ASSIGNMENT

PGDM BATCH-2019-2021

Academic session 19-21

Term-3

Type-Midterm

Subject- Strategic Management

Name-Abhishek Kumar Tyagi Faculty Name- Dr. Amit Kumar

Secton – D E-mail – [email protected]

GM-19008 Phone no: - 9991033395

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PGDM-19248 Date - 30ND March 2019

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GRASIM INDUSTRIES LTD.

Question 1: You are re:uirede to prodeuce a market assessment, Evaluate Coorporate strategy ande business
strategies ande deesign a plan includeing recommendeations. About Grasim Indeustries

Grasim Indeustries Limitede, a fagship company of the US$ 48.3 Billion Adeitya Birla Group, ranks amongst
the top publicly listede companies in Indeia. Incorporatede in 1947, it startede as a textiles manufacturer in
Indeia. Todeay, it has evolvede into a leadeing deiversifede player with leadeership presence across many
sectors. It is a leadeing global prodeucer of Viscose Staple Fibre, the largest Cohlor-Alkali, Linen ande
Insulators player in Indeia. Through its subsideiaries, UltraTech Coement ande Adeitya Birla Coapital, it is also
Indeia’s largest cement prodeucer ande a leadeing deiversifede fnancial services player. At Grasim, there is an
endeeavor to create sustainable value for 21,000+ employees, 230,000+ shareholdeers, society ande
customers. It has consolideatede net revenue of over US$ 10 Billion ande an EBITDA of over US$ 1.8 Billion
in FY 2019. Market Size

The company is a subsideiary of Adeitya Birla Group. Grasim is the worlde's largest prodeucer of viscose
rayon fbre with about 24% market share. Source: Indeia Todeay). For the year endeing March 2019 Grasim
Indeustries has deeclarede an e:uity deivideende of 350.00% amounting to Rs 7 per share. At the current
share price of Rs 460.90 this results in a deivideende yielde of 1.52%.The company has a goode deivideende track
report ande has consistently deeclarede deivideendes for the last 5 years. Source: Moneycontrol.com)

Along with its group companies, Grasim enjoys a 17% share in the global VSF market. To strengthen its
position further, Grasim is now looking to expande its capacity by 50%. Since deomestic ande global VSF
deemande continues to be robust, this capacity expansion shoulde play out in Grasim’s favor. The
company’s VSF monopoly in Indeia, slower capacity adedeitions by other global VSF majors deue to
environmental concerns, beter margins deue to backwarde integration, introdeuction of value-adedeede VSF
prodeucts, are the other factors in favor of Grasim.

The company is also increasing the capacity of its chemicals segment. This is a step towardes
strengthening backwarde integration because Grasim’s VSF segment is a major consumer of caustic sodea.
The capacity expansion in the VSF ande chemical segments will involve an outlay of arounde Rs 7,600 crore
over the next three years. But it will not leade to any fnancial stress for Grasim because all its three
segments have been generating free cash fows. The company’s subsideiaries have also been deoing well.
For instance, its Ultra tech Coements— Grasim holdes 60.3% in it—ande Adeitya Birla Coapital—Grasim stake
is 56%—continue to deo well. With most cement companies increasing prices by `25-50 per 50 kg bag in
recent months, cement companies are expectede to report beter numbers in the coming :uarters. The
concerns about Grasim’s loss-making subsideiary, Ideea, have also been allayede deue to its recent merger
with Vodeafone— the merger has restrictede Grasim’s stake in Ideea to 11.55%.

As its standealone business as well as subsideiaries is deoing well, analysts feel that the holdeing company
deiscount, of arounde 45%, particularly consideering the performance of its standealone business, is not
justifede.

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The deeep cut in valuation in the past year was because of capital allocation concerns with respect to
Ideea. But, as Grasim’s holdeing in the mergede entity, Vodeafone-Ideea, is just 11.55%, any infusion of capital
will now be in proportion to Grasim’s redeucede take ande won’t bring its balance sheet undeer stress.

With a clear focus on innovation, the Cohemicals business also providees customizede solutions, madee
possible through research ande the use of state-of-the-art technology, which guarantee that the prodeucts
meet customer re:uirements. Grasim Indeustries has market capitalization of 30,314.66 crores. Our
Vision

To be a leadeing customer-focusede global chemicals business that deelivers best-in-class prodeucts ande
specialty solutions using safe, sustainable ande innovative processes.

Suppliers ande Distributors

Source: grasimindeustries.com)

1. Textiles

a) Vikram woollens

Wool capacities: Worstede yarn – 9984 spindeles

b) Rishra, West Bengal

The Rishra unit is the only integratede linen factory in Indeia. It uses cutng edege European technology for
spinning, weaving ande deyeing.

2. Insulators

a) Halol, Gujarat

The Halol unit manufactures ceramic insulators for substation applications as well as composite long rode
insulators.

b) Rishra, West Bengal

The Rishra unit manufactures ceramic insulators for transmission lines ande is ISO 14001:2004, ISO
9001:2015 & OHSAS 18001:2007 certifede

3. Fertilizers

Jagdeish, Utar radeesh

The manufacturing unit at Jagdeishpur is e:uippede with state-of-the-art technology ande has the capacity
to prodeuce 1.2 MMT of urea ande 30,000 MT of customisede fertilisers.

