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STRATEGIC ORIENTATION OF
HINDUSTHAN NATIONAL GLASS & INDUSTRIES LIMITED
Submitted to: Submitted by:
Prof. A.K.Sar Jayanta Chakraborty 10202200
Tushar Kanti Nayak 10202201
Swarasij Guha Roy 10202202
Ritesh Shreemal 10202220
ManasRanjan Mohapatra 10202227
Abhishek Adhikari 10202199
Anindya S Nayak 10202219
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Company Overview
HNG was founded by Mr. C.K.Somany in 1946 following the commissioning of Indias first fully
automated glass manufacturing plant at Rishra (near Kolkata). At present, it is the key player in Indias
container glass industry with a pan India presence.
It is the market leader with a share of ~55%. The company caters to industries like liquor,pharmaceuticals, beverages and processed foods among others. It is presently operating with a
cumulative capacity of 3307 TPD across 6 manufacturing units.
In the 5 ml - 3200 ml segment, HNGIL is the market leader. It caters to varied end users sectors like
liquor, beer, pharmaceutical, beverage, processed food and cosmetic covering industry majors like HUL,
Coca-Cola, Dabur, GSK, Nestle, Pepsi, Reckitt Benckiser, UB Group etc. The company also exports its
products overseas to markets such as South East Asia, Middle East, Africa, Europe and North America.
The companys export component though is currently small at 5% of total revenues.
Industry Information
The glass segment of Indias packaging industry is growing at the rate of approx 15% p.a. The untapped
potential of the Indian market is reflected in the per capita glass consumption of glass of around 1.4 kg
when compared with 10.2 kg in Japan and around 27 kg in the USA.
Demand of the glass container industry is driven by growth in end user segments such as liquor, beer,
pharmaceuticals, food processing and carbonated drinks. The liquor and beer industries are the majorusers of glass containers, accounting for around 60% of Indias glass container production, followed by
pharmaceuticals 20%, food 10%, carbonated drinks 5% and remaining cosmetics & others.
Demand for float glass in India has grown at a rate of 12% during the last 3 years, driven by growth in
end user segments such as automobile and real estate. However, the business is still at a nascent stage
in India compared to other countries like the US, the UK and China. The lack of sufficient float glass lines
as compared to other countries reflects the huge untapped potential in the Indian market. The demand
of float glass is likely to grow at a healthy 11-12% over the next 5 years backed by strong growth in the
construction and automobile industries.
Product Information
The Company has one of the widest portfolios for the container glass ranging from 5ml to 3200ml
across multi-colored bottles (Amber, Flint and Green). The products are available in over 30 countries.
The company has been accredited with ISO 9000:2000 certification, ensuring stringent quality protocol
and ISO 22000 for food and safety.
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TechnologyHNG introduced the NNPB (Narrow Neck Press and Blow) technology in 2007-2008. It is a revolutionary
process that not only controls the distribution of glass inside the container but also reduces the weight
of glass by 33%. HNG is the first to introduce and commercialized this technology in India. The company
had invested a capital of Rs. 100 Cr.
Strategic Direction
Vision:
To create a world-class glass manufacturing plant that pursues Quality, Cost Reduction, and
Productivity Improvement measures in a truly holistic manner leading to Customers, Shareholders,
Employees and Suppliers Satisfaction; this integrated effort will result in the company becoming an
Industry Benchmark and a role model for systems, processes and results.
Mission:
At HNG we look forward to customer satisfaction. Our main objective is to ameliorate our customers
and stakeholders, and in the process strengthen the roots of our organization, so that we can emerge
as the behemoth in the glass packing industry.
Values:
At HNG, we believe in the core values of people, operational excellence, innovation and integrity.
It is our people that give us the gusto to move forward, keeping all the obstacles at bay. With our
diligent workforce, production has become so much easy.
Our operational excellence has given us the strength to lunch our product with even more confidence.
We have an installed capacity of 2825 TPD and this is what distinguishes us from competitors.
Innovation and integrity are two important things that drive the HNG team. These values are like assets
that consolidates us in our march towards a greater future.
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Macro Environmental
Sectors
Trends Impact on the Industry Opportunity/Threats
Social 1. Increased awareness
about recycling.
2. Prevention of land
contamination and
minimize carbon
emissions to air and
water.
