report
TRANSCRIPT
SUMMER PROJECT REPORT
RELATED AND NEW PRODUCT DIVERSIFICATION AT
NILKAMAL LTD.
Prepared for the Mumbai University in the partial fulfillment of the
requirement for the award of the degree in
MASTERS OF MANAGEMENT STUDIES
S ubmitted By:
Name: Mihir Sangani
Roll No.: 39 Year: 2011
Related and New Product Diversification Roll No. 24
Acknowledgement
In the completion of the present work, there are feelings of achievement and satisfaction.
In these moments of happiness, I would like to take this opportunity to record my sincere
gratitude to all those who mattered.
Foremost, I wish to express my deepest appreciation to my project guide, Mr. Karan
Doshi, Manager (Project Department). I am extremely grateful for his professional guidance and
support.
Thanks are extended to Mr. Mihir Contractor, Senior Vice President (Project
Department) and to my company guide, Mr. Karan Doshi, Manager (Project Department) for
allowing me to do my project in Project Department, Nilkamal Limited.
I would also like to thank Mr. Aditya Ahuja, Ms. Purtata Vaity, Mr. Jay Gandhi, Mr. Jude
Almedia and Mr. Merrill Mathews of Project Department, Nilkamal Limited for their assistance
and guidance throughout my project period.
I am also thankful to all the teaching staff for their valuable help throughout the project.
I would like to dedicate this success to my parents and family members who are a
constant source of encouragement and mental support throughout the tenure of the project. They
encouraged me at each and every point of my life and because of whom I am able to learn so
much in my life. Thank you very much.
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Executive Summary
Due to globalization there arises a need for a company to grow. Product diversification is an
option that can be use by the company to grow. Related product diversification was necessary in
Nilkamal BITO Storage System due to its stagnant sales. That is the reason Nilkamal BITO
Storage System did a study of banking sector so that it can target its products to that sector.
Similarly the @home Nilkamal tried to grab the opportunity of growing retail sector by
providing furniture and fit-outs for the retail shops. The new product diversification was thought
of by selling Tai Twun Enterprise, a Taiwanese company’s products in India. Tai Twun is
leading manufacturer of Mobiles and personal computers components and connector. As the
computer and mobile market is growing in India and Worldwide, Nilkamal did a study on Tai
Twun Enterprise so that it can sign a joint venture with it.
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Table of Contents
Sr. No. Title Page No.
1. Introduction 7
2. Organisational Chart 10
3. Department Introduction and Organisational Chart 11
4. Project Introduction 12
5. Need for Study 13
6. Objective of study 15
7. Research Methodology 16
8. Collection of Data 17
9. Analysis of Data 35
10. Finds and Interpretations 36
11. Recommendations and Conclusion 37
12. References 38
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List of tables
Sr. No. Table No. Page No.
1. Table 1 17
2. Table 2 18
3. Table 3 19,20
4. Table 4 21
5. Table 5 26,27,28
6. Table 6 29,30
7. Table 7 32,33
8. Table 8 35
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List of Figures
Sr. No. Figure No. Page No.
1. Figure 1 10
2. Figure 2 31
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Introduction
Nilkamal Limited is listed on the National Stock Exchange and Bombay Stock Exchange since
1991. Nilkamal’s (FY 0910) turnover exceeds INR.1235 crores / US$.260 million.
Quiet dynamism characterises the Company. Maintaining leadership in its market segments
through core values and hard work is a basic tenet driving the Company. Founded by first
generation entrepreneurs, the corporate leadership of the company is young and poised to lead
the Company to greater heights.
Nilkamal’s Core Businesses
Nilkamal is in 5 Key Businesses:
Material Handling Crates, Containers and Bins.
Molded Furniture such as Chairs, Tables and Cabinets.
Custom Moldings & OEM supplies for specific customers.
@home, the Mega Home Store Retail Chain
Service Products for Hospitality Industry
Manufacturing and Selling Strengths
The Company has 7 large manufacturing plants in India:
* North – Samba (Jammu & Kashmir) and Greater Noida (Uttar Pradesh)
* East - Barjora (West Bengal)
* West - Sinnar, Nashik (Maharashtra) and Silvassa
(Union Territory of Dadra & Nagar Haveli) (2 plants).
* South – Pondicherry (Union Territory)
The Company has advanced machinery in Injection Molding, Rotational Molding, Vacuum
Forming, Polyurethane Injection (of insulation) and capabilities for SMC and Blow Molding.
Each of these plants has dedicated Tool Rooms.
