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PROFESSIONAL
STUDIES, INDORE
SWOT
ANALYSIS
ON
WEST COAST PAPER
MILLS
PRESENTED BY :-
ANKITA SINGHAI
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CONTENTS
PHASE - I
• Company Profile
• Promoters
• Product Mix
• Mergers/Alliances/Take over
• Top Management
PHASE – II
PHASE – III
• SWOT Analysis
2
COMPANY PROFILE
• The company offers printing and writing paper for use in printing,
publishing, greeting cards, ledger books, bonds, certificates, cheque
leaves, coating, file boards, picture posters, book covers, soap
wrappers/stiffner boards, wedding cards, notebooks, computer
stationery, and stationery products.
• It also exports its products to Africa, the Asia Pacific, Europe, and
the Middle East.
3
PROMOTORS
4
VISION
MISSION
PRODUCT MIX
5
• WCPM's business segments include Paper and Paper Board, Optic
Fibre Cables and Wind Mills.
MERGERS/ALLIANCES
6
• The Andhra Pradesh Paper Mill Ltd.(APPM) located at
Rajahmundry in Andhra Pradesh, was promoted by the Company
by taking over the Andhra Paper Mills owned by Government of
Andhra Pradesh in 1964.
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TOP MANAGEMENT
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LOCATION AND TOUCH POINTS
Location:
TOUCHPOINTS:
9
PHASE – II
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CURRENT OBJECTIVE:-
CURRENT GOALS:-
The current goals of the company are, the replacement of existing Pulp Mill with new
fibre line, a new paper machine for writing/printing grade papers, installation of
additional equipments in Chemical Recovery and utility section.
The Company has also implemented Clonal Technology to achieve the following:
Clonal plantation
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S.NO Key Financial Ratios
of west coast ------------------- in Rs. Cr. -------------------
Paper Mills
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
INTERPRETATION OF RATIOS
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1. Operating margin (%):-
Operating Cost
Operating margin = -------------------- *100
Net Sales
Gross profit
Gross Profit margin (%) = -------------------- *100
Net Sales
Net Profit
Net Profit margin (%) = -------------------- *100
Net Sales
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PAT – preference dividend
Earning per share = -------------------------------------- * 100
Number of Equity shares
Net profit
Return on net worth (%) = --------------------------------------
Shareholders investments
• The earnings not paid to investors are left for investment to provide
for future earnings growth. The companys Investors seeking high
current income and limited capital growth prefer with high
Dividend payout ratio.
• This shows that company’s earning per share is high.
• West coast paper mills has well performed with the high investment
in acquisitions and alliances in recent year.
• As far as concern to high investment of the company is to get
profit .
8. Depreciation:-
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• Allocation of the cost of tangible assets to periods in which the
assets are used.
• Depreciation is the decrease in the economic value of the capital
stock of a firm, nation or other entity, either through physical
depreciation, changes in the demand for the services.
• High investment in the asset gives marginal profit.
• It increased last year.
9. PBIT
• Profit before interest and taxes (PBIT) or operating income is a
investment formula to measure the corporation's profitability by
subtracting operating expenses from revenue excluding tax and
interest.
10. PBT
• A profitability measure that looks at a company's profits before the
company has to pay corporate income tax.
11. PAT
• It the net profit earned by the company after deducting all expenses
like interest, depreciation and tax. It can be fully retained by a
company to be used in the business.
• Net profit is the money left over after paying all the expenses of an
endeavor. It also includes other income like dividend, interest on
loan.
STAKEHOLDERS
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Number of shares
FII's = 3363722
Others = 227797
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SWOT ANALYSIS
STRENGTHS
Finance
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1. Strong Financial condition:-
• Owners capital = 32481383
• Number of Share holders =
• Foreign and Institutional Investments = 5403982
2. West Coast Paper Mills has announced that Credit Analysis &
Research (CARE) has assigned 'PR 1+' rating for company's
proposed commercial paper issue aggregating Rs 25 crore.
3. The Company has acquired 33.85% equity of Rama Newsprint &
Papers Ltd (RNPL) Barbodhan (Gujarat) from ICICI Bank Ltd and
ICICI Equity fund for Rs.39.38 crores in September 2003.
4. Cost of pulp per tonne reduced.
5. The company has acquired the equity of APPM inorder to increase
their capacity.
6. The Company also has an excellent track record in timely
repayment of loans/lease rentals to financial institutions/leasing
companies and maintained the same even during recession period to
which this industry has been subjected many a time.
Marketing
7. Strong entry barriers.
8. The company has many first to add to its credentials. It was first in
Asia to install twin-wire Papriformer paper machine; first to have
well equipped research centre attached with a paper mill; and first
in India to establish the use of sulphuric acid as a protective agent
in conventional bleaching, amongst others.
9. The company exports its products to Malaysia, Egypt, Middle East,
Kenya, Indonesia, Fiji, Mauritius and Greece, amongst others.
