, so here the quality and supply constraints

come in to the picture which affects the company’s growth.

Determinant’s of Buyer’s Power

Since these products are highly substitutable, the number of sellers

in the industry is comparatively very less with respect to the

number of buyers.

The market is also very price sensitive. If a company increases

price of their products, customers have many options to choose

from and they may shift to another brand or company.

Rivalry among existing players

There is intense rivalry present in Edible oil industry because they

produce products with little or no differentiation.

Competitive Strategies for Adani Wilmar

Growing consumer demand for Branded edible oil unlike older

times and Adani Group is a well-known brand by now.

AWL has identified the fact that demand for vegetable oil excess

the National production of vegetable oil and they have largest

edible oil refinery complex with the help of which they can meet

this demand.

They have their own Logistics subsidiary company which eases

their imports, exports and national distribution of their products.

They have a super-strong distribution network than any other

competitor like Ruchi Soya, Marico, etc.