jayakrishna..organisaional study
TRANSCRIPT
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CHAPTER - ONE
INTRODUCTION
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INTRODUCTION
Introduction to the study
This report is based on the organizational study conducted at “KARNATAKA SOAPS
AND DETERGENT LTD”, which is one of the largest producers of sandalwood oil
and sandalwood soaps in the world. It is located at the heart of Bangalore city which is
the electronic capital of India. The company KS&DL was started in the year 1918 by
maharaja of Mysore in the name Government Soap Factory and later in the 1980 was
re named as Karnataka Soaps and Detergents Ltd. The company was in a state of
winding up in the year 1991 and was under the control of BIFR. But in 2003 the entire
carried forward loss of Rs.98 Crores wiped out and in May BIFR, declared the company
to be out of its Purview. The Company is making profit continuously, it is the only
State Public Sector unit that has come out of BIFR
The Mysore sandal brand of soaps of KS&DL is not only famous in India but in UAE,
Australia, Singapore.Etc. The company initially started with Mysore sandal soap but
later expanded their product line into Detergents, Talcum powder and Agarbathties.
The study, done for a period of one month from 2nd April to 2nd May 2014, focuses on
the structural and the functional aspects of Karnataka Soaps And Detergent Ltd., its
product profile, markets and the major competitors in their fields of business activities.
The industry and the environment of the firm is analyzed in detail and the study attempts
to identify the strengths and weaknesses of the firm while exploring its possible
opportunities and threat.
Scope of Study
The study is focused on the manufacturing facility, financial operations and Operational
activities of Bangalore unit of Karnataka Soaps and Detergents Ltd. The activities of
the company in other branches are not within the scope of this study. The structural
aspects, functional aspects of all the departments like the Finance, Human Resource,
Marketing, Materials, Research and Development and Production are covered in this
study. However a detailed study on the production process or the technology being used
or a detailed financial analysis is not done.
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Objectives of the study
The major objectives of the organizational study conducted Karnataka Soaps and
Detergent Ltd are as follows:
To have an overall understanding about Karnataka soaps and detergent ltd as an
organization, its history and the current status.
To study the products, the market which they have targeted and its business
process.
To analyse the Industry in which the firm operates and the external environment
impact over the company.
To study the organizational structure, departmental structure, their uniqueness,
their deficiencies, interactions and interrelationships.
To identify the Strength Weakness Opportunity, threats of Karnataka soaps and
Detergent Ltd (SWOT Analysis) and attempt to suggest ways in which the firm
can use its strength to exploit the opportunities and mitigate the threats.
Methodology for the study
The study is on the organization as a business entity and it is descriptive in nature.
Information and data collection was mainly done through one to one interactions with
the members of the management team and employees. Both formal and informal
methods have helped in the better understanding of the working of the business. The
study was done in a systematic manner following a predefined schedule wherein all the
departments were covered one by one. For the interaction with the key personnel and
top management, appointments were fixed and formal interviews were taken.
Secondary data sources like the Departmental manuals, Audit reports, Marketing
brochures. Material data from company website and other websites hosted by reputed
organizations were also used for this study.
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Limitations of the study
The in-depth and detail study of the organization could not be achieved due to time
constraint. The outcome of the study is highly dependent on the perception, attitude and
understanding of the informer. The Busy schedules and odd working hours (shift duty)
of the supervisors and employees had made them unavailable for interactions during
the study which could have really made the study more complete and valuable.
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CHAPTER – TWO
ANALYSIS OF
BUSINESS ENVIRONMENT
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ANALYSIS OF BUSINESS ENVIRONMENT
Analysis of remote external environment
The external environment of an organization comprises of all the entities that exist
outside its boundary, but have significant influence on its growth and survival. An
organization has little or no control over its environment but needs to constantly
monitor and adapt to these external changes, a proactive or reactive response leads to
significantly different outcome. It is actually the external environment that shapes an
organization. Any organization that easily adapts to the environment essentially
survives and the one that do not are the ones that are eliminated in the competition. The
informational resources on external environmental forces are critical to an
organization’s stability and survivability and all this data must be collected and
analyzed from which to implement strategies and to maximize the organization’s
strengths and opportunities, while minimizing its weakness and threats.
The external environmental factors that affect the company’s business could be
analyzed using PESTEL analysis. This analysis is an important tool that executives
can rely on to organize factors within the general environment and to identify how these
factors influence their Organization. PESTEL is an anagram, which means it is a word
that is created by using parts of other words. Where
P – Political Factors
E – Economical Factors
S – Social Factors
T – Technological Factors
E – Environment Factors
L – Legal Factors
Now we can see how these factors of the external environment affect the functioning
of Soaps and Detergents manufacturing Industry.
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Political environment. The political segment centers on the role of government in
shaping business. This segment includes elements such as the stability of governments
and the policies of different political parties. In the case of Soaps and Detergents
industry the political environment plays a major role. In the recent union budget,
government has increased the customs duty on caustic soda from 7.5% to 15. Caustic
soda is one of the main raw material that is being used in the production of soaps and
detergents and such a hike on customs duty will at least lead to hike in the price of
products of those companies that depends on imports of caustic soda. The industry is
also facing challenges due to higher power cost, cheaper imports and impact of
cascading duties and taxes. But there has also been relief for the soaps and detergents
industry in the recent budgets like customs duty rationalization on non-edible grade
industrial oils. However, the benefit might be too small to be passed onto the consumer.
To encourage domestic production of soaps and oleo chemicals, the government has
rationalized the customs duty structure on non-edible grade industrial oils, fatty acids
and fatty alcohols at 7.5%. Edible oils are another raw material that is used for the
production of soaps and detergents. The reduction in customs duty for non-edible oils
should have a favorable impact on input cost pressures for the soaps category. So we
can observe that there has been a mixed impact created by political environment for
soaps and detergents industry.
Economic environment. The economic segment centers on the economic conditions
within which the organization operate. It includes elements such as interest rates,
inflation rates, gross domestic product, unemployment rates, levels of disposable
income, and the general growth or decline of the economy. In the case of soaps and
detergents industry the economic environment is showing a positive swing. Penetration
of toilet soaps is high at 88.6% in the Indian economy. However per capita consumption
levels remain low India's per capita consumption of soap at 460 gms per annum for the
current year. All major soap companies are targeting the rural market for penetration as
it is showing good signs of opportunity.
Now in the case of detergents the current per capita consumptions stands at 2.7 kg. High
consumer awareness and penetration levels will enable the market to grow at an average
8-10% per annum with slightly higher growth in the rural areas in the Indian market.
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Soaps and detergents industry is such an industry that require a huge initial investment
and it is a highly capital intensive industry, so new companies in this industry require
financial help from banks and financial institutions. In India the recent monetary
policies of RBI has decreased the Repo and reverse repo rates of banks which will
enable the commercial bank to provide loans to public and for business purposes. This
will encourage the development of new companies in India especially in the soaps and
detergents industry since it is an industry which will have demand for their products all
the time. Also all the state governments are encouraging new entrepreneurs to develop
by providing financial help at the initial stages. So all in all there is a positive swing in
the Indian economy for all industries, especially for soaps and detergents industry.
Social environment. Social factors include trends in demographics such as population
size, age, and ethnic mix, as well as cultural trends such as attitudes towards consumer
activism. Sometimes changes in the social segment arise from unexpected sources.
Soaps and detergents are an indispensable products for human beings. In the case of
soaps and detergents industry the growth of the companies depends on the population
growth especially households with children. Now India there is a huge market for both
soaps and detergents. All the cultures and religious beliefs in India encourage
cleanliness, so there is a huge demand for the products of soaps and detergents industry.
Not only in India but all over the world there is an increasing importance for cleanliness
hence there is a positive cultural support for soaps and detergents industry.
Technological Environment. The technological segment centers on improvements in
products and services that are provided by science. Relevant factors include, for
example, changes in the rate of new product development, increases in automation, and
advancements in service industry delivery. One key feature of the modern era is the
ever-increasing pace of technological innovation.
Soap and detergent manufacturing is a highly automated industry and it involves
significant capital investment in plants and equipment. Computers control production
equipment and inventory management. Many companies use electronic data
interchange (EDI) to optimize the purchasing process. Due to the high level of
automation, the average plant has fewer employees. R&D involves creating, testing,
and improving product formulation, and evaluating environmental compatibility.
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Micro encapsulation technology allows manufacturers to deliver unstable ingredients,
like vitamin C, through soap to the skin. Technological advances thus have a great
influence in this industry. Majority of the companies in this industry are private sector
companies and hence can spend a lot of funds for the up gradation of technology for
faster production. Only those companies that are technologically advanced can stand in
this industry for a longer period of time.
Environmental Factors. The environmental segment involves the physical conditions
within which the organization operates. It includes factors such as natural disasters,
pollution levels, and weather patterns. The wastage of Raw materials in the production
process is also considered as an act against the environment
The wastages created by these industry are some harmful for the environment and thus
many rules are created by the governments and international institutions for the
protection of the environment. It has made mandatory that all companies should have
ISO-14001 standards and their products must have Ecomark. Also the products should
be packaged with materials that can be recycled and re used. Hence there are certain
strict rules under the environmental factors that create a major impact on the soaps and
detergents industry.
Legal Environment. The legal segment centers on how the courts and laws of the land
influence business activity. Examples of important legal factors include employment
laws, health and safety regulations, discrimination laws, Intellectual property rights and
antitrust laws.
The courts play an important role in every industries success. The quality of soaps are
rated on the basis of TFM rate. The minimum rate that is required is 55%. Anything
less than 55% is not considered as toilet soaps, so it is a legal rule that all companies
must at least have 55% TFM rate for their soap products.
Also there is a huge global competition in this industry, many companies apply for
intellectual property rights for their products. . If it is not protected, new firms will copy
the technique and gather the profits. So rights like IPR or Patents are beneficial for
companies.
So these are some of the ways these external factors effect Soaps and Detergents
manufacturing industry and the manner in which they influence their strategies.
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INDUSTRY PROFILE
Karnataka Soaps and Detergents Limited belongs to the soaps and detergents
manufacturing industry. The soap and detergent manufacturing industry includes about
700 companies with combined annual revenue of $17 billion. Major companies in the
consumer sector include divisions of Procter & Gamble (P&G); Unilever; and Dial.
Major companies in the commercial sector include divisions of Ecolab and US
Chemical. The industry is highly concentrated: the top 50 companies hold almost 90
percent of the market. The soap and detergent industry includes companies that are
primarily engaged in manufacturing soap, synthetic organic detergents, inorganic
alkaline detergents, and crude and refined glycerin from vegetable oils and animal fats.
It is an international industry, and during the early years of 1990, world demand for its
products has increased 1 to 3 percent every year. Many of the participants in the industry
competed on a global basis. According to analysts, there is a firm correlation the
standard of living of a nation and its usage of soap and detergent products. The analysts
are expecting the industry to continue to grow in both the industrialized as well as
developing nations.
The growth of this industry depends on Population growth, especially households with
children, drives demand in the consumer sector, while growth in economy drives
demand in the commercial sector. The profitability of individual companies depends on
several factors, such as efficient operations and effective sales and marketing. Large
companies have scale advantages in domains like buying, manufacturing, distribution,
and marketing. Small companies can effectively compete with large companies by
formulating specialized products, offering superior customer service, or catering a local
market. The industry is capital-intensive with average annual revenue per worker more
than $700,000. The industry is evenly split between the commercial and consumer
sectors, both being highly competitive with large companies spending millions to
maintain market share. Marketers packaged products differently to meet the needs and
requirements of specialized users like households with infants or exclusively for men
and women. To meet the requirements of different market segments, the industry saw
a development of brands and varieties. For example, a specific large super-market
might contain more than 40 different varieties of soaps and detergent including both
liquids and powders.