10.Strong branding as a multi-size and quality specialist
11. Favorable demand & supply situation will keep the margins intact.
12. Has been expanding capacities on a regular basis to drive growth.
13. With a readership base of over 250 million readers, India is the
second largest print market in the world.
Production
14.Cheap factors of Production.
15.The Company commenced commercial production over five
decades ago with an initial capacity of 18,000 TPA, which
was increased over the period by way of regular expansion/
modernisation programmes to 1,80,000 TPA. The latest expansion
programme commenced from July 2007 and has increased the
plant’s paper manufacturing capacity from 1, 80,000 TPA to 3,
20,000 TPA.
16.The production capacity has increased to 3, 20,000 TPA.
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17. In order to meet power requirement the company has set up 4
turbines with capacity totalling to 40.30 MW, 3 multi-fuel based
power plants of 11.84 MW – aggregate captive power generating
capacity being 52.14 MW.
18.Among the first movers in raw material cultivating initiatives
19.The production capacity has been increased to 1,19,750 TPA after
successful implementation of modernization/expansion programme
in 1996-97 – diversifying into new product – duplex board.
20.The Company has an impressive track record of production and
productivity for which various Awards have been conferred on it by
the National Productivity Council [Government of India] and other
organizations.
21. Reduction in consumption of chemicals.
22.A unit of West Coast Paper Mills Ltd is a leading manufacturer of
Telecom Cables in India having its state of the art manufacturing
facility in a Hi-Tech Electronics zone at Mysore (about 140 Km
from Bangalore) in South India.
23. Modern pulping plant and technology will result in raw material
efficiencies:
• Increase in unbleached pulp yield.
• Decrease in shrinkage loss.
24.Decrease in raw material requirement by 10% as bleach pulp yield
will increase.
Human Resources
25.Five decades of proven leadership.
26.Qualified management team
27.Creating safe and comfortable work environment to prevent
personal injury, danger to life, all types of resource losses and
damage of property.
28.The Company employed 2620 people as on 31.03.2010 as against
2551 people as on 31.03.2009.
29. West Coast Paper Mills, over years, has worked closely with the
farmer communities and demonstrated to them how scientific
farming methods can change fortunes for them.
30. Our organisation has a very low attrition rate and a stable senior
management team, reflecting stability and dedication. The
organisational team reflects a synergy of experience and youth in
the Company.
31. The Company enjoys Star Trading status that provides it with
additional incentives in its overseas trade. The Company has a
network of 89 dealers spanning 38 cities in 15 states.
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32. The Company’s paper mill enjoys an optimal location with
consistent availability of power and water and its proximity to the
major paper markets as well as raw material hubs.
Technology
33.The Company’s existing pulping plant has been replaced with a
completely, modernised 725 tonnes per day Elemental Chlorine Free
(ECF) fibres line.
34.Rich natural resource base in India.
35.The Company has 4 coal fired FBC Boilers.
36.Strong pulpwood procurement systems
37.Large tracks of Wasteland in India.
38.Changing focus from a forest based industry to a farm based
industry through technology-led farming initiatives.
39.Self sufficient on power
40.Technology at par with the global majors
41. Continuous innovation and quality control
42.Power plant comprising boilers and turbine to meet additional
requirement of steam and power.
43.Presence in copier paper, which is a high growth segment enjoys
dominance in the MICR cheque paper segment.
44.Causticizing section comprising liquor clarification equipments,
mud washing and thickening etc.
45. Developed better CSR initiative.
46.Stabilized fly-ash dumps through biological means, developed
better drainage system, supported educational institutions (including
pulp and paper technology courses), Commissioned educational
facilities for needy children and organized various social awareness
programs.
47.Consumption of utilities like water, steam & electrical energy
reduced.
48. Improvement in operating margin.
49.Superior white colour pulp improves the overall quality of the
paper.
50.By adopting advanced technology, the Company is geared to play
its role in curbing pollution and help in adapting to climate change.
51.Moving towards fully integrated operations through backward
integration.
52.With the help of the backward farming initiatives, the Company has
taken active steps to achieve the prestigious Forest Stewardship
Council (FSC) certification – one of the world’s most widely
recognised forest management standards and world’s most widely
recognised forest certification programme. Products carrying the FSC
label are independently certified to assure consumers that they come
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from forests that are managed to meet the social, economic and
ecological needs of present and future generations. This certification
will further promote growth and will be an added advantage to the
Company’s branding efforts in the copier segment.
53.Corporate Social Responsibility is interwoven into the core
business activities of the Company which aims to usher inclusive
development through various initiatives in education, health, and
environment and promote overall development in and around the
Dandeli region of Karnataka.
Infrastructure
WEAKNESSES
Finance
1. Capital intensive industry
2. Long gestation period
3. Depreciation of Indian Rupee against the US Dollar could
negatively impact debt servicing of the Company.
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4. Exchange rate difference coupled with increase in the wage bill on
account of steep hike in the Variable Dearness Allowance.
5. The backdrop of global and national economic slowdown, rising
naturally.
6. