Submitted to:
Prof. Anshuman Tripathy
Submitted by:
Group-I
Abhineet Sudhendra
Sambit Mishra
Saurabh Arora
UM14003
UM14048
UM14051
Contents
1
Executive Summary............................................................................................................................................................... 4
Industry Overview.................................................................................................................................................................. 5
2.1
2.2
2.3
2.4
2.5
Industry Benchmarks....................................................................................................................................................... 7
2.6
PESTEL Analysis............................................................................................................................................................. 12
2.7
2.8
2.9
Competitive Landscape................................................................................................................................................. 13
Company Overview.............................................................................................................................................................. 16
3.1
Company background.................................................................................................................................................... 16
3.2
3.3
3.4
3.5
3.6
3.7
3rd Generation Balanced Scorecard (Amalgamation of 1st Generation BSC and Activity System Map)........................19
3.8
SWOT Analysis............................................................................................................................................................... 19
3.9
3.9.1
3.9.2
Portfolio Analysis........................................................................................................................................................... 20
4.1.1
4.2
4.3
4.4
Re-imagining the Organization with the transformed business model or Use-case based on SMAC and IOE................21
1 Executive Summary
Guidelines
The executive summary should provide a brief overview of the organization and the industry in which it
operates. It should also illustrate the results of the analysis made in the report. It should provide the
future growth prospects in the industry for the organization. It should also highlight on the strategy for
any organization to gain competitive advantage in this industry.
2 Industry Overview
2.1 Nature and Size of the Industry
Guidelines
The origin of abrasive industry is traced back to the year 1954 when Carborundum
Universal Ltd (CUMI) was incorporated in the year 1954 as a joint venture between
Carborundum company, USA, Universal Grinding Wheel company, UK and Murugappa
Group, India. There were other small players like Ajax Products Pvt ltd. present at that
time other than that most of the abrasive requirements were fulfilled by imports. The
company ventured both into the coated and bonded abrasive by acquiring Ajax
Products Pvt Ltd. (1964) and setting up plant at at Thiruvottiyur in Chennai and bauxite
mining in Bhatia.
The other major player in this sector Grindwell Norton Ltd. (GNO) came into being when
a technical collaboration in 1967 between Grindwell and the then world leader in
abrasives Norton Company, USA, grew into a financial collaboration in 1971. It started
its manufacturing in Mora, near Mumbai and gradually spread to other areas. The
growth in the abrasive industry attracted investments from other players and Orient
Abrasives was set up in 1974, in technical collaboration with Karborundum, Bentueky,
Czechoslovakia by the Rajgarhia group of industries as a venture to manufacture
Calcined and Fused Alumina products.
CUMI further enhanced its presence in the abrasive industry by acquiring (1991) the
Khataus stake in Wendt (India) Limited (WIL), a Joint Venture between Wendt
GmbH and The House of Khataus. Since then WIL has been a 40 - 40 Joint Venture
between Wendt GmbH and CUMI. The public holds the balance 20% equity.
The industry has seen a growth of 2-3 % annually from the year 2000 to the present
day, but the percentage is expected to touch 8-10% in the coming days [1].
$43.8-billion-2017
[2]http://www.dsir.gov.in/reports/techreps/tsr145.pdf
The domestic market in India has seen moderate growth with no appreciable
signs of improvement. While the world GDP was forecasted to grow by 3% [1]
approx globally in 2013-14, the world-wide abrasives market was forecasted to
have a CAGR of 4.6% in 2014. The abrasive materials industry is substantially
strong at the moment having fully recovered from the economic downturn. Also,
considering the growth the key consumers of this industry are having at this
point of time, we can easily conclude that the abrasive materials industry is at
the growth stage of the industry life cycle with an expected annual growth of
4.6% well over 1.5-2% during the economic downturn.[2] The Indian Abrasives
industry is controlled by a few large players like Carborundum, Grindwell
Norton, Orient Abrasives, etc with a very large number of relatively smaller
players narrowing down their portfolio to select products. India has gradually
started to become a focus market for major global players resulting in intense
rivalry among the competitors. The industry has seen a steady growth rate of
about 2-3% in the last few years and the growth is expected to be at 8-10%
annually.