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The manufacturing of soaps and detergents is highly automated, which involves
substantial capital investment in plants and equipment. Computers are used to control
production equipment and manage inventory. Many companies use sophisticated
techniques, such as electronic data interchange (EDI) to optimize the purchasing
process. Due to the high level of automation, the average plant has fewer numbers of
employees.
The soaps and detergents industry has a good opportunity for growth in the coming
years. So in order to exploit this opportunity the different companies in this industry
should develop certain strategies. One strategy can be multi-purpose products, that is.
Detergents with bleach and soaps with moisturizers and deodorant offer multiple
benefits or specialized products that target only a specific segments of the market like
anti-allergy products target consumers with sensitive skin, and products containing
natural ingredients or special biodegradability properties target environmentally
conscious consumers. The main thing that is required to stay in this industry is to have
a good customer base in the market. It is due to this companies like P&G and Unilever
are able to stay in the market for a long period of time and also enjoy the tag if being
the market leaders.
Global Scenario. Soap manufacturing was started in North America. Some American
companies with well-known names were started 200 years ago. During the middle age
soap was made at various places in Italy, France, England, and other companies. France
became famous and small factories were established there. The growth of cities and the
textile industry in the early nineteenth century increased soap usage and stimulated the
rise of soap-making firms. By 1840, Cincinnati, then the largest meatpacking center in
the United States, had become the leading soap-making city as well.
By the late 1920s three firms had come to dominate the industry: (1) Colgate-
Palmolive-Peet, incorporated as such in 1928 in New York State, although originally
founded by William Colgate in 1807; (2) Lever Brothers, and (3) Procter and Gamble.
In 1940 the "big three"—Colgate, Lever, and Procter and Gamble—controlled about
75 percent of the soap and detergent market. Procter and Gamble had about 34 percent
of the market. Lever was a close second with 30 percent, and Colgate trailed with 11
percent. This was the history about how the global soaps and detergents industry got
shaped in the world.
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Coming to the year 2014 the market size of global soap and detergent market size is
estimated to be around 56M tonne. The soap and detergent manufacturing industry
includes about 700 companies with combined annual revenue of $17 billion. The major
companies in the global market currently are 1.Unilever, 2. P&G and 3. Dial. The
industry is highly concentrated and the top 50 companies hold almost 90 percent of the
market. Toilet soaps account for more than 30% of the total market of soap and
detergents. In Asia, even though the countries like China and India are showing rapid
growth in the toilet soap section, the Japanese toilet soap industry is showing signs of
decline due to the preference of consumers for liquid soaps. This trend is also observed
in other developed markets like the US and Europe, which is adversely affecting the
toilet soap industry. Market share of body wash was estimated to be around 2% in 2014
and is showing signs of healthy growth in these markets. Major products of soap and
detergent industry include soaps, laundry detergents, dishwashing detergents,
household-cleaning products, hair cleaning products, and toothpaste. Laundry
detergents account for 40 % of the overall market, while soaps for 20 % and
dishwashing detergent for 15 %. Laundry detergents come in powder as well as liquid
form, and may contain also contain bleach additives or color brighteners. Dishwashing
detergents come in powder, liquid, gel and tablet forms. Soap comes in bars or liquid
forms and may have several properties, such as moisturizing, antibacterial, or deodorant
benefits. So some of the opportunities for growth in this industry is through acquisition,
increasing productivity and exports.
Indian Scenario. In India the first soap industry was established North West Soap
Company in 1897 at Meerat following the Swadeshi Movement.from1905 onwards few
more factories were set up.
They are: Mysore Sandal Factory At Bangalore, Godrej Soap Factory At Mumbai,
Bengal Chemicals, Tata Oil Mills, Lever Brothers Company.
When it comes 21st century we can see that the soap industry all around the world is
being dominated by the big two companies that is Unilever, and Procter and Gamble.
Around 80% of the total market share of soap and detergents industry in the world is
being held by the big two. It has been because of their good quality products and
customer loyalty these big three companies were able to hold the maximum share of
the soap market in the world for a century or more.
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The country’s per capita consumption of detergent powders and bar stands at 1.6kg and
soaps at 460 gms.Hindustan Unilever, which have clear leadership in the cleaning
business sells in all over the cleaning business in India.
The Indian soap industry continued to flourish very well until 1967-68, but began to
stagnate and soon it started to recover and experienced a short upswing in 1974. This
increase in demand has occurred due to the following matters:
1. Growth of population
2. Increase in disposable income of the people
3. Increase in consumption rate
4. Increase in urbanization
5. Growth in the mindset of people regarding the concept of personal hygiene
The Indian soap industry has been long dominated by hand full of companies. Indian
soap industry volume is Rs. 4800 crore. For the purpose of gaining a competitive
advantage, Indian companies are now Re-launching their brands with value addition to
exploit the customers across India. The recent trend has been introduction of toilet soaps
with Ayurveda content and launching of Ayurveda soaps. Also recently the target
markets of these soap industries have been rural market rather than urban. Thus started
penetrating into the rural markets.
Some of the major players in the Indian soap industries are: Hindustan Unilever,
Karnataka Soaps and Detergents Limited, Godrej Soaps Private Limited
New entrants to the Indian market are: Proctor and Gamble Limited, Wipro Ltd, Nirma
soap works
The Indian soap industry includes around 700 companies which has both major and
local players and the annual revenue generated from this industry is about $17 billion
dollars. In the Indian market the soap industry has been divided into 2 segments, they
are:
Organized sector
Unorganized sector
Karnataka Soaps and Detergents Limited comes under the category of organized sector.
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Regional Scenario. Karnataka is the original name of sandalwood in India which also
been called as “Gandhada Gudi”.Karnataka is the home of the perfumed sandalwood.
Its oil is mainly used for the manufacturing of sandal soaps .Karnataka produces the
70% of total production of sandalwood oil in the world. Karnataka Soaps and
Detergents Limited is a public sector undertaking that is engaged in the production of
soaps, detergents and extraction of sandalwood oil. Toilet soap manufacturers faces the
problem of high prices of raw materials and KS&DL in particular, confronts the
problem is shortage of raw materials and its high prices. As a result of this the products
of KS&DL are high priced when compared with its competitors. The products of
KS&DL climb better place inn certain marketing mix variables against its competitors,
in respect of cleanliness, beauty factor, attractiveness, fragrance etc. The most
important competitive product of Mysore sandals soap of KS&DL in Lux, Dove, Pears,
cinthol and Hamam.
Challenges of Soaps and Detergents Industry
Environmental Compliance. Manufacturers must comply with differing state and
country environmental regulations. Phosphates used in powder laundry detergent are
banned in many states and European countries. Companies must also comply with
regulations governing waste disposal. Some large companies are actively involved in
cleaning contaminated sites due to past operations.
Industry Concentration. Large multinational companies dominate the industry. In the
consumer segment, companies spend millions on marketing to protect brand name
products like Tide, Cascade, and Ivory. The top four companies represent almost 90
percent of the US market. Scale advantages in almost every aspect of operations present
major challenges for smaller manufacturers.
Raw Material Pricing. Volatile oil prices greatly affect suppliers of petroleum-based
surfactants. Historically, heavy competition has made suppliers hesitant to pass price
increases to detergent manufacturers, with raw materials pricing rising less than 1
percent a year. However, rising oil prices led to significant increases in raw material
pricing in 2006 for the first time in five years.
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Reliance on Key Customers for Consumer Sales. Companies rely heavily on large
retailers like Wal-Mart, Costco, and Target for a sizable share of business. These large
retailers have the power to demand price concessions and supply chain management
services from manufacturers.
Global Exposure. Most large companies manufacture and sell products globally.
Fluctuations in exchange rates and foreign market conditions affect earnings of
companies with a large percentage of sales coming from other countries. Ecolab’s
international sales are over 40 percent of company revenue.
Future Growth & Prospects of the Industry
Competition amongst the MNCs has intensified, leading to shrinkage of margins. Low
margins and high volumes characterize the industry. Penetration of toilet soaps is very
high at 98%. However per capita consumption levels remain low, India’s per capita
consumption of soap at 460 gms per annum is lower than that of Brazil at 1,100gms per
annum which shows the light of opportunity for the firms in the midst of cut throat
competition. The market is highly fragmented, with companies having strong presence
in select segments of a regional presence only. Brand loyalty is very low, except at the
premium end and the level of disposable incomes determine the overall sector growth.
Key factors to success are distribution (in rural markets) and advertising (in urban
markets).To create awareness among the consumers, door to door campaign will be
arranged by engaging consultancy services.
.Introduction of herbal transparent soap, made out of essential oil based perfume, Aloe
Vera, Vitamin-E etc. as additive and suitable for all types of skin and all seasons and
introduction of new trade schemes to increase sales.
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INDUSTRY ANALYSIS
Porter’s five forces Model. Porter's Five Forces of Competitive Position Analysis was
developed in 1979 by Michael E Porter of Harvard Business School as a simple
framework for assessing and evaluating the competitive strength and position of a
business organization.
This theory is based on the concept that there are five forces that determine the
competitive intensity and attractiveness of a market. Porter’s five forces help to identify
where power lies in a business situation. This is useful both in understanding the
strength of an organization’s current competitive position, and the strength of a position
that an organization may look to move into. Strategic analysts often use Porter’s five
forces to understand whether new products or services are potentially profitable.
By understanding where power lies, the theory can also be used to identify areas of
strength, to improve weaknesses and to avoid mistakes. A change in any of the forces
normally required a company to reassess the marketplace. The overall industry
attractiveness does not imply that every firm in the industry will receive the same
profitability. Firms are able to apply their core competences, business model or network
to achieve a profit above the industry average. A clear example of this is the airline
industry. As an industry, profitability is low and yet individual companies, by applying
unique business model have been able to make a return in excess of the industry
average.
Here the analysis is made on soaps and detergents industry. It is one of the fast growing
industry under the FMCG sector. All the recent trends show a dramatic increase in the
sales and turnover of this industry. Now using the poter’s five forces this industry can
be studied.
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Figure 1
Porter’s five forces of competitive position analysis
Source: .edrawsoft.com
The five forces are:
Threat of new entry
Threat of substitution:
Buyer power:
Supplier power:
Competitive rivalry:
Five forces of Soaps and Detergents industry
Threat of new entrants. The threat of new entrants is medium in this industry as it is a
highly capital intensive industry. Even if the market shows remarkable profits, new
firms cannot come up in the short-run, as the industry require a huge initial investment.
The new firms have to make huge investments in setting up distribution network and
promoting brands. Spending on advertisements is also aggressive in this industry.
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Advertisements plays a huge role in the growth of companies in his industry. The
market is being dominated by few companies and they capture 90% of the market share,
so we even if new companies develop they can capture industry’s market share only
after 4 to 5 years. By this time the existing companies can take necessary steps to retain
their market position. Also the existing companies have a greater customer base and
brand loyalty in the markets, so it would be tough for new entrants to capture the market
share of existing companies in the short run.
Currently the major players are, Hindustan Unilever Ltd, Godrej Soaps And Private
Ltd, Proctor and Gamble, Wipro and Nirma.