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Occupying a massive total constructed area of 11,33,738 sq ft, all of Nilkamal’s manufacturing
plants are ISO 9001/2008 Certified and practice 6 Sigma manufacturing process. This extensive
manufacturing infrastructure is ably supported by our wide and strong sales network, operating
through 49 Regional Offices and 33 Warehouses spread across India. All the Nilkamal plants,
warehouses and offices are connected to the Head Office in real time by ERP, SAP-R3.
Joint Ventures
The Company has a Joint Venture in Sri Lanka, near Colombo. It is a leader in the Sri Lankan
market for Molded Furniture.
The Company also has a Joint Venture with Bito Lagertechnik Bittman GmbH for the
manufacture of Material Handling and Storage Systems in Metal, with a manufacturing plant at
Samba, Jammu & Kashmir. The Company has also recently entered into a Joint Venture with
M/s CAMBRO Inc, USA for manufacture of select products for Hospitality Service Industry,
and marketing of the entire International range of Cambro throughout India, Sri Lanka,
Bangladesh and Nepal.
Nilkamal has exclusive tie ups with:
* Hanel Buro-Und Lagersystems, Germany for Automatic Storage and Retrieval Systems.
* ConTeyor Multibag Systems NV of Belgium for manufacture of Textile Partitions for Crates
and Metal Racks to provide valuable in-transit protection for scratch sensitive products.
* Plastic Omnium Systems Urbains, France, for supply of their International Standard Waste
Binsof all sizes conforming to EN/DIN Standards.
* CAMBRO Manufacturing Company, USA for Hospitality Products suited for large Restaurants
and Hotels. Now further consolidated into a Joint Venture to market the entire range of
CAMBRO products throughout India, Sri Lanka, Bangladesh and Nepal.
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Business Strengths.
Nilkamal is the undisputed leader in the Indian market for molded plastic furniture, being the
largest manufacturer and marketer of molded plastic chairs in India, and probably worldwide.
We manufacture and sell over 1.4 Million plastic molded chairs in Indian markets, along with
sofas as well as ready to assemble furniture too.
In material handling, Nilkamal is a "One Stop Shop For Material Handling Solutions" and offers
a comprehensive product mix right from bins, crates, pallets, Material Handling Equipment
ranging from Pallet Trucks to Stackers, Forklifts, shelving and racking plus all equipment
required for the logistics industry which is growing at a rapid pace in India.
Nilkamal's quality is widely accepted internationally and we have an office in Ajman, UAE to
cater to the Middle Eastern Markets. We also export to most major markets in Europe and
Americas which are known for being sticklers for quality. We have consistently won prestigious
export awards and are now an Export House
The Company's New Venture @home, the Mega Home Retail Chain is recognized as a pioneer
and leader in this category in India. @home is spread across the country with 16 large format
retail stores with an average of 25,000 sq.ft. per store.
@home, positioned as a Home Maker store, is a perfect one-stop solution store for home
planning, with finest quality furniture, soft furnishing, home accessories and a plethora of a
whole lot of services to enhance your indoor and outdoor spaces. The designs @home are
contemporary yet practical, mirroring Indian taste & finesse.
Every @home store is a visual treat; the Visual Merchandising at every store is done in
minute detail to suit the Indian taste. The Company has aggressive plans to build this business
with a wide footprint across all major cities and towns of India. All the @home Stores are
connected to the Head Office and the Distribution Centers by ERP, SAP Industry Specific and
Retail. @home is the recipient of "Retailer of the Year 2008" Award for home and office
improvement, by the Asia Retail Congress in February 2009.
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Organisational Chart
*Figure No. 1
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Department Introduction and Organizational Chart
I worked in Project Department. This department is headed by the senior vice president Mr.
Mihir Contractor, who has been associated with Nilkamal since January, 2010. Mr. Mihir
Contractor has a master’s degree in business administration from University of California, USA
and master’s of science in plastic engineering from University of Massachusetts, USA. Mr.
Contractor is responsible for formulation of project strategy and new business developments for
Nilkamal. He has experience of around 14 years in manufacturing sector. Before joining the
Company, he was associated with Apple Inc. and General Electric. Mr. Karan Doshi is the
manager of Project department. He leads the team of three MBA graduates which are responsible
for the research and development. One of the team members has done MBA from prestigious
Jamnalal Bajaj Institute of Management Studies. The team carries out surveys and research
which helps in the business development of Nilkamal. This department gets projects that will
help Nilkamal to grow. The department does extensive survey and research and prepares a report
that is presented in front of the promoters of the company. I became part of this team and help
them carry out various researches. The department also carries out various other works related to
Nilkamal.
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Project Introduction
Nilkamal is having a joint venture with a German company, BITO Storage System. The joint
venture is known as Nilkamal BITO Storage System (NBSS). NBSS makes products like
Universal Storage System, Compactors, and Storing Racks. It provides storing rack to the
industries and shops which help them store their goods. NBSS has targeted few sectors like
industries and few commercial shops. Also the sales of Nilkamal BITO Storage System are
stagnant, 18 -20 Crores every year. So Nilkamal BITO Storage System has decided to explore
new sectors like banks, hospitals etc. Market survey was done in banking sector to study which
file storage system are current used in banks and can Nilkamal BITO Storage System enter this
sector and dominate.
The @home division of Nilkamal Ltd is spread across the country with 16 large format retail
stores with an average of 25,000 sq.ft. Per store. @home is positioned as a Home Maker store
and is a perfect one-stop solution store for home planning. It has finest quality furniture, soft
furnishing, home accessories and a plethora of a whole lot of services to enhance your indoor
and outdoor spaces. The designs @home are contemporary yet practical, mirroring Indian taste
& finesse. As the retail sector is booming in India, @home Nilkamal thought it as an
opportunity. @home thought of providing fit-outs for the retail store. Research was done to study
which companies are into retail shop fit-outs and Nilkamal penetrate in this market.
A Taiwanese company named Tai Twun Enterprise is planning a visit to Nilkamal and hoping to
sign a Joint Venture with Nilkamal so that Nilkamal could sell it products in India. A detailed
study was done on Tai Twun to know everything about the company and the products it makes.
Even a Market survey was done as to which companies are into selling similar products in India.
And can Nilkamal will be successful if signed a Joint Venture with Tai Twun.
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Need for study.
As the market grows so is the need increases for the company to grow. The company that doesn’t
grow die. Due to this reason the company finds various ways to increase its sales and grow.
There are many ways of growing your business for example 1) Getting more customers and
clients. 2) Getting your customer and clients buy more from you. Etc. One of best ways to
increase your sales and grow is to go for diversification. Diversification has been an essential
basis for the growth and survival of firms in the last half of the twentieth century, due to the
vulnerability of the specialized firm to the fast and unexpected changes in the environment [1a,
b, and c]. There are mainly three types of diversification 1) Concentric Diversification, Here the
technology used in the industry remains the same, while the marketing plan changes to a
significant extent. The technology remains same between two business ventures. Hence,
technical knowledge remains a major advantage. 2) Horizontal Diversification, Technology is
not a factor to consider in this. The products are related but the existing customer base is taken
into account while coming up with new products. This strategy is advantageous if the company
has a loyal customer base. 3) Conglomerate diversification occurs when a firm diversifies into
areas that are unrelated to its current line of business. Synergy may result through the application
of management expertise or financial resources, but the primary purpose of conglomerate
diversification is improved profitability of the acquiring firm [2].
For going in for product diversification one have to conduct extensive market research into the
viability of new products. Make sure new products align with different target markets than the
customer base for your existing product to avoid eroding market share for your current product.
Conduct surveys, focus groups and product trials to ensure product success prior to launching a
new product [3]. According to Calori and Harvatopoulos (1988), there are two dimensions of
rationale for diversification. The first one relates to the nature of the strategic objective:
Diversification may be defensive or offensive. Defensive reasons may be spreading the risk of
market contraction, or being forced to diversify when current product or current market
orientation seems to provide no further opportunities for growth. Offensive reasons may be
conquering new positions, taking opportunities that promise greater profitability than expansion
opportunities, or using retained cash that exceeds total expansion needs. The second dimension
involves the expected outcomes of diversification: Management may expect great economic
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value (growth, profitability) or first and foremost great coherence and complementary to their
current activities (exploitation of know-how, more efficient use of available resources and
capacities). In addition, companies may also explore diversification just to get a valuable
comparison between this strategy and expansion [4]. Studies of diversification often analyse the
ownership advantages that diversifying firms must possess, considering that the speed and the
economic feasibility of diversification are to a large extent determined by those advantages. They
also look at the mode by which firms diversify - through organic growth, mergers and
acquisitions or alliances [5]. There are nine way to build demand out of which two are, Selling
our existing products to new type of customers and Design new products to serve new type of
customers [6].
Nilkamal choose this option of related and new product diversification. Nilkamal was already
into the business of storage system it was providing products to industries and some commercial
shops. It thought of diversification into new sector such as banks and hospitals. Both the sectors
are in the growing stage and are going to experience growth along the years. As banking sector
growing extensively, Nilkamal BITO Storage Systems decide to target this sector.
Similarly @home Nilkamal which is into furniture business was planning to take the opportunity
of providing furniture fit-outs to the growing retail sector. As there is synergy in current
Nilkamal’s business. So there aroused the need for study of the retail fit-outs market in India.