1. Increased CSR.
2. Potential to capture
larger market share.
3. New project
implementation.
Opportunity.
Technological 1. Installed NNPB
(Narrow Neck Press &
Blow) technology.
2. Collaborations with
international
companies.
1. Able to produce high
quality at less cost.
Opportunity.
Economical 1. Performance linked
to robust growth in the
end user segment.
2. Focus on sustainable
growth.
Stimulate
renewable-
favoring market
forces with
attractive
return rates.
To encourage
consumers to
shift to latest
advancements
in technological
products.
Threat.
Political 1. Grant of funds by
Govt. for R&D.
1. Make production
cheaper and generation
more efficiency.
Opportunity.
Porters Five Forces Model:
Threat of entry:
Item Key TOE
Brand loyalty commanded by incumbents High 1. Customers are brand loyal.
2. New players will require a lot of
brand building.
Economies of scale in the business High 1. Barriers to entry.
2. Change in technology.
3. High power and fuel cost.
Capital requirement High 1. Setting up new manufacturing units.
2. High cost associated with
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distribution channel.
3. High working capital requirement.
Buyers switching cost low 1. Homogeneous products and low
price difference.
Easy access to input No 1. Availability and procurement of sand
for production.
History of past retaliation Low 1. Technological advancement is low.
Power of Suppliers:
Item Key POB
# of suppliers relative to # industry players High As suppliers are
more they are
having less
power.
Average buying volume of the industry per transaction High(depends
on plant
capacity)
Power o f
supplier is low.
Suppliers do sell to other industries also High Natural
resources like
sand, lime stone
and soda ash
etc. are also
used in other
industry.
Cost (to industry players) of switching between suppliers Low Power of
supplier is low.
Industry players can integrate backward into the supplier industry Low Can integratebackward but
capital
requirement is
high.
Suppliers cannot integrate forward into the industry Low Power of
supplier.
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Powers of Buyers:
Item Key POB
#buyers relative to # of
industry players
High Power of buyers is low as demand is more than supply.
Buying volume per
average transaction
High Demand for container glass is directly linked to performance of end
user industries.
Industry players do sell
to all buyer segments
High Industry sells to all segments. It does not differentiate.
Buyers can buy from
multiple players
High HNG Caters to customers across segments (Like liquor, beer, food,
soft drinks, pharmaceuticals etc.). Piramals maximum revenue comes
from pharmaceuticals sector.
Cost (to the buyers) of
switching between
players
Low Buyers can switch.POB is high.
Buyers cannot integrate
back to the industry
Low End users can not integrate backwards.
POB is low.
Industry players can
integrate forward
Low Industry player cannot integrate forward.
POB is low.
Threat of Substitutes:
Item Key TOS
Substitutability of the industrys product (availability and
comparability of substitutes price/ performance)
High PET
bottles &
Aluminum
cans are
substitute
of
container
glass.
Profitability of substitute products industry High Available
but not
preferred.
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Strategic Group and Segmentation Analysis:
The glass industry has three prime segments i.e. Container Glass, Float Glass and Fiber Glass.
The container glass segment produces glass packaging products, such as bottles and jars. The float glass
segment caters to residential and commercial construction, automobile windshield, mirrors etc. The
fiber glass is further divided in to two sub industries like building insulations (Glass Wool) and textiles
fibers used to reinforce plastics and other materials for the transportation, marine, and constructionindustries.
The company focuses on container glass segment and has recently forayed into the float glass segment.
Float Glass Segment:
The Company possesses a market share of around 35% in western India and of around 20% and 18% in
northern and southern India respectively.
Integrated glass plant having capacity to manufacture toughened, insulated glasses for architectural
and automotive application 18% raw material source within 100-150 km and 20% of the production is
sold within 500 km.
The company has a Pan-India presence with distribution network of 758 agents.
Diversified supplier base for each raw material to reduce any business risks on account of non-supply
Container Glass Segment:
Liquor and beer industries are the main users of glass containers with 60% share, followed by
pharmaceuticals 20%, food 10%, carbonated drinks 5%, and cosmetics & others account for the
remaining
Favorable demographics and rising disposable incomes drive consumption across end-user industries in
India.
The per capita consumption of glass in India is ~1.4kg, as against 27.5kg in US and UK and 5.9kg in
China.