Threat of substitute products. In the case of soaps and detergents industry there is a
high chance for threats created by the substitute products. In this industry there is
presence of multiple brands and narrow product differentiation under many brands.
Therefore there is a huge chance of price war created by the companies under this
industry. Some of the substitute products that can be used for bar soap is liquid soap.
So the companies in this industry should analyze the market and make quick
innovations to their products in order to stand in this highly competitive industry.
The Bargaining Power of Buyers: Buyers or customers can exert influence and have
control over an industry in certain circumstances. This happens when,
There is little differentiation over the products and substitutes can be found
easily
Customers are sensitive to price
Switching to another product is not costly
In the case of soaps and detergents industry, there is only little differentiation found in
the market. Moreover, there is low switching cost between products under this industry
which induces the customers to shift from one product to another. Although for some
top companies there is a huge customer base and brand loyalty in the market, it can
change at any time because of the availability of many substitute products. Also the
customers in this industry has a huge influence on the marketing strategies and
promotional activities adopted by companies in this industry. It is because soaps and
detergents industry is such an industry whose growth completely depends on the
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population growth and the disposable income of the customers. Hence the bargaining
power of customers is high in this industry.
Bargaining Power of Suppliers: Suppliers are also essential for the success of an
organization. They also have power. This power comes from,
If they are the only supplier or one of few suppliers who supply a particular raw
material
If it is costly for the organization to move from one supplier to another(known
as switching cost)
If there is no other substitute for the product.
The companies under this industry mainly depend on suppliers for chemicals for the
production and materials for their packing. In the case of soaps and detergents industry
their main raw materials are surfactants, solvents, phosphates, silicates, alkalis, salts,
and perfumes.
There are many suppliers who supply these materials to the manufacturers. Many big
companies in this industry have their own plants and machines to create these raw
materials, so the suppliers have a less influence on this industry. Hence they have a very
low bargaining power on this industry.
The Intensity of Competitive rivalry: If the entry to an industry is easy, then the
competitive rivalry is likely to be high. Generally competitive rivalry will be high if,
There is little differentiation between the products sold between customers
Competitors are approximately the same size of each other
If the competitors all have similar strategies
It is costly to leave the industry, hence they fight to just stay in(exit barriers)
For soaps and detergents industry the competitive rivalry is very high as there are no
much legal barriers for the entry into this industry. Also as mentioned above there is
very little differentiation between products which are sold by different companies,
hence competitors influence play a major role in deciding the marketing strategies and
also fixation of prices.
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Competitor Analysis. In the present era, competitors have a very important role in
marketing. To prepare an effective marketing strategy a company must study its
competitors as well as its actual and potential customers. Companies need to identify
competitor’s strategies, objectives, strengths, and weakness and reaction patterns. They
also need to know how to design an effective competitive intelligence system, which
competitors to attain and which to avoid.
A company’s closest competitors are those seeking to satisfy the same customers and
need and making similar offers with good competitive intelligence, generally
competitors are the ones who have similar strategies (e.g. targeting the same segment,
targeting a same geographic area or compete on same strategic lines of cost leadership
or differentiation).
Brand Competition is very dangerous because the company seeks to capture the major
market share with the companies offering a similar product and services to the same
customer at similar prices. Competition is a benefit for customers. The consumer gets
the best product at a fairer price. In order to overcome the competitors the company
should have to maintain the good quality, quantity and reasonable price. Karnataka
soaps and Detergents Limited facing cut throat competition in national and
international market. Some of the main competitors are:
• Hindustan Unilever Ltd
• Godrej Consumer Products Limited
• Wipro
Hindustan Unilever Limited. Hindustan Unilever Limited Is India's largest Fast
Moving Consumer Goods Company with a heritage of over 80 years in India and
touches the lives of two out of three Indians. Hindustan Unilever Limited works to
create a better future every day and helps people feel good, look good and get more out
of life with brands and services that are good for them and good for others.
With over 35 brands spanning 20 distinct categories such as soaps, detergents,
shampoos, skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods,
ice cream, and water purifiers, the Company is a part of the everyday life of millions of
consumers across India. Its portfolio includes leading household brands such as Lux,
Lifebuoy, Surf Excel, Rin, Wheel, Fair & Lovely, Pond’s, Vaseline, Lakmé, Dove etc.
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The Company has over 16,000 employees and has an annual turnover of INR 30,170
crores (financial year 2014 – 15). HUL is a subsidiary of Unilever, one of the world’s
leading suppliers of fast moving consumer goods with strong local roots in more than
100 countries across the globe with annual sales of €48.4 billion in 2014. Unilever has
67.25% shareholding in HUL.
Godrej Consumer Products Limited (GCPL). Godrej Consumer Products Limited is
an Indian consumer goods company based in Mumbai, India. GCPL's products include
soap, hair colourants, toiletries and liquid detergents. Its brands include 'Cinthol',
'Godrej Fair Glow', 'Godrej No.1' and 'Godrej Shikakai' in soaps, 'Godrej Powder Hair
Dye', 'Renew', 'ColourSoft' in hair colourants and 'Ezee' liquid detergent. The Consumer
Products business was part of the erstwhile Godrej Soaps Limited (GSL) and was
demerged into Godrej Consumer Products Limited in April 2001. GCPL operates in the
domestic and international markets in the 'Personal and Household Care' segment.
Some of the categories are soaps, hair colourants, toiletries and liquid detergents. In the
soaps category, GCPL brands compete with 'Lux' and 'Lifebuoy'- Hindustan Unilever
Limited, 'Nirma' – Nirma. GCPL has a widespread distribution network across India. It
makes sales in both urban and rural markets, enabling it to benefit from the
opportunities in both segments. Its distributors and sub stockiest cover around 650,000
retailers in India. GCPL has linked its major distributors in India through a system
called 'Sampark', a collaborative planning, forecasting and replenishment system with
its ERP system leading to reduced inventory levels.
Wipro Consumer Care business. includes soaps, toiletries, personal care products,
baby care products, wellness products, electrical wire devices, domestic and
commercial lighting and modular office furniture. We have a strong brand presence
with significant market share in identified segments. In addition, we have a strong
presence in the personal care and skin care products market in South-East Asia and
Middle-East.
Wipro Consumer Care (WCCLG) is today among the top FMCG companies and
amongst the fastest growing FMCG companies in India. It has presence in over 40
countries with over 8300 employees worldwide. It has 8 production plants in India and
7 overseas. Wipro Consumer Care organic growth has been led by growth in toilet
soaps. The key brands include – Santoor (a Toilet soap brand) Chandrika soap, and
Yardley soap
22
Table 1:
Competitor Analysis
Basis
Hindustan
Unilever Ltd
Godrej
Consumer
Products
Limited
Wipro
Consumer
Care
KS&DL
Turnover
(2013-2014)
In crore
5694
4300
837
315
Net Profit
(2013-2014)
In crore
634
564
78
32
No of
Products (in
India)
20
9
10
6
Market Share
(Premium
Segment)
64
10
4
11
From the table it is evident that HUL has a complete dominance in the Soaps industry
with a market share of 60% and turnover of Rs. 5600 crores. The market share is given
in the premium market segment of soap not the complete markets of soaps. Compared
to other competitors KS&DL has less turnover and profits, but all other are private
companies and KS&DL is a completely government owned so it has certain limitations.
23
Table 2:
Market Share of Soap Companies in India (Premium Segment)
SL/NO:
PARTICULARS
MARKET SHARE (%)
1 Hindustan Unilever ltd 64
2 Karnataka Soaps and
Detergents Limited
11
3 Godrej Soaps 10
4 Proctor and Gamble 4
5 Wipro 4.6
6 Others 6.4
Figure 2:
Market share of toilet soap companies in India (Premium Segment)
24
CHAPTER – THREE
ORGANISATION ANALYSIS
25
ORGANIZATION ANALYSIS
An Overview of the Organization
History of soaps. India is a rich land of forest; ivory, silk, sandal; precious
gems are magical charms of centuries. The most enchanting perfumes of the world got
their exotic spell with a twist of sandal. The world’s richest sandalwood resource is
from one isolated stretch of forests land in South India that is Karnataka.
The origin of sandalwood and its oil in Karnataka, which is used in making of Mysore
sandal soaps, is well known as Fragrant Ambassador of India & Sandalwood oil is in
fact known as “Liquid Gold”.
By the Inspiration of His Highness Maharaja of Mysore late Jayachamarajendra
Wodeyar, the trading of sandalwood logs started which was exported to Europe and
New destinations, but with commencement of First world War India faced Severe Crisis
on the business of sandalwood.
This situation gave rise to start of an industry, which produces value added products
i.e., of Sandalwood oil. His Highness Maharaja of Mysore created this situation as an
opportunity by sowing the seed of the Government Sandalwood Oil Factory, which is
the present KS&DL. The project was shaped with the engineering skills and expertise
of the top level. Late Sir M.Visvesvaraya, the great Engineer who was the man behind
the project.
Today’s famous Mysore sandal soaps credit goes to late Sri Sosale Garalapuri Shastri
who incorporated the process of soap making using Sandalwood oil. He was an eminent
scientist in the field working at the Tata Institute, Bangalore. He was sent to England
to master the fine aspects of soap manufacturing.
The Maharaja of Mysore & Diwan Sir.M.Visvesvaraya established the Government
Soap factory during the year 1918. The factory was started as a very small unit near
K.R.Circle, Bangalore with the capacity of 100 tons P.A. In November 1918 the
Mysore sandal soap was put into the market after sincere effort and experiments were
undertaken to evolve a soap perfume blend using sandalwood oil as the main base to
manufacture toilet soap.
26
The factory shifted its operation to Rajajinagar industrial area, Bangalore in July 1957,
where the present plant is located. The plant occupies an area of 39 acres (covering
Soaps, Detergents and Fatty Acid divisions), on the Bangalore – Pune Highway, easily
accessible by transport services and communication. Another sandal wood oil division
was established during the year 1944 at Shimoga, which stopped its operations in the
year 2000 for want of Natural Sandalwood.
This factory started at a moderate scale in year 1916. The first product was washing
soap in addition to the toilet soap in the year 1918. The toilet soap of the company was
made up of sandal wood oil.
In 1950 Government decided to expand the factory in two stages. The first stage of
expansion was done to increase the output to 700 tons per year and was completed in
the year 1952 in the old premises.
The next stage of expansion was implemented in 1954 to meet growing demand for
Mysore sandal soap and for this purpose Government of India sanctioned license to
manufacture 1500 tons of Soaps and 75 tons of glycerin per year. The expansion project
worth of Rs.21 lakhs includes the shifting of the factory to a newly laid industrial
suburban of Bangalore.
The factory started functioning in this new premise [i.e., present one] from 1st July
1957. From this year onwards till date the factory had never looked back, it has achieved
growth and development in production scales and profits.
The industry has 2 more divisions one at Shimoga and another at Mysore where sandal
wood oil is extracted. The Mysore division started functioning from 1917 and only
during 1984 manufacturing of perfumed and premiere quality agarbathies at was
started. Right from the first log of sandalwood that rolled into the boiler room in 1916,
the company has been single – minded pursuit of excellence. The project took shape
with the engineering skills and expertise of top-level team under the leadership of Sir.
M.Visvesvaraya, Prof. Watson and Dr.Sudbrough. Like this soap factory was started as
a small unit and now it has grown up to a giant size.