One way of growing is new product diversification. Nilkamal thought of taking opportunities of
the ever growing electronics industries in India. Tai Twun Enterprise is into making connectors
used in mobile phone, laptops and computers. This company was expected to visit Nilkamal in
July for negotiating on selling its products by Nilkamal in India. A detail study was necessary to
understand Tai Twun and its products and its market in India.
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Objectives of Study
The objectives are diversification of related and unrelated products. The storage system division
of Nilkamal i.e. NBSS (Nilkamal BITO Storage System) are into making products such as racks
and cabinets for the storage for goods and inventories. Its sales are stagnant and are explored to
very few sectors such as Industries for their storage facilities. Now Nilkamal is trying to target
new sectors and increase its sales by selling its USS (Universal Storage System) product. The
target sectors were banks, hospitals and hotels. My objective was to do a detail survey on which
type of storage system used at banks and can Nilkamal sell its product and fit into that sector.
The @home division of Nilkamal is into making furniture for home. As the retail market is
growing so is the market for the fit-outs at retail is growing. There are very few players in retail
shop fit-outs and as the market opportunities are huge. I have done a research on the market of
retail shop fit-outs. The research involved whether how can Nilkamal @home fit into this
market and provide fit-outs to the retail shops.
The other objective was about unrelated product diversification. The electronics manufacturing
services industry is growing due huge demand for Electronics products. A company name Tai
Twun Enterprise Co. from Taiwan is going to visit Nilkamal in July. My part was to research
everything about the company, its products, financials, customers etc. Even the companies in
India who are into similar business and the market in India for these products. And can Nilkamal
sign a Joint Venture with Tai Twun and sell its products in India.
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Research Methodology
Research methodology is a collective term for the structured process of conducting research.
There are many different methodologies used in various types of research and the term is usually
considered to include research design, data gathering and data analysis.
I have done exploratory research. Exploratory research is a type of research conducted for a
problem that has not been clearly defined. Exploratory research helps determine the
best research design, data collection method and selection of subjects
In the case of Nilkamal BITO Storage System I did a secondary as well as primary research where in I prepared a questionnaire for different banks where I conducted a in-depth interview with the premises department so that I could know what kind of storage system they use. My target group was Nationalized Banks situated in Mumbai.
The Questionnaire is as follows
1. Which type of file storage system does their bank use?2. Which company’s file storage system they are using?3. What is the price of each rack?4. Of what material is the rack made?5. How many years are they using this product? 6. What are the Advantages and Disadvantages of the product that is currently used?7. How many racks do you have per branch?8. How many branches do they have?
In case of @home Nilkamal and TaiTwun Study, secondary research was done through internet so that I could find out which companies are into similar business, what the market in India is and who all their customers are.
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Collection of data
Nilkamal BITO Storage System.
Nilkamal BITO Storage System is into manufacturing storage system in India. They manufacture
products like Universal Storage System, Compactors etc. These products can be used to store
goods. Nilkamal BITO Storage System sales were stagnant and so Nilkamal thought of
diversifying the products to different sector. The sector selected was banks. The Banking sector
is currently growing in India and it needs the racks and storage system to store its files and
documents. A study and survey was required to understand what kind of storage system is
currently being used in the sector and to understand the market properly. From a sets of many
banks a sample was chosen. The following banks were chosen.
Banks
IDBI
DBS
Corporation Bank
Federal Bank
Kotak Mahindra Bank
Bank of India
Indian Overseas Bank
State Bank of India
*Table No. 1
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A short but precise questionnaire was prepared. The questionnaire contained all the necessary
question required to collect data. There were approximately 7to 8 questions. The questions are as
follows.
Questionnaire for Banks regarding the file storage system.
1. Which type of file storage system does their bank use?
2. Which company’s file storage system they are using?
3. What is the price of each rack?
4. Of what material is the rack made?
5. How many years are they using this product?
6. What are the Advantages and Disadvantages of the product that is currently used?
7. How many racks do you have per branch?
8. How many branches do they have?
These questions were asked telephonically. The calls were made to the premises department of
the banks. Following table will show the people called to be interviewed.
Banks Contact Person
IDBI Mr. Sudhir Kulkarni
DBS Ms. Karnika Dubey
Corporation Bank Mr. Bhattacharya
Federal Bank Ms. Raut
Kotak Mahindra Bank Ms. Chardrakala
Bank of India Mr. Patki
Indian Overseas Bank Mr. Nicolus Menezes
State Bank of India Mr. Donald Colaco
*Table No. 2
A detailed database was created that contained all the answers to the asked question. The
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following table shows the data collected from eight banks.
Banks Contact No.
Contact
Person Location
Type of File
storage used Made of.
IDBI022-66552277
Mr. Sudhir
Kulkarni Fort
Drawer,
Cupboard Godrej
DBS022-66388818
Ms. Karnika
Dubey Fort
Wooden
Furniture Godrej
Corporation
Bank022-22693453
Mr.