[1]http://www.indexmundi.com/world/gdp_real_growth_rate.html
[2]http://www.bccresearch.com/pressroom/avm/global-market-abrasives-reach-$43.8billion-2017
Total Available Market Size (National
and Global)
[3]http://www.dsir.gov.in/reports/techreps/tsr145.pdf
The world market for the two major types of abrasive materials, i.e. Bonded and
Coated abrasives is estimated at Rs. 4500 crores and Rs. 6000 crores
respectively. The players in contention are Norton, Baystate and 3M from the
USA, Tyrolit and Treibacher from Austria, and Noritake from Japan. The total size
of bonded abrasive materials market is estimated to be about Rs. 190 crores
approximately in value. The Coated abrasives market has a total size estimated
at about Rs. 110 crores approximately in value.
[1]http://www.dsir.gov.in/reports/techreps/tsr145.pdf
[2]http://www.bccresearch.com/pressroom/avm/global-market-abrasives-reach-$43.8billion-2017
industry. These companies account for almost 70% of the abrasives market[1]
[1]http://www.dsir.gov.in/reports/techreps/tsr145.pdf
Expansion in markets of
furniture, automotive and
jewellery
Growth in Auto OEM,
fabrication and flooring
industries
Developing countries markets
will drive demand for
abrasives.
Rationale
Rationale
Ability of the industry to meet the ever changing demands of the manufacturing
industry is a key factor determining the success of an industry. Various
innovations like zirconia grains, fine grit rubber bonded for centre-less
applications enhance the product offerings.
CSF 3 : Peoples Training &
Development
CSF 1
Global
North
South
East
India
West
North-East
Central
Note: Use data for the year 2013-14
CSF 2
CSF 3
CSF 4
Category
Industry Level
(National)
Activity Ratios
Liquidity Ratios
Solvency Ratios
Indicator
201213
201314
Market Size
2476.4
2611.06
2607.03
Size as % of
GDP
0.029%
0.028%
Inventory
turnover
6.299
Receivables
turnover
2014-15
(till Q3)
Market Leader
201112
2012-13
201314
2014-15
(till Q3)
2621.05
925.288
1125.373
1100.89
2
1148.6
0.025%
0.025%
0.011%
0.011%
0.012%
0.011%
5.867
5.811
5.454
6.72
6.00
6.12
6.17
NA
NA
NA
NA
NA
NA
NA
NA
Payables
turnover
NA
NA
NA
NA
NA
NA
NA
NA
Asset
turnover
1.539
1.560
1.574
1.494
1.27
1.51
1.47
1.42
Current ratio
1.94
1.62
1.725
2.147
0.74
1.34
1.19
1.51
Quick ratio
1.009
0.862
0.871
1.103
1.22
0.99
1.11
1.55
Cash ratio
0.271
0.192
0.141
0.238
0.043
0.077
0.033
0.059
Debt-toassets ratio
0.224
0.106
0.067
0.088
0.302
0.132
0.102
0.139
Debt-tocapital ratio
5.479
2.486
1.655
2.374
12.164
5.164
4.126
6.29
Debt-to-
0.288
0.118
0.072
0.096
0.43
0.15
0.11
0.16
Category
Indicator
201213
201314
Market Leader
2014-15
(till Q3)
201112
2012-13
201314
2014-15
(till Q3)
equity ratio
Profitability Ratios
Valuation Ratios or
Interest
coverage
ratio
15.71
18.378
16.478
20.978
7.81
11.01
7.6
8.92
Profit After
Tax(INR
Crore)
282.26
284.64
202.10
142.68
146.67
74.53
72.78
NA
Operating
profit
margin(INR
Crore)
467.65
480.40
396.47
295.8
219.89
152.83
145.04
NA
Net profit
margin(INR
Crore)
282.26
284.64
202.10
142.68
146.67
74.53
72.78
NA
Return on
assets (ROA)
13.25
13.21
9.01
7.72
13.64
15.12
7.40
NA
Return on
equity (ROE)
25.69
22.1
14.34
11.65
26.11
25.30
11.33
NA
Price to
Earnings
(P/E)
15.83
17.96
26.94
NA
19.93
29.85
37.68
NA
-82.70
-289.72
NA
NA
-40.53
-1188.00
NA
NA
PEG Ratio =
(P/E Ratio) /
Category
Indicator
Price Ratios
201213
201314
2014-15
(till Q3)
Market Leader
201112
2012-13
201314
2014-15
(till Q3)
Projected
Annual
Growth in
Earnings per
Share
Price to Cash
Flow
17.02
13.09
18.90
NA
22.01
18.89
27.99
NA
Price to Book
(P/B)
3.32
2.35
2.70
NA
4.59
3.25
3.74
NA