On 1st October 1980, the Government Soap Factory was renamed as “Karnataka Soaps
and Detergent Limited” The Company was registered as a public limited company.
Today Company produces varieties of products in the toilet soaps, detergent,
Agarbathies and Cosmetics.
27
Trademark of KS & DL is the sharabha, which is a mythological creation from the
“puranas” which has a body of a lion and head of elephant, which embodies the
combined virtues of wisdom and strength. It is adopted as an official emblem of KS&
DL to symbolize the philosophy of the company.
The sharabha thus symbolized a power that removes imperfections and impurities. The
maharaja of Mysore as his official emblem adopted it. And soon took its pride of place
as the symbol of the Government Soap Factory of quality that reflects a standard of
excellence of Karnataka Soaps and Detergent Limited.
Nature of Business Carried. The company Karnataka Soaps And Detergent Limited
is a premiere soap manufacturing company based in the state of Karnataka. Its nature
of business is basically manufacturing of toiletries including soaps, detergent, incense
sticks, talcum powder and hand wash. The company is in operation for hundred years
with a wide range of product that are tailored to meet the needs of the customers from
both higher and lower income strata of the market. The company believes on the
philosophy of carrying on business not only with aim of making profit but also to serve
the society by providing job opportunities and also preserve and protect the culture of
the society.
Markets. The soap market in India is divided into premium segment, economy segment
and popular segment. Karnataka Soaps and Detergents limited is focusing mainly on
the premium segment of the soap market, then they have a small market share in
detergents and agarbathies segment. The main soap with which they occupy the
premium segment of soap market is through Mysore sandal soaps and variants.
Currently they are having a market share of 11% in the premium segment of soap.
Business Performance. During the year 2013-2014 the company had a turnover of 315
crores. Compared to last year the company has an increase of 110% increase in revenue.
The current net profit of the company is Rs. 32 crores.also the company has occupied
shelf spaces in all major stores like Big Bazzar, Spar stores, Reliance stores and Lulu.
As a result of this the products of the company has even become famous in the northern
states of India. Hence the company is growing in its revenue and customer loyalty year
by year.
28
Net Profit for the Last 5 Years
Year
Net Profit in Crores
2010
5
2011
9
2012
15
2013
21
2014
32
Figure 3:
Net profits of KS&DL for the past Five years
Financial Analysis
1. Current ratio
Items Amount
Current Asset 168,46,89,526
Current Liability 63,34,42,659
Current Ratio = CA/CL
CR = 2.65
29
Since the company is having a current ratio above 2.5, it shows that the company is
liquid and has the ability to pay current obligations in time as and when they become
due.
2. Debtors Turnover Ratio
Items Amount
Net Sales 315,71,67,354
Average Debtors 52,81,85,622
Debtors Turnover Ratio = Net sales/ Average Debtors
DTR = 5.97 times
Average Collection Period = No.of working days / Debtors turnover Ratio
Average Collection Period = 60 days
Hence the company has to wait 60 days convert its receivables into cash.
3. Net Profit Ratio
Items Amount
Net Profit 32,83,74,699
Net Sales 315,71,67,354
Net Profit Ratio = Net Profit/Net Sales
NPR = 9.49%
4. Debt Equity Ratio
Items Amount
Debt 33,77,20,917
Equity 903,17,74,686
Debt Equity Ratio = Debt/Equity
Debt Equity Ratio = 0.03
So it can be seen that of the total capital only 0.03% is financed through Debt, which is
a good sign as the company has less fixed interest to be paid every month.
30
Turnover Details. The Total turnover for KS&DL for the period 2013-2014 was
Rs. 315, 71, 67,354 (last year Rs. 286, 21, 32,818).so compared to last year there has
been an increase of 110% in the revenue for the company.
The maximum revenue is earned by the company from the sale of Toilet Soaps.It shows
that of the total revenue earned by the company 86% is earned from the sale of Soaps
(both domestic and export sales).
Table 3:
Revenue Earned from Domestic markets
Source: Annual Reports 2013-2014
Table 4:
Revenue Earned through Exports
Source: Annual Reports 2013-2014
Sr.No Class of Goods Revenue (in Rs.)
1 Soaps (Mysore Sandal) 7,10,97,359
2 Detergents 83,90,475
3 Talcum Powder 7,65,900
5 Agarbathies 27,10,440
Total 8,29,64,174
Grant total (Domestic + Exports) = Rs. 315, 43, 67,191 (total turnover)
Sr.No Class of Goods Revenue (in Rs)
1 Soaps (Mysore Sandal) 267,12,69,313
2 Detergents 8,88,23,057
3 Talcum Powder 4,88,51,015
4 Sandal Wood Oil 51,56,527
5 Agarbathies 18,12,40,615
6 Coconut oil 4,98,21,123
7 Others 2,62,41,367
Total 307,14,03,017
31
Company Profile.
1.
Incorporated name
KARNATAKA SOAPS AND DETERGENTS
LIMITED
2.
Address
Karnataka Soaps and Detergent Limited (KS&DL)
Bangalore – Pune Highway.
Post box No: 5531 Rajajinagar,
Bangalore – 560055
3.
Phone no
080; 22164800. Connected to all Departments
4.
5.
Website
www.mysoresandal.com
6.
Year of
Establishment
1918
7.
Management
Wholly owned by the Government
of Karnataka undertaking.
8.
Products
Toilet Soaps,
Detergents
Talcum Powders,
Agarbathies,
Sandalwood Oil.
Figure 4:
Company profile of Karnataka soaps and detergents limited
32
MILESTONES OF KS&DL
1918 – Government Soap Factory was started by Maharaja of Mysore and the Mysore
Sandal Soap was introduced into the market for the first time.
1950 - The factory output rose to 500 M.Tons with the following modifications.
Renovating the whole premises.
Installing new boiler soap building plant and drying chamber.
1954 – Received license from Government to manufacture 1500 tons of soap
and 75 tons of glycerine per year.
1957 – Factory shifted its operation to Rajajinagar industrial area.
1974 – Mysore sales international limited was appointed as the sole selling agent, for
marketing its products.
1975 – Rs.4 Crores synthetic detergent plant was installed based on Italian technology
by Ballestra SPA.
1980 - On 1st October 1980 the Government Soap Factory was converted into a public
sector enterprise and renamed as “Karnataka Soaps & Detergents Limited”.
1981 – Production capacity increased to 6000 tons and Rs.5 Crores Fatty Acid Plant
was installed.
1984 – Manufacturing of premium quality of Agarbathies at Mysore division.
1985 – Production capacity was raised to 26,000 M.Tons Per Annum. A large variety
of toilet soaps at attractive shapes, colours and fragrances introduced to meet the
varieties & tastes of consumers.
1992 – The company was registered with the Board for Industries and Financial
Reconstruction (BIFR), New Delhi in December for rehabilitation, as the company
suffered losses continuously since 1980 at its net worth fully eroded.
33
1996 – The BIFR approved the rehabilitation scheme in September & the Company
stated making Profits.
1999 – ISO-9002 Certificate for quality assurance in production, installation and
Servicing.
2000 – ISO-14001 certificate pertaining to environmental management system.
2003 – The entire carried forward loss of Rs.98 Crores wiped out and in May BIFR,
declared the company to be out of its Purview. The Company is making profit
continuously, it is the only State Public Sector unit that has come out of BIFR.
2004 – The ISO-9002 was upgraded to ISO-9001-2004, Quality Systems.’
2008- Company has introduced Hand wash liquids under the trade name of Herbal
Hand Wash and Rose Hand Wash liquids. Company has also introduced liquid
Detergent under the trade name of KLEENOL liquid with different variants for Floor
wash, Dish wash and Automobile wash.
2009- Company has established In-House state of the Art manufacturing and filling of
Mysore sandal, Talcum powder and Mysore sandal Baby powder.
2010- The ISO Certification was upgraded to ISO 9001:2008.
2011-Company launched Mysore sandal Dhoop.
2012- Launched Super Premium Mysore Sandal Millennium Soap and also The
Company reached highest sales turnover and Profit of Rs.262.00 crores.
2013 –they reached highest sales turnover and profit on 22nd of Aug “National Award
for Excellence Cost manufacturing” Karnataka Soap and Detergents Ltd was the
winner in the public manufacturing (Medium Organization) Category.
34
2014- The Company reached highest sales turnover and profit during 2013-2014 and
is on progressive during year 2013-2014 was Rs.315.7Crores with a net profit of
Rs.32.83Crores.
Vision. Karnataka Soaps & Detergents Limited has clear Vision for all round
development of the Company. This is reflected in the form of a well conceptualized and
rational blue print called VISION 2013. The VISION 2013 sets the goals and
milestones and suggests the strategies and plans necessary to realize the Vision. The
Vision of the KS&DL is embodied in the following statement:
“KARNATAKA SOAPS & DETERGENT LIMITED will leverage latest soap
manufacturing technology and information technology by imbibing professional
management techniques to improve its functional activities, transparency, business and
to transform itself into a competitor in the FMCG market in India and also to spread
its fragrance in the FMCG global market”.
Mission. The mission of the company is to serve the National economy and to attain
self-reliance. It also strives to promote purity & quality products, to maintain the Brand
loyalty of its customers and to build upon the reputation of Mysore sandal soap based
on pure sandal oil.
Quality Policy
Communicate its environment policy and best practices to all employees for
implication.
Set targets and monitor progress through internal and external audits.
Strive to design and develop products, which have friendly environmental
impact during manufacturing, also reuse and recycle materials wherever
possible and minimize energy consumption and waste.
An ISO-9001 Company. KS & DL with a tradition of excellence of over eight
decades is committed to customer delight, through total quality management and
continuous improvement through the involvement of all employees. KS&DL has got
ISO 9002 certificate.
35
To improve the quality management system and to facilitate TQM in the process of
soap and detergent, the management took decision to obtain ISO-9002 by end of March
1999. Accordingly action plan was drawn and a committee was set up for the purpose
during October 1998 with a mission statement.
The company gives initial training including conducting employee’s awareness
programme, document quality manual and quality system procurement.In this direction
company obtained the guidance from Consultancies, Bangalore and Bureau of Indian
Standards, Bangalore. Accordingly, company standards registered for ISO 9002 by the
end of March to the Bureau of Indian Standards. Obtained the certificate by the end of
March 1999 itself.
This is to project in the national and international market and also to improve quality
of products offered to the consumers with the assurance of quality in the message. The
Company got itself upgraded to ISO-9001-2004, Quality Systems in the year 2004-05.
An ISO-14001 Company. The company is located in the heart of the Bangalore
city. The management of the company took a decision to get the ISO-14001 and become
model to other public sector for the techniques used and also to other Government units
to spread the message of maintenance of environment. The environment management
system adopted in the company through this motive is as follows:
Conservation of Energy.
Conservation of Surrounding.
Conservation of Resources.
Area of Operation. “Global Favorites for Their Natural Goodness”
KS&DL has a long tradition of maintaining the highest quality standards, right
from the selection of raw materials to processing and packaging of the end product. The
reason why its products are much in demand globally & are exported regularly to UAE,
Bahrain, /Saudi Arabia, Kuwait, Qatar, South East Asian countries as well as North
America & South America. The sandalwood oil, of course, is much sought after by the
leading perfume houses of the world. All the toilet soaps of KS&DL are made from oils
& fats of vegetable origin & totally free from animal fat.