Bhattacharya Churchgate FRFC Cabinet Steelage
Federal Bank0250-2333496
Ms. Raut Vasai
Wooden
Furniture Godrej
Kotak
Mahindra
Bank
7798982408 Ms.
Chardrakala Vasai
Wooden
Furniture Storewell
Bank of India 9892499061 Mr. Patki Bandra Cabinet Godrej
Indian
Overseas Bank9892610694
Mr. Nicolus
Menezes Fort Furniture Godrej
State Bank of
India9833877471
Mr. Donald
Colaco Fort FRFC Cabinet Methodex
*Table No. 3
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Banks Price.
Material of
Racks
Years
since
they are
using
this
Product
Advantage
/Disadvantage
How
Many
Racks
per
branch
How Many
Branches in
Mumbai
IDBI NA
Steel and
Wood NA
Ease of handling,
Cheap and
Strong
7-8
Racks 65
DBS NA
Steel and
Wood NA
7-10
Racks 1
Corporation Bank NA
Steel and
Wood NA
7-8
Racks 69
Federal Bank NA
Steel and
Wood NA
4-5
Racks 20
Kotak Mahindra
Bank NA
Steel and
Wood NA
6-7
Racks 34
Bank of India NA
Steel and
Wood NA
8-9
Racks 119
Indian Overseas
Bank NA
Steel and
Wood NA
7-8
Racks 55
State Bank of
India NA
Steel and
Wood NA
7-10
Racks 250
*Table No. 3 continued
The above table showed the Name of the banks, contact no. , contact person, location, type of file
storage system currently using, the current storage is made by which company, the price of the
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storage system, material of which the system is made, years since they are using the products, the
advantages or disadvantages of the current product used, how many racks that are used per
branch, and how many branches in Mumbai.
@home Nilkamal.
@home Nilkamal is vertical of Nilkamal Limited that is into the business of furniture for homes.
It has around 16 stores all over India. Nilkamal decided to grab the opportunity of rapidly
growing retail sector and thought of diversifying the product for different sector. The sector it
thought of targeting was retail sector. As there are many retail stores opening across the nation,
@home thought of providing shop fit-outs to these retail stores. To understand the market a
detail survey was done where in all the major companies that are into retail shop fit-outs were
studied. The following table shows the companies that are in retail shop fit-outs, their services,
their location, their customers, and are they in manufacturing or fixing it.
Company Clients Products
Manf
. Location
Featherlite
Nokia, Future Group, Jockey,
Fabmall, Fossil, Shell
Fashion, Food &
Electronics Yes Karnataka
Gv Display
Solutions
Pvt. Ltd Coca Cola, Lays
Supermarket Shelving,
Modern Trade Display,
Garments Display Racks,
Electronic Product
Display Racks, Books
And Music Racks, Pop
Dispensers, Customised
Display Racks, Counter
Top Dispenser Yes Delhi
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Glue Design
Pvt. Ltd
Apollo Tyres, Brand
Rollouts, Cafe Ritazza, John
Player, Khadims, Levi's,
Reliance Sansar, Service One
Motorola, Shoe Tree, Sree
Leather, Toshiba, W For
Woman, Wills Lifestyle
All Customised
According To
Requirements No Noida
GH
Graphics
Pvt Ltd Chivas, Coca Cola, Pepsi
Brochure
Display ,Cosmetics &
Perfume Display, Heel
Rest Shoe Display,
Acrylic Display, Banner
Stand, Tower Display,
Shelves, Brochure
Display Yes Gurgoan
BRV
Solutions
Koutons, les femme, T.N.G,
Siyaram, Eagles, Ritu Wears,
Liberty
All Customised according
to requirements from start
till the end YES Sahibabad
Electrospark
Tata, faber, samsung,
siemens, LG, United colours
of benettom, elica, Hamleys,
Haier, Modi care, Reliace,
Walmart bharti, Bose, Bata,
Croma, Sony, Sony Ericsson
Display Counters,
Pegboard Display, Glass
Displays, Kiosks Display,
Pamphlet Display,
Modular Shelving, Panel
Display, Portable Display,
Display Stands, Slat
Display Systems YES Manesar
Retail
Detaliz
Big Bazaar, Staples,Spar, D-
Mart, Vijay Sales, Star
Bazaar, Arcus, Hyper City,
More Mega
Store,Spinach,Carrefour
Accessories, Heavy Duty
Storage
Systems,Customised
Solutions,Fashion
Display,Hypermarket YES Mumbai
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Shelving.