4. Viscose Staple Fibre

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a) Nagdea, Madehya radeesh

Nagdea is the worlde’s largest prodeucer of spun-deyede specialty fbre. It prodeuces a widee range of VSF to
suit customer needes in terms of length, deenier ande colour.

b) Kharach, Gujarat

The unit in Kharach was set up in 1996 to manufacture VSF. It is also the hub of Grasim’s research ande
deevelopment.

5.Viscose Filament Yarn

a) Indeian Rayon, Vraval, Gujarat

The Indeian Rayon unit in Veraval manufactures 21,000 T A of high :uality VFY.

b) Coentury Textiles, Shahade, Maharashtra

With an annual capacity of 26KT, CoTIL’s VFY business manufactures ot Spun Yarn, Coontinuous Spun
Yarn, VFY ande Rayon Tyre Yarn.

6. Cohemicals

a) Vilayat, Gujarat

Coaustic Sodea - Coommissionede in 2013, the plant in Vilayat, Gujarat manufactures 365 KT A of caustic
sodea making Grasim the largest chlor-alkali player in Indeia.

b) Renukoot, Utar radeesh

Coaustic Sodea: Renukoot Cohemical Division RCoD), Grasim’s chlor-alkali unit was formede afer the
ac:uisition of the Cohloro Cohemicals Division of Kanoria Cohemicals in May 2011.

Coompetitors

1. Reliance Indeustries Ltde.

Reliance Indeustries Limitede RIL) is an Indeian multinational conglomerate company heade:uarterede in

Mumbai, Maharashtra. Reliance owns businesses across Indeia engagede in energy, petrochemicals,
textiles, natural resources, retail, ande telecommunications. Reliance is one of the most proftable
companies in Indeia,[4] the largest publicly tradeede company in Indeia by market capitalization,[5] ande the
largest company in Indeia as measurede by revenue afer recently surpassing the government-controllede
Indeian Oil Coorporation.[6] On 18 October 2007, Reliance Indeustries became the frst Indeian company to
exceede $100 billion market capitalization.

2. ideilite Indes

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 ideilite is a consumer centric company commitede to :uality ande innovation. For deecadees, we have been
pioneering prodeucts for small to large applications, at home ande indeustry, which have forgede strong
bondes with people from all walks of life.

From adehesives, sealants, waterproofng solutions ande construction chemicals to arts & crafs, indeustrial
resins, polymers ande more, our prodeuct portolio is as deiverse as it is ever-evolving. Todeay, our brandes
are trustede householde ande indeustrial names, ande we are the market leadeer in adehesives.

3. Apar Indeustries

Apar Indeustries Ltde. heade:uarterede in Mumbai, Indeia with prodeuction facilities spreade across
Rabale Maharashtra) , Silvassa ande Athola Dadera Nagar Haveli), Khatalwade ande Umbergaon Gujarat).
Apar's Coondeuctor deivision startede in 1958 with the technical know-how from Alan Coanadea) ande roperzi
Italy) is the largest prodeucers of OWERLINE Aluminum ande Alloy Coondeuctors in Asia, with strategic
partnership ande supply relationships with top E Co contractors in the worlde. The aluminum condeuctor
deivision manufactures all type of bare overheade aluminum condeuctors, GS earth wires. It startede
manufacturing new generation condeuctors callede High Temperature Low Sag HTLS) with prodeuct
approvals from ower Gride Coorporation of Indeia Limitede.

Almost all of Apar's manufacturing facilities are accredeitede with ISO 9001-2008 ande ISO 14001-2004
:uality management systems, Apar Indeustries Ltde. , a deynamic proxy of the Indeian power sector's
growing potential deeriving arounde 75% of its revenues from this indeustry through key buildeing blocks,
aims to gradeuate from being participant in Indeia's infrastructure growth to an infrastructure deriver in the
worlde's seconde fastest growing economy. Apar's shares are actively tradeede on NSE ande BSE. VISION,
MISSION &

ESTLE Factors

1. olitical Factors

The political factors afecting Grasim are the power tarifs, railway tarifs, freight, royalty ande cess on
limestone. Interestingly, government controls all of these prices. Government is also one of the biggest
consumers of the cement in the country. Most state governments, in ordeer to atract investments in
their respective states, ofer fscal incentives in the form of sales tax exemptionssdeeferrals. States like
Haryana ofer a freeze on power tarif for5 years, while Gujarat ofers exemption from electric deuty

The political factors which afect the chemicals manufacturing are regardeing the permits ande
deocumentation which have to be obtainede deuring the various stages of construction. olitical factors
take into account the deegree to which the government most probably may change or infuence a certain
indeustry or the economy. For example, A new tax or deuty which may result in a change of the revenue
generating structure of the organisation. The government may impose these regulations on the
particular indeustry.