Ownership Pattern. “Wholly owned by Government of Karnataka”
36
Present Status. The company has entered into shampoo, dish wash, detergent bar &
room refresher. The company is striving to develop new perfumes for soaps detergents,
agarbathies & shampoo. The company wants to improve the existing products in terms
of quality.
Infrastructural Facilities, Karnataka soaps and Detergents limited has its
manufacturing units located at three places, they are at Bangalore - which has Toilet
Soaps, Detergents& Cosmetics plants, Mysore - Sandalwood Oil Extraction plant and
Shimoga – Sandalwood Nursery. Then the company has a well-developed library with
all major books and journal, a good research and development section, seminar hall
with Wi-Fi connectivity and a canteen.
Future Growth & Prospects
Competition amongst the MNCs has intensified, and the companies like KD&DL has
to make innovations in their products in order to stay in the market. Some of the future
plan of actions of the companies for the next fiscal year are:
Working on the development of premium quality soaps with unique shapes in
two different fragrance variants like Lavender and Deo especially to sell in
super markets and malls.
Working on the modifications of existing batch of Mysore carbolic soaps for
better appeal and improved enhanced performance of the product
Working on Eco-friendly packing of products and reduction of Non-
Biodegradable products.
Effectively working for the replacement of existing cosmetic colours used in the
variants of toilet soaps of KS&DL. All these colours have been approved by
FD&C and REACH.
The company is working on the modification of various perfume brands of the
company in order to have global standards.
Also the company proposes to manufacture the Tooth Paste in its own brand
known as “Mysore Sandal Ivory”.
37
PRODUCT PROFILE
KS&DL is the true inheritor of golden legacy of India. Continuing the tradition of
excellence for over eight decades, using only the best East Indian grade Sandalwood
oil & Sandalwood soaps in the world. The main product categories of KS and DL are:
Toilet Soaps
Detergents
Agarbathies
Talcum Powder
Sandal Wood Oil
Liquid Soap
Toilet Soaps. Karnataka Soaps And Detergent Limited produces the only soap that
has a TFM rate of 80%.They produces one of the best quality soaps which are available
all over the global market. Some of the different types or categories of toilet soaps
produced by KS and DL are as follows:
Name Of The Products Units of Grams
Mysore Sandal Soap 75, 125
Mysore Sandal Classic Soap 75
Mysore Sandal Gold Soap 75, 125
Mysore Sandal Baby Soap 75
Mysore Special Sandal Soap 75
Mysore Rose Soap 100
Mysore Sandal Herbal Care Soap 100, 125
Mysore Jasmine Soap 100
Wave Soap 100
Mysore lavender Soap 150
38
Mysore Sandal bath tablet 150
Mysore Sandal classic bath tablet 150
Mysore Jasmine bath tablet 150
Mysore Special Sandal tablet 150
Mysore Sandal rose tablet 150
Mysore Sandal Guest tablet 17
Figure 5:
Toilet Soaps of Karnataka soaps and detergents limited
Detergents. KS&DL also manufactures high quality detergents applying the
latest spray drying technology with well-balanced formulation of active matters & other
builders; they provide the ultimate washing powder. Some of the different types of
detergent powders produced by KS& DL are:
Name Of The Products Units in Grams
Mysore detergent powder 1000
Mysore detergent powder 500
Mysore detergent Cake 125
Mysore detergent cake 250
Figure 6:
Detergent products of Karnataka soaps and detergents limited
39
Agarbathies. Some of the products produced in Agarbathies section are:
Name of the Products
Mysore Sandal Premium Parijata
Mysore Sandal Regular
Sir M.V.100
Mysore Rose
Venkateshwara
Nagachampa
Durga
Suprabhatha
Ayyappa
Mysore Jasmine
Meditation
Figure 7:
Agarbhatie products of Karnataka soaps and detergents limited
Talcum Powder. The talcum powder products of KS and DL are: Mysore
Sandal Talc and Mysore Sandal Baby Talc.
Liquid Soap. The Liquid Soap products of KS and DL are: Wave duo liquid
body washes and Wave herbal wash.
Achievements and Awards for KS and DL
The company was awarded by Government of Karnataka .Dept. of Industries and
Commerce State Export Promotion Advisory Board. “EXPORT AWARD” 1974-75.
Then it has received national award from ICWA for Excellence in Cost Management
2007. Then again an EXPORT AWARD” by the company received from chem. excel
in 2009 and lastly it received Ratna Award by Chief minister in 2012
Market share of the company
Currently Karnataka Soaps and Detergents Limited is having a market share of 11% all
over India and a market share 24% in south India in the premium segment of soaps.
40
HUL is the market leader in the premium segment of soap with 60% share .Followed
by Godrej consumer products limited.
But Mysore sandal soaps has a great customer base and loyalty since it uses purest
sandalwood in its soap for aroma and it is the only soap which has the essence of purest
sandalwood in the world.
Strategic Planning Programme of KS & DL
The current strategy adopted by Karnataka Soaps And Detergent Limited for the time
period is:
PRICE COMPETITIVENESS
Strategies are usually adopted by companies to get competitive advantage in the market
and to build up core competency. So strategies are very essential for the survival of
companies. Supply chain management is one of the main strategy adopted KS&DL.
Through this strategy the company is able to reduce the cost of production, which would
automatically increase the profitability of the company. And the success of this strategy
is evident from the performance of the company for the last few years. Hence KS&DL
are not only able to adopt strategies but also are able to achieve them through their
performance.
41
ORGANIZATION STRUCTURE
Organizational structure refers to the different hierarchies or levels in a company. An
organizational structure appears as a series of boxes, vertical and horizontal lines. The
boxes represent various titles within the organization, and the vertical lines represent to
whom that position reports. Horizontal lines show which employees are on the same
level. The organization structure gives a brief idea about the various departments and
their interconnections.
Karnataka Soaps and Detergents Limited Is Following a Functional Organizational
Structure.
Employees within the functional divisions of an organization tend to perform a
specialized set of task, for instance the Marketing department would be staffed only
with people who have good communication skills and finance department would be
staffed with people who have good arithmetical and financial skills. This leads to
operational efficiencies within the group. However it could also lead to a lack of
communication between the functional group within the organization, making the
organization slow and inflexible.
As a whole, a functional organization is best suited as a producer of standardized goods
and services at large volume at low cost. Coordination and specialization of tasks are
centralized in a functional structure, which makes producing a limited amount of
products or services and predictable. For instance, a small business could make
components used production of its products instead of buying them. This benefits the
organization and employees faith.
42
ORGANIZATION CHART
Figure 8:
Organizational Structure
Source: Company Manual
DGM Dy,General manager
AGM Asst.General Manager
MGR Manager
J.O Junior Officer
43
Observations from the Organization Chart. The organization of KS&DL consists of
4 levels, they are
Top Level consist of Board of Chairperson and Managing Director
Second Level consist of Department Heads
Third Level consist of Managers, Asst. Managers and Junior Officers.
Fourth Level consist of clerks, Assistants and Attendees.
Hence we can see that KS&DL is following a Tall Organizational Structure in
their organisation.
Also the Departmentation is done on the basis of different Functions performed
in the organisation.
FUNCTIONAL ANALYSIS
The Functional structure involves arrangement of activities and assignment of activities
for the achievement of organizational goals. It is a way by which similar parts of an
organization are tied together in a coordinated manner. It also illustrates the various
relationships among various levels of hierarchy within the organization .A well-defined
functional structure results in better use of resources.
The importance of departmentation is to facilitate successful operation and to create an
environment for effective performance. Grouping of activities and employees into
departments makes it possible to expand an organization to a large extent. It enables
the organization to recapture some of the advantages of the small functional
organization while minimizing the disadvantages of that which comes with increasing
size, diversity and dispersion. The need for departmentation arises because of
specialization of work and the limitation on the number of subordinates that can be
directly controlled by a superior.
There are 6 functional departments In Karnataka Soaps And Detergents Limited. The
span of management is narrow since the company is following a tall organizational
structure. In the company, centralized decision making is common. The information
flows from top to bottom through the well-defined channel of communication. The
structure of the company also describes the roles and duties of each position. It also
defines the functional authority as well as responsibility of each employees of the
company.
44
Functional Departments of KS&DL. The functional departments of Karnataka
Soaps and Detergents Limited are.
Production Department
Marketing Department
Finance Department
Human Resources Department
Materials Department
Research & Development Department
PRODUCTION DEPARTMENT
Figure 9: Production Department structure
Deputy General Manager (P&M)
Asst G Mngr
(P&M)
Asst G Mngr
(Maintenance)
Asst G Mngr
(Safety)
Asst Mngr
Officers
Jr. Officers
45
Production Department Structure. Under this structure, Deputy General Manager
heads the Production Department. He is assisted by Asst General Manager, Managers,
Officers, junior officers and Employees. This department is the back bone of the
company and 80% of employees work in this department. Production is the process by
which raw materials and other inputs are converted into goods. Production management
refers to the application of management principles of the production function in a
factory. In other words, production management involves application of planning,
organizing, directing and controlling of production process. The proper implementation
of these management functions in production process will result in continuous flow of
production. Karnataka Soaps and Detergents Limited’s production unit produce high
quality products, which undergo various quality control test. The company uses
advanced technology for producing their products.
Objectives. Production is organized in a manufacturing organization’ Karnataka
Soaps and Detergents Limited’s production department sets certain important
objectives as follows.
Maximum production with high quality and quality.
Ensure timely delivery of products.
To strive for continual improvement
Ensure proper implementation of manufacturing Process.
Responsibilities of Production Manager. Coordination with other department for
sales forecast which helps in planning the requirement of materials for production in
advance. Practice cost effective production by control raw material consumption and
stock at store. He is also responsible for maintaining the consistency of quality and
planning the production process for smooth production.
Production Manager has a huge role in training and development of subordinates and
resolving grievances of employees. He is responsible for maintaining work discipline
and ensures optimum manpower and efficient usage of manpower.
46
Product Range. The various products produced by KS&DL are Toilet Soaps,
Detergents, Agarbathies, Talcum Powder, Sandal Wood Oil and Liquid Soap
In these the products produced in Bangalore Plant are Mysore Sandal Soap and its
varieties, then talcum powder and Detergents. In this Mysore Sandal Soap is their main
product and the most profitable product for KS&DL.
Production System. The production system followed in KS&DL is Continuous
production system where the production volumes are high and the products are
homogenous or less variation are there in the products produced. Under continuous
production system the company follows a combination of Line and Synthetic Process
production system. In the plant there are different line for different products of Mysore
sandal like Mysore sandal gold soap in line Mysore sandal baby Soap in Line 2, Mysore
Sandal Premium Soap in line 3 Etc. In total there are 9 different lines in the soap plant.
Whereas in each line synthetic process happens where each of the raw materials goes
different transformation process and all are assimilated to form the final product that is
the Soap.
Table 5: Production Capacity (of Bangalore Plants):
Source: Audit report
Sr.no
Class of Goods
Units of
Measurement
Installed
Capacity
Actual
Production
1
Soaps (Mysore Sandal)
MT’s
26000
10,434.008
2
Detergents
MT’s
3000
2,692.269
3
Talcum Powder
MT’s
325
144.751
Here we can observe that KS&DL are not fully utilizing their Production capacity
which they have at Bangalore.
47
KS&DL as 3 main production plants at Bangalore: Fatty Acid Plant, Soap Plant and
Detergent Plant
Fatty Acid Plant. The basic raw materials, Oil & fats undergo the splitting &
refining process including hydrogenation at the fatty acid plant. It is also obtained &
used for soap making. The plant has a capacity to process 10,000mt of oils fat.