MetaWood
Akbarallys,
Amul,Pantaloons, Apna
Bazaar, Godrej & Boycle
MFG, Globus, Shopper Stop,
Reliace Retail N/A YES
Daman &
Vasai
Krishna
Engineers
Display Showcases,
Racks, Electronics Racks,
Garment Racks,Architects
Designs Racks,Leather
Bags Racks,Shop
Fittings,Display
Counters,Store
Fixtures,Depatmental
Rack, Garment Racks,
Shoes Racks YES Malad
Grottini
Bata Metro, Reliance
Apparels, Fossil, Max Value,
Metro, Triump, life style
India Full store YES Italy
Dalziel +
Pow GAP, Mom & Me, Sony Full store NO Mumbai
Shark
Design
Studio
Godfrey Philips India, Frito
Lays, Yahama, Lenovo,
All,Baggit Full store YES Noida
Welworth
Reliance Retail Ltd,
Spencers, Vishal Mega Mart,
Big Apple, Dollar Store,
Spinach, Hyper City,Sabka
Bazar, In & Out, Carnation.
Supermarket Shelving,
Garment
Shelving,Slatwall Board,
Base Shelve, Gandola
Unit, Corner
Racks,Garment Shelving YES Mumbai
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Racks,
Rigved
(turnkey
Interiors)
Raymond Brands Like Color
Plus, Park Avenue, Zap &
Parx,Levi's,Lawman, Lee
Cooper, Nike, Swaranjali,
Bizarre, Spykar,Ruff
Kids,Marco Ricci
Fixed Furniture,modular
Store fixtures, visual
merchandising solutions NO
Ramms Full store NO Chennai
Dove Tail
Motorola, tata indicom,
william penn, banglore
central, kodak, levi,s health
& glow Fullstore YES Bangalore
*Table No. 4
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Tai Twun Enterprise.
Tai Twun is a Taiwanese company that is into manufacturing and trading of computer and
mobile connectors this company is visiting Nilkamal in July to negotiate on signing a joint
venture with Nilkamal so that Nilkamal can sell its products in Indian market. A detail study was
needed to understand Tai Twun Enterprise and all its products. And whether it’s possible for
selling Tai Twun’s products in India. The data collected are as follows.
Company:- Tai Twun Enterprise.
Year since:- 1988
Products:-
1) USB Hubs
2) Hard disk enclosure
3) GPS antennas
4) WLAN antennas
5) USB connectors and cables
6) HDMI connector and cables
7) RF connectors and cables
8) Multi card readers
Products used in sectors:-
1) Consumer Electronics
2) Telecommunication.
3) Instrumentation
4) Railways
5) Automobiles
6) Military
7) Medical
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Customers:-
1) Compal
2) Sandisk
3) Samsung
4) Sony
5) Flextronics
Area served:-
1) Eastern Europe
2) North America
3) Western Europe
4) Some parts of Asia
Balance Sheet:-
Consolidated
Balance Sheet In Cr INR
As On
31/12/201
0
31/12/200
9
31/12/200
8
A] ASSETS :
Fixed Assets
Land 6 6 6
Buildings and Structures 6 6 6
Machinery and Equipments 79 80 80
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Molding equipment 21 16 13
Transportation Equipment 1 1 1
Office Equipment 5 6 6
Other Facilities 4 3 3
Construction in process and prepayment for
equipments 9 2 4
Total Fixed Assets 132 119 120
Intangible Assets
Patents 1 1 0
Total intangible Assets 1 1 0
*GROSS BLOCK 134 121 120
**Less : Depreciation 50 41 34
NET BLOCK 84 79 86
Total Net Fixed Assets 84 79 86
Funds and Long Term Investment 0 0 2
Current Assets,Loans, & Adv.
Inventories 21 23 35
Total Inventories 21 23 35
Sundry Debtors 70 115 101
Cash & Cash Equivalents 152 81 60
Other Current Assets 7 7 11
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Total Current Assets 250 226 207
TOTAL ASSETS 334 305 294
B] Share Capital & Liabilities :
Share Capital 153 109 110
Reserves & Surplus 105 91 74
NET WORTH 257 200 183
Long Term Loans:
Short term borrowing 0 6 21
Long Term Debts 9 11 7
Total Loans 9 18 28
Current Liab. & Provisions :
Sundry Creditors 34 39 50
Current portion of long term debts 3 3 1
Other Liabilities 13 12 10
Accrued Expenses 19 34 23
Total Current Liabilities 68 88 83
Deferred Tax Liability
Total Capital and Liabilities 334 305 294
*Table No. 5
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Profit and Loss Account:-
Consolidated
Profit & Loss A/c.