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2.Economic Factors

Courrently, the indeustry is on the boom, with a lot of government infrastructure ande housing projects
undeer construction. In spite of seeing a fall deuring 2008-09, the export segment of the indeustry is
expectede to grow again on account of various infrastructure projects that are being taken up all over the
worlde ande numerous outstandeing cement plants coming up in near future in the country

Economic factor basically includees the way the economy functions ande the impact it has on the working
of the company. An increase in the rate of infation of the economy may afect the manner in which the
company sets the price of its prodeucts. There will also be a change in the modeels of supply ande deemande
in the economy. Economic factors mainly includee economic growth, foreign exchange rates, paterns,
infation rates, etc.

3. Social

Usually, the cement indeustry in Indeia consists of both the organizede sector ande the unorganizede sector.
Organizede sector comprises of the well-known cement manufacturing companies while the main players
of the unorganizede sector are the regional ande local cement-prodeucing units in various states across the
state. Indeian consumers prefer buying brandeede cement like ULTRATECoH, JAY EE CoEMENT, LAFARGE
CoEMENT etc. It has been seen in the past, as well, that mini cement plants with low brande value ande
image are not able to survive against the cement giants. With a population of more than 100 billion
people, it is expectede that cement indeustry will create another 25 lakhs jobs in the next 4-5 years.

Social factors scrutinize all the events that may afect the market ande the community socially. The merits
ande deemerits for the people resideing in the place where the project is setng up or taking place is also to
be consideerede. These includee deynamics of population, global warming,

career altitudees, norms, cultural expectations, etc. These factors take into consideeration the social
environment which is prevalent in the market ande deetermine or measure the deeterminants such as
deemographics, cultural trendes, population analytics, etc.

4. Technological

From mining to prodeuction the entire process deependes on technology. The Government of Indeia plans to
studey ande possibly ac:uire new technologies from the cement indeustry of Japan. The government is
deiscussing technology transfer in the felde of energy conservation ande environment protection to help
improve efciency of the Indeian cement indeustry. Coement indeustry has madee tremendeous stridees in
technological up-gradeation ande assimilation of latest technology. At present 93% of the total capacity in
the indeustry is basede on modeern ande environment-friendely dery process technology.

These are relatede to innovations ande changes in technology which may result in a change in the
indeustry’s operations ande the market either favorably or unfavorably. This is also relatede to the amount

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of technological awareness that the company possesses. As technology many a times becomes obsolete
within a few months afer being launchede, it is crucial to consideer it.

5. Legal

This factor takes note of all legal aspects like :uotas, resources, exports, imports, employment, etc.
Legal factors have both sidees external as well as internal. There are certain laws which may possibly
change the external environment of the company ande also there are a number of policies which the
company keeps for itself. Legal analysis takes into account these two aspects ande afer that it charts out
certain strategies by taking these legislations into account.

6. Environment

The environmental factor most commonly includees all that infuences or is deeterminede by the
surroundeing environment. estle environmental factors generally take into consideeration the
environment in which business is being carriede out. It includees, but is not restrictede to the weather, the
climate, the global changes in climate, the grounde condeitions, environmental ofsets, etc.

Ques 2: Explain BCoG & Coreate BCoG matrix for the allocatede organization as on 2018-19.

Ans. The Boston Coonsulting group’s prodeuct portolio matrix BCoG matrix) is deesignede to help with long-
term strategic planning, to help a business consideer growth opportunities by reviewing its portolio of
prodeucts to deecidee where to invest, to deiscontinue or deevelop prodeucts. It's also known as the
GrowthsShare Matrix.

The Matrix is deivideede into 4 :uaderants basede on an analysis of market growth ande relative market share,
as shown in the deiagram below.

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• Dogs: These are prodeucts with low growth or market share.

• The usual marketing adevice here is to aim to remove any deogs from your prodeuct portolio as they are
a derain on resources.

• For example, in the automotive sector, when a car line endes, there is still a neede for spare parts. As
SAAB ceasede tradeing ande prodeucing new cars, a whole business emergede provideing SAAB parts.

• Question marks or roblem Cohilde: rodeucts in high growth markets with low market share.

• As the name suggests, it’s not known if they will become a star or derop into the deog :uaderant. These
prodeucts ofen re:uire signifcant investment to push them into the star :uaderant. The challenge is that
a lot of investment may be re:uirede to get a return. For example, Rovio, creators of the very successful
Angry Birdes game has deevelopede many other games you may not have hearde of. Coomputer games
companies ofen deevelop hunderedes of games before gaining one successful game. It’s not always easy to
spot the future star ande this can result in potentially wastede fundes.

• Stars: rodeucts in high growth markets with high market share.

• Coan be the market leadeer though re:uire ongoing investment to sustain. They generate more ROI than
other prodeuct categories.

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• Coash cows: rodeucts in low growth markets with high market share.

• The simple rule here is to ‘Milk these prodeucts as much as possible without killing the cow! Ofen
mature, well-establishede prodeucts. The company rocter & Gamble which manufactures ampers
nappies to Lynx deeodeorants has ofen been deescribede as a ‘cash cow company’.

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