Soap Plant. The soap plant is one of the largest production plants in the country
with an installed capacity of 26,000 tons per annum.KS&DL’s soap plant has its
uniqueness been in a position to process as many as ten different varieties of soap
simultaneously.
The sophisticated plant from Italy has a wholly integrated straight line facility that links
up process sequence for higher productivity. It is a stream line flow through right from
raw material preparation to end or the line collation with the built in facility for
continuous fat bleaching & saponification. The finishing touches are given or high tech
universal wrapping machine. This high speed auto wrapper has the capability to handle
soaps of virtually & size or shape.
Detergent Plant. It has installed capacity of 3000 tons per annum. To produce
spray dried powder & a syntax plant for detergent cakes & bars. It produces industrial
detergent which is used in the formulation of wet table pesticide powders for crop
protection.
48
Soap Manufacturing Process.
Figure 10:
Soap Manufacturing process of Karnataka Soaps and Detergents limited
Final Packing (Manualy)
Let out through the Conveyor Belt
Wrapping Machine
Cakes are fed into Stamping Machine
Cutting Machine
Duplex Plodder
Becomes Soap Ribbons
Milling
It Becomes NOODLES
Simplex Plodder
Container Mixer
Soaps Noodles
SILOS (Silos are closed chambers)
49
Production Process. The production process of soaps are called saponification. The
raw materials used for the production of Mysore sandal soap are: Palm Fatty Acid,
Caustic soda, Salt water, Sandal Wood Oil (for Aroma)
These raw materials are boiled for 3-4 hours at a temperature of 100-130 degree Celsius,
where the fats and dust particles are separated. After this process a Knead soap is
formed with a moisture of 35% the moisture is then removed from it by the drying plant.
After that sandalwood oil is added to it for fragrance.
MARKETING DEPARTMENT
Figure 11: Marketing Department structure
Marketing Department Structure. Under this structure, Deputy General Manager
heads the Marketing Department. He is assisted by Asst General Manager, Managers,
Officers, junior officers and Salesman
Deputy General Manager (Marketing)
Asst General Manager (Adv)
Asst General Manager (MKT)
Manager
Officer
Junior Officer
Salesman
50
Marketing is a sum total of physical activities that are involved in the transfer of goods
and services and which provide for their physical distribution. The marketing
department must act as a guide and lead the company's other departments in developing,
producing, fulfilling, and servicing products or services for their customers.
Communication is vital. The marketing department typically has a better understanding
of the market and customer needs, but should not act independently of product
development or customer service.
Marketing has been defined as all the activities involved in the creation of place, time,
possession and knowledge utilities. Place utility is created by transporting the goods
from the place of production to the place of where they are needed. Time utility is
created by making goods available to consumers at a time when they are needed
possession utility is created by transferring the ownership and possession of goods from
the product to the consumer. Knowledge utility is created by bringing to the notice of
the customer the utility of buying the goods and services. Thus marketing is concerned
with all activities which are involved in the process of transferring goods from the point
of production to the point consumption.
Currently the company is having a market share of 8% all over India and 18% market
share in South India. Also it has a regular supply of soaps to government institutions
like Government Hotels, Guest houses etc. in Karnataka. As Mysore Sandal soaps is
having its own customer base and high loyalty in south India, the marketing efforts to
be put are slightly easy. Currently it is ranked the as 3rd most preferred bathing soap in
India. Hence Mysore Sandal is having a satisfactory demand in both domestic and
international market.
Marketing Strategy. As the company is a government owned company its main
strategy is Sales maximization rather than profit Maximization. The Company prepares
sales budget of different depots in different places to know the product movement in
each depots. Also the company can’t spend a lot of money in advertising like other
MNC’s. So the product is not very popular in the northern parts of India.
But now the company has a great improvement in the sales, especially Mysore sandal
soaps. Also the company has acquired shelf spaces in the major retail stores like; Big
Bazar, Lulu, Spar Stores etc. As a result the company is slowly entering even in to the
north Indian market.
51
Advertisements and Sales Promotion Activities
The sales promotion strategy adopted by KS&DL are Direct Promotion rather than
depending on intermediary or a third party. Some of the methods are
Exhibitions (National Level and State Level)
Free Samples
Festival Based Promotion (Providing Gifts Boxes)
Print Media (Newspapers and Magazines)
As part of sales promotion activities, KS&DL is participating in INDIAN Trade
exhibition and fare (ITEF) every year on all India basis. ITEF conducts exhibition for
a period of 15 days. So it provides a good platform for the company to create awareness
about their product especially products other than Mysore sandal soap. The company
also uses print media on a limited basis for the promotion activities. They mainly
promotes through magazines and newspapers.
KS&DL also participates in Mysore Dasara Exhibition conducted for a period of two
months every year in Mysore.
They even set their stalls during festival seasons at different parts of our country. Hence
they can attract more people.
Exports
The products of KS&DL are exported to different parts of the world in larger quantity.
Currently the company has earned a revenue worth 9 crores from exports. The main
product which is being exported and which has more demand is MYSORE SANDAL
soap and its various categories. The different countries to which the products are being
exported are:
Australia Italy Sri Lanka
Berlin Kenya USA
Canada Malaysia Japan
Czechoslovakia Saudi Arabia UK
France Singapore Taiwan
Germany Africa Holland
52
Main Product of KS&DL: Mysore Sandal Soap
It is said that Mysore sandal soap was born from the golden legacy that is from sandal
wood oil which is known as the liquid gold and also enriched in this pure sandalwood
oil. Mysore sandal soap is the only soap in the world made from 100% pure sandal
wood oil. As mentioned above Mysore Sandal soap has 11% Market share in the
premium soap category all over India. When comes to south India it has a market share
of 24%.It has been known as the best soap in the sandal soap category in the market.
Mysore sandal also has a strong customer base in Gulf, Singapore and Malaysian
market.
The Mysore sandal soap has been divided into two segments:
Premium Segment
Popular Segment
Under Premium Segment it includes:
Mysore sandal classic
Mysore sandal gold
Mysore sandal baby soap
Mysore sandal millennium
Specialties of Mysore Sandal soaps
Sandalwood is the premium ingredient of Mysore sandal soap, known as the queen of
perfumes. Sandalwood oil has the properties of being the excellent antiseptic and anti-
dandruff has been recommended in ancient texts for skincare. It soothes picky heat, it
removes skin rashes and internal ulcers.
Major Competitors for Mysore Sandal Soap Are:
Dove
Santoor
Pears
Lux
Medi mix
53
In these brands Santoor soap of Wipro is considered to be the main competitor as it is
another soap which uses sandalwood oil. But still Mysore sandal holds comparatively
large market share compared to Santoor. While Dove is the most popular brand of soap
in the Indian market and hold the first position in the most popular soap brand in Indian
market. The second position goes to Pears and the 3rd most popular brand of soap in
India is Mysore Sandal.
Channel of Distribution
KS&DL manufactures their products i.e. soaps & detergents. After this sent to various
distribution points through agents. The stockiest sells to various retailers hence it
reaches to the consumer.
Figure 12:
Channel of Distribution of Karnataka soaps and detergents limited
Manufacture (KSDL) CFGS
C&FA (Godown)
RD's Stockiest (Wholesalers)
Retailer
Customer
54
FINANCE / ACCOUNTS, DEPARTMENT
Figure 13: Finance Department structure
Finance Department Structure. Under this structure, Deputy General Manager
heads the Finance Department. He is assisted by Asst General Manager, Managers
(Accounts) and Manager (Costing), Officers, junior officers and Employees. Finance is
the life blood of the business. It is required for an organization for its functioning. It is
an important aspect of the business. The Finance Department deals with the
procurement and management of funds. This Department controls the overall financial
transactions of the company. It controls the receipt and payments of each and every
activity for all the divisions. In KS&DL, Finance Department plays a major role
because it is this department who calculates the final profit. The Finance Department
keeps a record of everything concerning any expense or income.
DGM
AGM (PF & PR)
MGR (ACCOUNTS)
SUPERVISOR
MGR (COSTING)
SUPERVISOR
J.O
55
The areas under the purview of the Finance department include salary administration,
bill processing, statutory payments like taxes, central excise etc., financial
administration, costing, internal audits and balance sheet preparation, budgeting,
payments and receipts, bank negotiations etc.
Functions of Finance department. Budget and Budgetary control, Management of
receipts, Management of payments, Auditing, Costing, Profit determination, statutory
transaction.
Budget and budgetary control. The annual budgets of the company are prepared both
for the capital and revenue based on the requirements furnished by various units and
departments. The requests of the department are analyzed only after consulting with
various departmental heads and corporate divisional management group and finalized
only on the basis of disposition of funds. These budgets are presented before the
management for approval. The budget is reviewed half yearly. If some changes are
occurred they are submitted to management/board through a revised budget for
approval.
Management of receipts. Payment from dealers/customers is revised only through
marketing department. They accept proper receipts, customer wise and dealer wise.
There will be a debit outstanding and it must be informed to marketing development
once in a month. Insurance, Freight outward, bank negotiation etc. are accounted and
maintained to arrive at the cost of sales.
Management of payments. Due to the availability of funds, payment commitment is
honored on the due dates. All the payments are supported by approved vouchers.
Advance payments are settled within a time of 45 days to 50 days.
Non-receipts/delayed receipts extra are brought to the notice of stores for remedial
actions. Payments are usually done by cheque/demand draft.
Auditing. In KS&DL has its own audit wing is headed by internal auditors. Auditing
is vital for the company as it facilitates verifying of all the books of a/c by trial balance,
it also comply with requirements for central excise & income tax purposes. After the
Auditor’s monitor everything they give report to the company and publish it which is
helpful to the company and to the public.
56
Costing. When a company does costing it ensures proper fixation of selling price of the
product, cost control it also help in taking decision. KS&DL use process costing as the
production mechanism is systematic it involves addition of a lot of ingredient in the
manufacturing.
Statutory transactions. Sales tax/Income tax/TDS certificates/C-format care issued.
They are properly accounted and proper time settlements are made. Salaries and other
payments, remittances and recovery etc. in the case of employees are done at a time.
Capital Structure of Karnataka Soaps And Detergents Ltd (as on 31st march
2014)
1. Equity
Authorized capital: 35, 00, 00,000
Subscribed capital: 31, 82, 21,000 (all shares held by Govt of
Karnataka)
2. Debt
Unsecured loans from Government of Karnataka: 3, 50, 00,000
The equity shares of KS&DL are divide into 3, 18,221 shares of Rs.1000 each. In
which all the shares are being held by Karnataka Government and its Nominees. Hence
it is a fully government owned company. During the period of 2013-2014 the board of
directors proposed a dividend of 15.712% on the paid up equity share capital of Rs.
31,82,21,000 to the government of Karnataka which amounted to be Rs.5,00,00,000.
Working Capital
For the smooth functioning of business the company has a good working capital
management. The company allows a credit period of more than 45 days for credit sales.
The company’s operating cycle involves cash, raw materials, work in progress, finished
goods, sales, bills receivables, debtor etc. For obtaining raw materials the company
purchase goods from venders who give more credit period.