Figure 1. End User Segmentation
52, 52%
15, 15%
11, 11%
9, 9%
13, 13%
Liquor
Beer
Food
Pharmaceutical
Others
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Liquor:
Indians consume 200 mn cases of IMFL and 220mn cases country liquor. Increasing trend of social
drinking, driving the sector growth at almost 13%.
Beer:
The consumption has been increasing by 15-20%.
Food Processing:
This industry is expected to grow at a rate of 10% in next 5 years.
Pharmaceuticals:
Increased consciousness for wellness leads to demand. Indian pharmaceutical market is expected to see
a CAGR of 12-15% over the next 3 years (as per IMS research).
Carbonated Drinks:
This is an Rs 6000 Cr industry and is expected to grow at 6-8% p.a.
Cosmetics:
Domestic cosmetics and toiletries segment is growing at 15-20%.
The Value Net:
Competitors:
Cooperation among rival firms can bring about new technologies and R&D activities by which they can
explore a new market through a new product which can be beneficial to the industry as a whole.
Suppliers:Firms can integrate with the suppliers to develop quality products and ensure uninterrupted supply of
raw materials.
Customers:
Firms can collaborate with the end users so as to fulfill their specifications and requirements keeping
intact the industry standards and environmental norms. The company has introduced the NNPB
technology to enhance light weight bottles manufacture thereby ensuring reduced per bottle cost for
the customer (up to 33% of lower weight, lower transportation cost, less breakage).
Complementor:
Firms can synergize with the Complementor which will increase their scope of expansion. HNG has a
joint venture with OMCO International NV (world's leading glass mould manufactures) for mould
manufacturing facility; it also has an alliance with Siemens to leverage its technological innovation in
automation and energy efficiency.
Identifying Key Success Factors
What do customers
want? (Analysis of
demand)
How do firms survive
competition? (Analysis
of competition)
Key success factors
Glass Industry
(Container )
Technologically
advanced
Adaptation of
new
Using NNPB
(Narrow Neck
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products.
Light weight &
high quality
glass.
Aesthetically
appealing glass
container.
Low cost
products.
Continuous
availability.
technology.
Diversified
product
portfolio.
Economical
pricing.
Capacity
expansion.
Low resource
consumption
(water and
energy).
Press & Blow)
technology.
Pan India
presence.
Brand loyalty.
Highest
installed
capacity 2930
TPD.
Internal Analysis
RELATIONSHIP AMONG RESOURCES, CAPABILITIES & COMPETITIVE ADVANTAGE
The Industry key success factors for this industry mainly rest upon the product differentiation that
requires continuous product development which is an outcome of regular technological up-gradation
and lowering natural resource consumption.
Strategy
Organizational Capabilities
Strong R&D, Product
development, Govt. relations,
CRM
Industry Key SuccessFactors
Using NNPB (NarrowNeck Press & Blow)
technology.
Pan India presence.Brand loyalty.Highest installed
capacity 2930 TPD.
CompetitiveAdvantage
Differentiation: Light weight
container glass.
Replacing gaswith fuel.
Low Cost & Pricemaker.
RESOURCES
TANGIBLE INTANGIBLE HUMAN
Strong BalanceSheet with debt
equity ratio 0.37.
Adequate cashreserves.
Highest installedplant capacity.
High brandvalue.
LatestTechnology(NN
PB)
R&D.
Propermanagement ofintellectual
capital
Effectivecollaboration
among
employees
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The rightful integration of its resource and capabilities has enabled HNG to come up with the product
differentiation competitive advantage. The regular spending on technology and R&D activities is due to
strong financial backbone and the enhance employee co-operation which has lead to the development
of intellectual capital within HNG.
DISTINCTIVE COMPETENCIES SHAPE THE FUNCTIONAL-LEVEL STRATEGIES
THAT A COMPANY CAN PURSUE
HNG functional strategies have lead to the attainment of its competitive advantage with value creationto gain superior profitability.
Superior Efficiency: Superior efficiency has been achieved by the strategic global alliances and
acquisitions, technological innovations in automation and energy efficiency and above all consolidation
of resources and capabilities. Over the years HNG has spent massively on technological development
lead to its economies of scale in the current development scenario.
HNG has a long term customer relationship which has helped to decrease the total fixed cost and
average per unit cost of sale. Customer Loyalty has been a driving force in HNGs superior efficiency.