In Cr INR
Year Ended
31/12/201
0
31/12/200
9
31/12/200
8
A] SALES :
Sales
Revenue 319 324 334
Gross Revenue 319 324 334
Sales Returns 5 4 4
Sales discounts and allowance 4 2 2
Net Sales 310 319 328
Total Sales[A] 310 319 328
EXPENSES
Operating COGS 240 234 247
Selling Expenses 18 21 22
General and Administrative Expenses 28 29 31
R&D expenses 4 4 5
Total Expenses 289 288 305
EBITDA 21 31 24
Add: Other Income 4 4 4
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Less : Interest 0 0 0
Currency exchange gains/Loss 9 2 2
Less: Other Loss 1 2 2
Profit Before Tax (PBT) 15 30 23
Less : Provision for Tax including FBT 1 7 7
Profit After Tax (PAT) 13 23 16
*Table No. 6
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Sales drop as per month:-
November 2010:- 51.51% Drop as compared to November 2009 [8].
December 2010:- 45.73% Drop as compared to December 2009 [9].
February 2011:- 56.2 % Drop as compared to February 2010 [10].
April 2011:- 46.74% Drop as compared to April 2010 [11].
May 2011 :- 48.1% Drop as compared to May 2010 [12].
Novenber
2009
Novenber
2010
Decmber
2009
Decmber
2010
Febru
ary 2010
Febru
ary 2011
April 2010
April 2011
May 2010
May 2011
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
Sales in thousand TWD
Sales in thousand TWD
*Figure No. 2
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More Information:-
As per J P Morgan report Tai Twun’s revenue breakdown in 2009 is 88.7% connectors, 6.5%
others and 4.6% hardware terminal[7].
Tai Twun has three manufacturing units in China.
Competitors of Tai Twun in India:-
Company Products Year Customer
Area
Served
Tyco
Electronics
USB connectors, SIM
card connectors,
Memory Card
connectors, RF
connectors. 1993 India
Molex
HDMI Connectors, RF
connectors, USB
connectors. 1985 India
FCI OEN
Connectors
USB connectors, HDMI
Connectors, Memory
card connectors. 1982 India
Amphenol
Interconnect
India
GPS antennas, RF
Connectors. 1972 India
Amkette
(Delhi)
USB hub, Memory card
reader. 1985 India
Synergy
Telecom Pvt RF Connectors 1994Ericsson, Siemens, Nokia,
Bharti, Hutch, Military, India
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Ltd Aviation, Railway, ONGC
MDR
Electronics
(Maharashtra)
USB cables, USB
connectors. 1969 India
Adbs
Electronics
(Haryana) SIM card connector 2008 India
Belkin
(Haryana)
USB hub, Memory card
reader, HDMI cables. 2009 India
Hitech India
Pvt Ltd
(Andhra
Pradesh) RF connectors 1975
Nuclear Fuel Complex,
Ship Building, Indian
Railways,Bharat Heavy
Electricals Limited, Bharat
Electronics Limited,
Electronics Corporation of
India, Instrumentation
Ltd., Cine Production
equipment/Flood Lights. India
Anand
Technologies
(Karnataka)
GPS Antennas, RF
cables/connectors,
WLAN Antennas. 2006 India
*Table No. 7
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Other findings:-
1) Major producer and exporter of connectors are China and Japan in Asia.
2) As the electronics market is growing there will huge demand for its components.
3) Most connectors sold in India are imported and not manufactured locally. The ratio is
about 60/40.
4) PCB, circular, RF, and rectangular I/O connectors are dominant connector types on the
Indian connector market.
5) Mumbai, Pune, Bangalore, Chennai, and Delhi NCR (National Capital region) are major
production hubs [13].
6) India expects growth rates for the connector industry around 16% to 18% per year for the
next five years [14].
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Analysis of Data.
Tai Twun Enterprise.
From the balance sheet and profit and loss account collected we need to analysis the
financials of the company, which will help us understand the performance of the
company. The financials collected were of last three years, 2008, 2009 and 2010.
From the balance sheet and profit and loss account ratios were obtain.
Following table shows the ratios.
Ratios 2010 2009 2008EBIDTA To Net Sales 7% 10% 6%
EBIDTA To Total Sales 7% 10% 6%PBT To Total Income 5% 9% 7%PAT To Total Income 4% 7% 9%
Return on Capital Employed 6% 14% 12%Return on Average Capital
Employed 6% 14%Return on Net Worth 5% 12% 8%
Return on Average Net Worth 6% 12% Total Debt - Equity Ratio 0.04 0.10 0.60
Current Ratio 3.68 2.58 2.5Quick Ratio 3.37 2.32 2.08
*Table No. 8
From the calculated ratios it is observed that ratios such as EBIDTA to Net Sales has decreased
by 3% similarly EBIDTA to Total sales , PBT to Total Income , PAT to Total Income, Return
on capital employed, Return on average capital employed, Return on Net Worth and Return on
average net worth are decreased drastically in 2010 as compared to 2009.