Price to Sales
1.93
1.62
1.93
NA
2.60
2.02
2.39
NA
Dividend
Yield
0.02
0.02
0.02
NA
0.01
0.01
0.01
NA
28.84
31.04
37.99
NA
25.55
31.44
32.23
NA
Enterprise
value (EV is
market
capitalisation
plus debt
minus cash)/
EBITDA
9.07
9.02
11.90
NA
11.99
13.42
17.35
NA
Staff
NA
NA
NA
NA
NA
NA
NA
NA
Category
Indicator
Market Leader
201112
201213
201314
201112
2012-13
201314
2014-15
(till Q3)
Staff Cost/
Salary as
percentage
of Sales
4.17
3.79
4.64
NA
2.98
3.10
3.93
NA
Operating
Expenses as
percentage
of Sales
59.02
59.77
59.98
NA
91.90
93.68
93.72
NA
Depreciation
as
percentage
of Sales
3.88
3.95
3.88
NA
3.59
3.59
3.39
NA
Fixed Assets
to Sales
Revenue
26.05
26.67
26.40
NA
26.22
25.32
24.78
NA
Advertising
as
percentage
of Sales
17.74
17.27
17.94
NA
14.65
14.13
15.19
NA
Turnover or
Industry
Attrition Rate
Competitive Ratios
http://www.moneycontrol.com/stocks/marketinfo/netsales/bse/abrasives.html
http://financials.morningstar.com/ratios/r.html?t=504879®ion=ind&culture=en-US
Economic
Social
Technological
Environmental
Legal
Description
Rationale
Description
Buyer Power
Supplier Power
Existing Competition
Threat to new
entrants
Threat to substitutes
Effect of
Complementors
Rationale
Regions
Details
End-user Segments
Ex
Individual Customers
High
SMEs
Corporate
High
High
The impact of the buying criteria is graded on the basis of the intensity and duration of their impact on the current market
landscape. The magnitude of the impact has been categorized as described below:
Trend
Trend
Trend
Trend
examples
1
2
3
4
Analysis of Trends with High Impact and High Certainty to be carried out
Impact on strategies or business models to be highlighted
3 Company Overview
3.1
3.2
3.3
3.4
3.5
3.6
Company background
Timeline with key milestones and their strategic impact
Vision, Mission, Goals, and Strategic Themes
Key Product and Service Portfolio
Core Competencies of the firm
Business Model of the organization
Key Partners
Key
Activities
Value
Propositions
Categories
Production
Problem Solving
Platform/Network
Characteristics
Newness
Performance
Customization
Getting the Job Done
Design
Brand/Status
Price
Cost Reduction
satisfying?
Customer
Relationship
s
Customer
Segments
Key
Resources
Channels
Risk Reduction
Accessibility
Convenience/Usability
Mass Market
Niche Market
Segmented
Diversified
Multi-sided Platform
Types of resources
Physical
Intellectual (brand patents, copyrights, data)
Human
Financial
Channel phases
1. Awareness
How do we raise awareness about our companys products and
services?
2. Evaluation
How do we help customers evaluate our organizations Value
Proposition?
3. Purchase
Cost
Structure
Revenue
Streams
Real-time-Market
3.7 3rd Generation Balanced Scorecard (Amalgamation of 1st Generation BSC and Activity System Map)
3.8 SWOT Analysis
3.9 Competitor Analysis (identify competitors)
3.9.1 Based on Critical Success factors
3.9.2 Based on Financial indicators
Category of
Investment
Industry
Reward to
Risk Ratio (A)
Country
Reward to Risk
Ratio (B)
Risk Adjusted
Rewards
( 0.65A +
0.35B)
Product Market
Investment Strategy
Investment
Rationale
Which Industry?
Strategic Alliance?
High Profit?
Potential
Market ?
Which
Product/service?
Mergers/acquisitions?
FDI?
Cost
efficiencies?
Ratio calculations based on reward and risk ratings from Business Monitor International Report March 2014
4.4 Re-imagining the Organization with the transformed business model or Use-case based on SMAC and
IOE
Reimagining
Reimagining
Reimagining
Reimagining
Reimagining
Business Models
Business Processes
Customer Segments
Products & Services
Workplaces
Reimagining Channels