Superior Quality: At HNG quality has never been compromised. Better quality means less rework,
fewer mistakes, fewer delays and better use of time and materials and that leads to cost reduction. The
Company has one of the widest portfolios for the container glass ranging from 5ml to 3200ml across
multi-colored bottles (Amber, Flint and Green). The products are available in over 30 countries. The
company has been accredited with ISO 9000:2000 certification, ensuring stringent quality protocol and
ISO 22000 for food and safety. HNG is a public limited company too.
Superior Innovation: HNG is collaborating with noted international companies, such as Emhart Glass
(U.S), HEYE Glass (Germany), Pennekemp (Germany), Horn Glass (Germany) and Zippe (Germany).
Emhart is the world's leading supplier of equipment, controls and parts to the glass container
industry which is providing HNG with the latest glass bottle forming machines. It is alsosupplying state-of the-art BIS machines to be installed for the first time in Asia. HNG is also
using NNPB technology resulting in 33% reduction in weight of glass container.
Resources
Distinctive
Competencies
Capabilities
Functional
Strategies
Superior:
Efficiency
Quality
Innovation
Differentiation
Low Cost
Value Creation
SU P
P R
E O
R F
I I
O T
R A
B
I
L
I
T
Y
FUNCTIONAL LEVEL STRATEGIES CAN BUILD RESOURCES & CAPABILITIES TO ENHANCE
DISTINCTIVE COMPETENCIES
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Customer Responsiveness: HNG is making light weight bottles and bottles of fancy shapes and
sizes, of different colors, and with frosted finish. This has enhanced glass aesthetics, compared
to PET and Tetra pack. HNG is focusing more on narrow neck press and blow process (NNPB)
to enhance lightweight bottles manufacture. This has ensured higher per tonne realization, while
reducing the per bottle cost for the customer (up to 33% lower weight, lower transport cost, less
breakage). Presently HNG has a market share of 55%.
VALUE CHAIN FOR HNG
All the above factors have come together for HNG to create its competitive advantage thus helping it to
maintain profitability over the years and serve the customers as per their needs. Thus a margin is being
generated with the integration of support and primary activities entitling HNG to create a barrier for
other players.
Strong Financial Position, Accounting, Global Alliances, Low D/E Ratio
Young Managers, Attractive incentives, Periodical Training
SUPPORT ACTIVITIES
PRIMARY ACTIVITIES
Firm
Infrastructure
HR
Technology
Development
Procurement
Inbound Operations Outbound Marketing & Services
Logistics Logistics Sales
Latest
technology
(NNPB).
Fuel
based to
gas based.
Waste heat recovery
project sites for power
generation.
Sourcing equipment
from 100% owned
subsidiary.
Sourcing
Amber sand
Importing
latest glass
bottle
forming
machines
Use of
cullet.
Focus on
automation
for cost
reduction
Strong
distribution
channel
supplying
direct to
end users.
Direct
Marketing
Website
Customer
specific.
Prompt
customer
feedback
model
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ASSESSING RESOURCES AND CAPABILITIES OF HNG
ASSESSING RESOURCES OF HNG ON SCALE OF 1-10
Resource Importance
HNGs Relative
Strength Comment
R1. Finance 9 9
Rating AA+ & PR1+ by CARE
Ratings. Low Debt Equity
Ratio(0.37)
R2. Technology 10 9 Leader in NNPB (Narrow Neck Press& Blow)
R3. Plant and
Equipment
9 9 Importing latest glass bottle forming
machines. Highest & constant
capacity addition.
R4. Distribution 7 8
Direct marketing.
R5. Brands 7 7 High brand loyalty (50% market
share).Participated in national andinternational trade fairs in order toenhance brand visibility.
The key Resources are Finance, technology, updated equipment and a wide distribution network.
These factors integrate to form a part of the competitive advantage strategy. The resources are
well determined by the key success factors for the industry.
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ASSESSING CAPABILITIESS OF HNG ON SCALE OF 1-10
Capability Importance
HNGs
Relative
Strength
Comment
C1. Product
Development
9 9 It is very strong in product
development as compared to
competitors.
C2. Manufacturing 8 7 High plant capacity thereby enjoys
economies of scale/scope.