57
HUMAN RESOURCES DEPARTMENT
Figure 14. Human Resource Department Structure
Human Resource Department Structure. This chart shows the administrative setup
of Human Resource Department in KS&DL. Deputy General Manager heads the
department. He is responsible for the personnel and administrative functions of the
company. Under the DGM manager, there are AGM, HR. Manager, and Welfare
Manager. After that comes Assistant Managers, junior officers and Attenders. This
department is in relation with human resource personnel management and welfare
management. It is in the sense of getting things done through people. This department
aims at attaining maximum individual development, desirable work atmosphere, inter
personal relations and effective moldings of human resources. The main objective is to
meet the organizational needs of the company and the needs of the people working in
the company. HR. department provides expert advice and assistance concerning
personal matters. HR. department helps to maintain better relation between
management and employees. The main functions of HR. department is, Human
resource planning, Recruitment and Placement, Training, Performance appraisal,
Promotion Wages and Salary Administration, Health and Safety measures, Welfare
Measures, Workers participation, Employee grievance cell, Personal records and audit
DGM
AGM
Manager (HR)
AM (HRD) AM(RTI)
J.O
Manager (wefare)
AM (CANTEEN)
AM (FIRST AID)
OFFICER
J.O
58
At KS&DL human relations are warm and cordial in nature. The employer and
employees share a good mix of both formal and informal relations. The company
implements various incentive schemes for the benefit of the employees, thereby
increasing their productivity manifold.
Table 4:
Manpower details of KS&DL
Source: Audit report
GROUP
BANGALORE
MARKETING
BRANCHES
SOD
MYSORE
SHIMOGA
TOTAL
EXECUTIVES
105
48
11
02
166
NON
EXECUTIVES
423
30
29
10
492
Total
528
78
40
12
658
In total there are 658 employees working in KS&DL including both Executives and
Non-Executives at various branches of Karnataka Soaps and Detergents Limited. In
that there are 423 workers working in the Bangalore Factory of KS&DL at 2 shifts,
whereas there are around 105 Executives working at the Bangalore Office of KS&DL.
So in total there are 528 employees at the Bangalore branch of KS&DL. The personnel
at various functional levels affecting the product quality are having adequate
competencies; these people have years of experience and skills. Main objective of HR.
department is procurement and proper utilization of workforce to achieve the overall
objective of the company.
59
Working Timings for Employee at KS&DL
The company is working for 6 days in a week from Monday to Saturday. The office
hour is from 9.30am – 5.30pm every working day. For the workers in the factory the
working hours is designed on the basis of shifts. There are usually two shifts every day
for the workers in factory and in case of additional orders the factory will work for three
shifts. The details of shifts are given below:
The lunch time is from 12.00pm to 12.30pm.
Every Sunday is rest day for the employees.
Remuneration System.
1. Time rate system is followed to employees in the factories.
2. Government fixes the remuneration to executives
Functions of HR. Department.
Human resource planning. The BOD, MD, General Manager, and HR. Manager will
decide the number of employees required, their qualification, method of recruitment,
remuneration etc. Qualification for lower level employees is plus two. For executives,
degree is compulsory. In the case of higher posts experience is also needed.
Recruitment and Placement. Head of each department has to report the work force
requirements if they are lacking manpower to the HR. department with details of
manpower specification. It is the HR. department that take action for filling up
vacancies that normally arises in the organization. Recruitment of workers is made
through newspaper advertisement followed by tests and interview.
First Shift 6.00am to 2.00pm
Second Shift 2.00pm to 10.00pm
Third Shift 10.00pm to 6.00am
General Shift 7.30am to 3.30pm
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Company publishes advertisements in leading newspaper with job details and
requirements of candidates. Company also makes recruitment through employment
exchanges. After recruitment, scrutiny and interview, eligible candidates will be
selected. The selected candidates will be placed at the right job. Whereas the top level
employees like DGM and MD are selected by the government from IAS cadre
Training. Training the employees is one of the main objective of HR.Dept. In KS&DL
six months is given for fresh candidates through KSBDE. Training is given according
to the training need of each employee. It is an evaluation of employee’s skill
competencies, abilities, attitudes, morale etc. The personnel are given adequate
training. Training needs of employees are discussed during management review
meeting; training is organized internally and externally depending on the nature of
training required. The personnel are made aware of their roles in achieving the quality
policy.
Performance appraisal. The HR. department makes performance appraisal of
employees. It is the evaluation of employee’s skills and capabilities and actual
performance with standard performance with stated standards. If there is any deviation,
corrective measures are taken. Criteria or attributes for performance appraisal are; job
knowledge, productivity, attendance, integrity, commitment, cooperation etc.
Promotion. In the company the Promotional Policy has twin objectives because the
career planning is also included.
Ensure high level of expertise and professionalism.
To create certain degree of mobility and job rotation.
The employees below the rank of officers i.e. unionized cadre of employees are eligible
for the promotion after satisfactory completion of seven and five years of service [Time
Bound Advancement Promotion].
The promotion is based on their grading obtained in the performance done by their
Supervisors.
The promotional policies for the officers divided into two categories. They are Career
Development Plan (CDP) and Vacancy Based Selection (VBS).
61
Career development plan. Officers from Grade I to IV come under this plan. The
ingredients of this plan are given below:
Eligibility: Is a minimum of five years of service.
Selection: Is done through staff selection committee.
Mode of selection: Is done through interview conducted by Staff
Selection Committee once in a quarter.
Final selection: Of the maximum of 100 marks earmarked for selection
70 marks is allotted to the performance in the present
Grade and the remaining 30 marks are allotted to the performance in the VIVA during
the interview by the Staff Selection Committee. Out of the weight age, the individual
has to score a minimum of 35 from the 70 performance marks and 15 from the VIVA
marks to get the final selection. Hence we can see that KS&DL is following a good
career development plan for the betterment of the employees. Thus the employees are
well satisfied and motivated to work at KS&DL.
Wages/Salary Administration. One of the main function of HR. department is the
preparation of payroll/work sheet for calculating the amount of wages payable to the
workers. For factory workers the salary is given based on time rate. For executives
remuneration is given as salary and it is given as per the government regulation.
Everyone gets an increment in wages depending upon the profitability and their
experience every year.
Health and Safety measures. Management has provided necessary infrastructure to
carry out the activities. There is adequate work space, associated utilities, process
equipment, and supporting services. The infrastructure provided is adequate to ensure
safety of the employees. Appropriate work environment has been provided necessarily
to achieve product conformance and safe working conditions for the employees.
Employee state Insurance is also provided here.
Employee Grievance Cell. The important grievance faced by the company is that
workers are not getting better working environment and safety i.e. the air coming from
production plant is injurious to health, especially lungs. Weekly meetings within groups
and complaint cells are also functioning in the company.
62
HR. personnel are responsible for handling the complaints, disputes within the top
management. Employees can directly complaint to the top management or put their
complaints in the complaint box. Every department has a complaint box placed at the
entrance.
Personnel Records and Audits. It includes:
Maintenance of personnel records
Seniority list of employees,
Wage and salary of employees
Attendance management and leave administration
Other related functions.
Fringe Benefits available to employees
Washing Allowance. The company provides two sets of uniform once in a year. For
this a washing allowance of Rs.50 per month is paid to every worker.
Leave. The company provides:
Earned Leave (EL): Workman who wishes to avail privilege leave shall apply at least
3 days in advance to General Managers. This leave can be accumulated and encased.
18 days EL is credited to an employee. It can be encased and for this purpose the basic+
DA to the employee is calculated for 26 days but paid for 15 days in a year.
Casual Leave (CL). The leave is to meet unforeseen circumstances and is granted for
3 days at a time and 7 days CL is given to an employee per year.
Sick Leave (SL). Workman who avails sick leave exceeding 3 days at a time should
produce medical certificate from Doctor. 15 days of sick leave is given for an employee
per year and it can be encashed.
Conveyance Allowance. The conveyance allowance of Rs.680 per month per workman
is extended. Special Allowance. Paid to Typists, Stenographers, Asst.Cashiers, and
Store Keepers from Rs.55 to Rs.75.
63
Family Travel Allowance. This allowance is paid at the rate of Rs.500 per employee
per year who has put a minimum three years of service.
Canteen Facilities. All employees are provided with canteen facility at highly subsided
rate. Annual Bonus. It is agreed to pay the profit sharing bonus in terms of the
provisions payments of Bonus Act 1965. Attendance Bonus. It is paid equivalent to
one day’s basic pay subject to minimum of Rs.75 per month. House Building Advance
(HBA). House Repair Advance, House Purchase Advance: KS&DL has agreed to
provide subsidy on the loan amount secured by the employee from HDFC or any
recognized financial institutions viz., co-operative banks, scheduled banks etc., If the
interest payable by the employee exceeds 7% then he shall be eligible for interest
subsidy to be borne by the company not exceeding 5%. Festival and National
Holidays. Number of paid holidays in the company is festival holidays and 3 national
holidays per calendar year. 2 holidays will be treated as restricted festival holidays to
be selected by the employees from the list of holidays to be notified by the company
for this purpose. Death Relief Fund. Rs.30,000 will be paid to the nominee in case of
death of an employee. Memento to retiring employee. Rs.2,500 will be paid as
memento to retiring employees. Medical Reimbursement. Benefit to non-ESI
employees a sum of Rs.500 per month will be paid per employee towards domiciliary
treatment. With regards to hospitalization treatment, the company has taken medi claim
policy from Insurance Company for a sum of Rs.1,50,000 per employee, which includes
spouse and two children.
Welfare Department:
The welfare department functions under the human resource department in KS&DL.
This department takes care of the welfare activities of the employees in KS&DL. Some
of the activities performed by this department are given below.
KS&DL welfare department can be classified into 3 sections namely,
1. Statutory
2. Voluntary
3. Non statutory
a) Statutory. KS&DL welfare association is based on employees contributions,
interest carved. Its statutory facilities are Canteen facility, First aid and
Provident Fund
64
b) Voluntary benefit. The voluntary benefits are workers education class
conducted by the central board, Inspection of fittings, Dust nuisance, Toxic gas
nuisance checking
c) Mutual. The mutual benefits provided are Employees get 3 pair of uniform at
every 2 years & a Pair of shoes for every year, Cultural Recreations, Leave
facilities, Employees Co-operative society which give loan on credit,
Employees house building society.
MATERIALS DEPARTMENT
Figure 15: Materials Department structure
Materials Department Structure. Under this structure, Deputy General Manager
heads the Materials Department. He is assisted by Asst General Manager, Managers
(Materials) and Manager (Stores), Officers, junior officers and Employees.
DGM (MATERIALS)
AGM (MTRLS)
MGR (MTRLS)
ASSISTANTS
AGM (STORES)
MGR (STORES)
ASSISTANTS
65
The materials department plays a very important role in an organization because
purchasing has its effects on every vital factor concerning the manufacture, quality,
cost, efficiency and prompt delivery of goods to customer.Materials department is the
other name for purchase department. Its function is to procure materials, supplies,
services, machines and tools at the most favorable terms consistent with maintaining
the desired standard of quality.
Objective of purchasing department:
To make continuous availability of materials so that there may be uninterrupted
flow of materials for production. To make purchase competitively and wisely at
the most economical prices. To make purchase in reasonable qualities to keep
investment in materials at minimum. To purchase proper quality of materials to
have minimum possible wastage of materials and loss in production. To develop
good suppliers relationship which will ensure the best terms of supply of
materials. To develop alternate sources of supply so that materials may be
purchased from those alternate sources if a particular supplier fails to supply the
materials etc.
The Raw Materials Used for Production. Palm acid Oil, Perfumery materials, Linear
alkyl Benzene, Sandal wood oil.