On the other hand Total debt – equity ratio, Current ratio and Quick Ratio all have changed
drastically.
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Finding and Interpretations
Nilkamal BITO Storage System.
Based on my finding and interpretations I have found out that as the banking sector is growing and there are few companies such as Godrej, Methodex and Storewell etc that provide file storage system to banks. It is a good option for Nilkamal BITO Storage System to target banking sector. Even Nilkamal has good brand name so it will be easy for Nilkamal to penetrate.
@home Nilkamal.
As per the survey and findings my interpretations are that the demands by different retail shops for the furniture are different. Even there is lots customization in the products there are no standard products as such.
Tai Twun Enterprise.
As per my finding the sales of Tai Twun are decreasing consistently. Even the CEO of Tai Twun who had 7 out of 8 patent of Tai Twun under his named resigned in June 2010. As per the ratios EBIDTA to Net Sales has decreased by 3% similarly EBIDTA to Total sales , PBT to Total Income , PAT to Total Income, Return on capital employed, Return on average capital employed, Return on Net Worth and Return on average net worth are decreased drastically in 2010 as compared to 2009. The other ratios such as Total debt – equity ratio is 0.04, Current ratio is 3.68 and Quick Ratio is 3.37 so it means the company is unnecessarily blocking its funds. There are also many multinational companies which are already based in India from past few many years and have good amount of market share. The market for connectors is growing extensively. These connectors are used in Electronic products, whose market is also growing consistently. There is lot of scope for this business in India.
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Recommendations and Conclusion
To conclude as in the case of Nilkamal BITO Storage System there is a good scope for Nilkamal
to target the banking sector as there are few players those who provide file storage system to
banks, as shown in Table No. 3. Nilkamal BITO Storage System can use the advantage of
Nilkamal brand name and try to penetrate the banking sector. Nilkamal BITO Storage System
can use its products like Universal Storage System and Compactor to target the banks.
As per the finding in Table No. 4 there is lots of customization in the shop fit-outs and the
product design and need differs from company to company it is difficult for @home Nilkamal to
enter this market. As there is no standard product involved in shop fit-outs and @home sells
standard set of products, it will be difficult for @home to set up a different setup altogether.
In the case of Tia Twun, selling its product in India by Nilkamal is a difficult option. There exist
no synergies between Nilkamal and Tai Twun. Even after studying the financials as show in
Table No. 5 and 6 of Tai Twun it is clear that the company is losing its sales over the years and
even the ratios as per Table No. 8 are not satisfactory.
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References
1a) Penrose, E. (1959/1995). The theory of the growth of the firm. Oxford: Oxford University
Press.
Pernod Ricard. (1991). Annual Reports and Accounts.
1b) Marris, R. (1964). The economic theory of managerial capitalism. London: Macmillan.
1c) Whittington, R. and M. Mayer. (2000). The European corporation. Oxford: Oxford
University Press.
Williamson, O.E. (1975). Markets and hierarchies. New York: Free Press.
2) http://www.enotes.com/management-encyclopedia/diversification-strategy
3) http://www.ehow.com/way_5272073_product-diversification-strategy.html
4) http://www.absoluteastronomy.com/topics/Diversification_(marketing_strategy)
5) Vachani, S. (1991). Distinguishing between related and unrelated international geographic
diversification: A comprehensive measure of global diversification. Journal of International
Business Studies, 22/2, 307-22.
6) Kotler on Marketing: How to Create, Win and Dominate Markets
By Philip Kotler
7) https://mm.jpmorgan.com/stp/t/c.do?i=3F434-3&u=a_p*d_529944.pdf*h_-kiuhmt2%0D%0A
8) http://www.bloomberg.com/news/2010-12-08/tai-twun-enterpr-november-sales-fall-51-51-
table-3432-tt.html
9) http://www.bloomberg.com/news/2011-01-10/tai-twun-enterpr-december-sales-fall-45-73-
table-3432-tt.html
10) http://www.bloomberg.com/news/2011-03-08/tai-twun-enterpr-february-sales-fall-56-20-
table-3432-tt.html
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11) http://www.bloomberg.com/news/2011-05-09/tai-twun-enterpr-april-sales-fall-46-74-table-
3432-tt.html
12) http://www.bloomberg.com/news/2011-06-09/tai-twun-enterpr-may-sales-fall-48-10-table-
3432-tt.html
13) http://www.connectorsupplier.com/tech_updates_AV_India_1-18-11.htm
14) http://www.connectorsupplier.com/tech_updates_Visser_India_Part2_4-5-11.htm
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