C3. Financial
Management
10 9 Debt equity ratio 0.37. Sufficient
cash reserves. Loaned funds of Rs.
640 Cr.
C4. R&D 6 6 Spending for gaining operational
efficiency. Total expenditure Rs.
13lacs in FY11.
C5. Marketing and
Sales
9 8 Direct Marketing. Participated innational and international trade fairs in
order to enhance brand visibility.
C6. Government
Relations
4 6 Important in emerging markets.
Only resources alone cant provide a platform for implementing on competitive advantage. The
resources need to be applied with the capabilities to form a part of the strategy. The industry key
success factors induce the capabilities to work upon to build the competitive advantage for the
company. HNG has a strong relation with the State Govt. of different states. Continuous product
development becomes very important.
APPRAISING RESOURCES AND CAPABILITIES OF HNG
R5C5
R4
C6
C3R3
C1
C2
R1
R2Superfluous strengths Key strengths
I
10
5
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The resources and capabilities are being assessed so as to find out which resources and capabilities are
important and in which HNG has relative strength. The factors in which HNG has relative strength will
help it to charge a premium on the price of services it provides. The strength determines the resources
and capabilities in which economies of scale can be achieved.
HNG is a leader in technological innovation and also backed up by good financial condition and a wide
distribution network. Government regulations need to be improved so that the company can undertake
in-house R&D activities.
The Delta Model
At HNG three distinct strategies are followed:
1. Strategic Priority 1: Grow value of the HNG brand and widen the product portfolio.2. Strategic priority 2: Transform the go-to market model to improve efficiency and effectiveness.3. Strategic priority 3: Attract, develop and retain a highly talented and diverse workforce.
The three distinct strategic options are:
Systems lock-in Total customer solutions Best products
Systems Lock-In:
The company enjoys economies of scale due to highest installed capacity (2930 TPD) and several
proposed greenfield and brownfield projects across India.
The company is the countrys largest container glass manufacturer with a commanding market share of
55% .The Company has focused on both organic and inorganic growth. The Company has successful
turnaround six sick units over a period of time.
The Company has synergized with the Complementor to increase their scope of expansion. HNG has a
joint venture with OMCO International NV (world's leading glass mould manufactures) for mould
manufacturing facility; it also has an alliance with Siemens to leverage its technological innovation in
automation and energy efficiency.
C4
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Total Customer Solutions:
The Company has one of the widest product portfolios ranging from 5ml to 3200ml across multi-colored
bottles. Furthermore the companys products are available in over 30 countries.
The Indian container glass market is estimated to be a Rs. 30-billion business, accounting for 12% of the
packaging industry and is expected to grow at 10% to 12% per annum in the future. India's is one of the
lowest per capita glass container consumption at 1.4 kg as compared to 27.5 kg in the USA and 10.5 kg
in Japan.
Demand for container glass is driven by the growth in user industry i.e. liquor, beer, pharmaceuticals,
cosmetics, perfumery, food and beverages. The liquor and beer industries are the main users of
container glass with 70% contribution, followed by pharmaceuticals 10%, food products 10%, beverages
6% and cosmetics 4%. Business in this industry also differs from one region to another.
It has a prompt feedback customer model. The Company has an in house fleet of over 100trucks to de-
risk supply side logistics.
The Company has a team of highly experienced and competent management to cater to varied
customer demand.
Best Products:HNG has the highest plant capacity which enables to enjoy economies of scale thereby lowering the
cost of products.
The Company specializes in light weight container glass (by using NNPB technology) across three colors
such as Amber, Flint and Green and also with frosted finish. This has enhanced glass aesthetics,
compared to PET and Tetra Pack.
Value Proposition:
ValueProposition
Element
Description
Experiences Integrated teams of skilled professionals with deepunderstanding of client's business.
End to end delivery with high quality and competitiveprice.
Value Delivery
Systems Installed a value score card system in collaboration with
Ernst & Young.
Training of professionals (Young Managers Programmefor selecting potential managers).
Setting up of an HR strategy cell.Value
Appropriation Value gained by customer: Light weight container glass.
Different shapes and sized bottles.
Value gained by HNG: Leveraging long term relationshipswith clients and servicing their growth needs.
Value shared by both: Lower resource consumption(Energy & water), conversion of fuel based units to gas
based to reduce carbon emission.