Stores Department:
In KS&DL the stores department also comes under the control materials head ie.DGM
materials. Although it comes under the materials department, it is kept as a separate
functioning unit.
Objectives. Assuring the availability of raw material at right quantity. Maintenance of
economical and uninterrupted flow of production activities and finally to ensure
minimum blockage. Achieving maximum efficiency in production and sales with least
investment in inventory.
There are about 8 stores in KS&DL namely:
1. Packing Materials
2. Engineering Goods
66
3. Perfumery Stores
4. Oil & Fats Stores
5. Detergent finished goods stores
6. Fuel & Serviceable stores
These stores play a great role in maintaining of required stock. It also facilitates
maintenance of suitable store organization structure. It monitors the procedures of the
receipt. Materials are issued on the basis of FIFO.
Inventory Control System
ABC analysis for stock control.
FIFO method for issuing materials.
RESEARCH DEVELOPMENT & QUALITY CONTROL
DEPARTMENT
Figure 16: R&D Department structure
Research Development and Quality control Department Structure. Under this
structure, Deputy General Manager heads the Research Development and Quality
control Department. He is assisted by Asst General Manager (R&D and Asst.general
Manager (Quality Control), ManagersOfficers, junior officers and Employees.
DGM
AGM (R&D)
Manager
J.O
AGM (Quality Control)
Manager
J.O
67
KS&DL its full-fledged quality control & R&D single mended pursue quality
enhancement. Both departments are headed by highly qualified professionals,
committed to developing products that keep place with customers changing needs &
perceptive. When doing Research they have a target which they get benefits & it enables
the company to forecast the future.
AIMS:
Product process development.
Product process improvement.
Cost reduction
Alternative raw materials
Slow moving & non-moving inventory reduction
Technical advice to the management.
Quality plays a very important role in KS&DL majority of the products are consumer
goods. So it must satisfy the consumer expectation.
KS&DL as 2 Quality Control division
Raw material QC division
Production QC division
Objectives of R&D:
To improve the existing production
To adopt new methods of product development
To provide technical support for marketing department
To make improvement in the process of production
Recent Developments Made by Research and Development Department
The company was able to revise the fragrance of Mysore Sandal soap, which
was developed by the research and development house during the year. This
was resulted in avoiding the monopolized perfumery items in the formulation.
Modification of composition of fatty acids of premium soaps keeping in mind
the Lauric acid content in the end product to be on par with the competitors
premium soaps, which would not only leads to significant cost reduction in the
end product but also to conserve the natural resources.
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The development of formulation of Mysore sandal Magic spray (Body Spray)
is under progress
Development of Mysore Sandal Body Wash formulation is completed, efforts
are in progress to place Mysore Sandal Body wash in retail market with new
attractive seamless tube packing in 200ml variant. The shelf life study of the
product in seamless tube has been completed and the outer packing design with
loofa is under development.
As a part of continuous development and improvement, Mysore Sandal
Detergent cake formulation is Re-Engineered to the customer expectation
coupled with modification in packing has been finalized and the product was
placed in the market and is getting a good response from the customers. Further
due to the introduction of new wrapping machine the productivity has increased.
Also modification of construction of flow of wrap film of Mysore Sandal Soap
and related products resulted in cost reduction and environmental friendly
packing.
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ORGANIZATIONAL ANALYSIS
Organizational analysis is the analysis done on the basis of the company’s strength,
weakness, opportunity, threat etc. And the tool used for the analysis is SWOT
SWOT Analysis. SWOT analysis is an important aid for the management when it
comes to making critical decision. SWOT is an acronym for Strengths, Weakness,
Opportunities and Threats. The strengths and opportunities represent the positive
aspects whereas the weakness and threats represents the negative aspects that the
company should try to overcome. Strength and Weaknesses are internal to the
organization. It is related to the strategies implemented by the Organization, its position
in relation to competitors etc. Generally these parts are controllable whereas
Opportunities and Threats are external to the organization, which are caused by the
external environment.
The aim of conducting a SWOT analysis is to isolate the key issues which would be
important in the future for the organization. Every successful firm’s success comes up
when they implement the outcomes of the SWOT analysis in the best possible manner.
Strengths. The factory is located in the heart of the city & has all infrastructure
facilities. They require quick movement of raw materials & finished products. Due to
its proximity, habitation movement of men and material are easy. Also the organization
has devoted and hardworking employees who contribute to the organization’s well-
being. This is because the company provides both monetary and non-monetary benefits
to employees. This is the main reason why a company like Karnataka soaps and
detergents limited has reached such heights irrespective of being a government owned
company. The company also maintains a very good dealership network, which ensures
that the products reach every loop and corner. And their main strength is that there is
very little competition for its major products sandal soap, only other brand which has a
sandal flavor is santoor soap of Wipro.
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Weakness. There is a lack of effective use of media for promotional activities,
especially the use of mass media for the promotional activities of its products. The
company is not utilizing media like television for promotion. Although modern
technology has been utilized for the production process, still packing is done manually.
This can delay the production process. No fuller utilization of land available within the
premises of the company. Large parts of the land are left underutilized.
Opportunities. The company should try to develop and expand its exports, as Mysore
Sandal has a greater demand in the foreign markets. As there is a positive swing in the
economy towards development, the company should try to make maximum utilization
of this situation. The toilet soap and the detergents market is an over expanding industry
and a major company likes KS& DL with its manufacturing expertise can call the shots
if it.
Threats. One of the main threat is Intense Competition from other global leaders like
Hindustan Unilever Limited because KS&DL is a government owned company and
they have certain restriction in adoption of new technology and promotional activities.
Too much Government interference may reduce growth potential. Growth of Private
enterprises in this sector with huge investment and great service potentiality is a great
threat to public enterprises like KS&DL.
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CHAPTER-FOUR
OBSERVATIONS AND
CONCLUSION
72
Observations
Karnataka Soaps and Detergents Limited is wholly owned by government, so it has to
work according to the instruction of the government and there is less freedom. The
company conducts weekly meetings on every Saturdays discussing about the weekly
performance of the company. The medium of language used for communication is
Kanada for all meetings and internal reports. It has been mandatory that the language
used should be Kanda. But for external meetings and reports English is used. Consumer
awareness of its products is very less except for Mysore Sandal soap. Since the
company is ISO certified, the raw materials used have the required quality. All the
records are well maintained which helps the finance department in taking decisions
relating to finance. Inventory control and warehousing are the major functions of the
purchase department.
By all means the organization is in a position to go ahead with the expansion plans.
Moreover, the company bears a good relationship with its employees, customers,
dealers and suppliers making them a good entity to deal with.
Suggestions
KS&DL has a wide variety of products but people are unaware of many products like
Agarbathies, Detergents, Baby soaps etc., as its marketing is very weak. So it should
spend both money and man power on advertising, especially advertising through mass
media. They should also improve in building up the strong marketing strategy in order
to improve the distribution channels and could be able to increase the sales other than
the Mysore Sandal soap. In order to meet the competition at the international level,
there should be sufficient production capacity. The company should introduce
automation in packing, thus reducing labour.Also the company should try to build a
strong customer base in north Indian markets through effective promotion techniques.
The management should design more Training and development programmes and
Career Development programs and identify the skills or knowledge. With some of these
small changes KS&DL the government company can capture even the market share of
multi-national companies.
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CONCLUSION
The organization study done on Karnataka Soaps And Detergents Ltd. helped me to get
clear picture of the organization and its management function. KS&DL is one of the
largest producers of sandalwood oil and sandalwood soaps in the world. The sandal
soaps of KS&DL are probably the only soaps in the world that uses pure, natural
sandalwood oil. KS&DL was established in the 1918 by the Maharaja of Mysore in the
name Government Soap Factory and later in the year the company was renamed as
Karnataka soaps and Detergents Ltd. KS&DL is an ISO 9001:2004 and ISO-14000
Certified Company. It has manufacturing units located at Bangalore, Mysore and
Shimoga. The main products of KS&DL are Mysore Sandal Soap and its varities,
Talcum powder, sandalwood oil and Agarbhathis.
The company has an effective human resource department where in the employees are
given good remuneration, incentives and extensive care is taken by providing facilities
such as canteen, medical facilities, and extracurricular activities. Since it is a
government owned company, one of the main objective is to provide maximum job
opportunity to the people of Karnataka and development of the society. The company
has an excellent financial position with a current net profit of 32 crores and a good
solvency rate. The company has a strong market and customer base all around the
world.
The study has accomplished several goals. The study has helped to familiarize with
working condition of the organization. The study has given a general idea about the
functioning of KS&DL. It helped to analyze and understand the administrative
functions. Since an organization is a human grouping in which work is done for the
accomplishment of some specific goals or mission, this organization is trying to remain
on top position by utilizing and maintaining its resources to maximum. Proper
management and quality assurance is a challenging job, and here in this organization in
order to attain is its objective.
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BIBLIOGRAPHY
A. BOOKS AND JOURNALS
Aswathappa, K. (2005).Resource and Personal management. New
Delhi: Tata McGraw-Hill Publishing Company Ltd. Fourth edition
Aswathappa, K., SridharaBhata, K. (2005). Production and Operations
management. Place of publishing: Himalaya Publishing House
Annual reports of KS&Dl
Flippo, Edward .B. (1984). Personal Management. New Delhi: Mc
Graw Hill.
Jain, P.k. Khan, M.Y. (2005). Financial management. Place of
publishing: Tata McGraw-Hill Publishing Company Ltd, Fourth
edition.
Kotler, Philip. (2009).Human Resource Management. New Delhi: New
age Publication.
MSIL – Company Brochure
B. WEB SITES
http://202.138.105.9/mysore sandal/rti.php
www.mysoresandal.com & www.msilonline.com
www.investopedia.com
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ANNEXURE
Balance Sheet of KS&DL
As on 31st March 2014
PARTICULARS
AMOUNT AS ON
31-3-2014
RS. RS.
1. SHARE HOLDERS FUNDS:
(a) Share capital
(b) Reserve & surplus
(c) Revaluation Reserve
Revaluation of Land
2. NON CURRENT LIABILITIES
(a) Long term borrowings
(b)Other noncurrent liabilities
(c)Long term provisions
3. CURRENT LIABILITIES
(a) Short term borrowings
(b)Trade payables
(c)Other current Liabilities
(d)Short term provisions
TOTAL
ASSETS:
1. NON-CURRENT ASSETS
(a)Fixed Assets
(i)Tangible Assets
(ii)Intangible Assets
(b)Non-current Investment
(c)Deferred Tax Assets
(d)Long term loans & advances
(e)Trade Receivables
2.CURRENT ASSETS:
(a)Inventories
(b)Trade Receivables
(c)Cash and cash equivalents
(d)Short term loans and
advances
(e)Other current Assets
TOTAL
31,82,21,000
95,49,62,316
7,75,85,91,370
903,17,74,686
33,77,20,917
63,34,42,659
3,50,00,000
4,58,98,686
25,68,22,474
NIL
4,92,47,570
31,49,79,855
26,92,15,234
7,85,27,71,403
-
1000,29,38,262
831,82,48,736
23,00,00,100
3,03,86,255
17,54,41,070
2,96,49,908
80,81,43,158
23,20,25,566
43,77,57,488
20,67,63,314
-
168,46,89,526
1000,29,38,262
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The products of KS&DL
Mysore Sandal Soap
Mysore Detergent Powder
Mysore Detergent Bar
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Agarbhathies
Talcum Powders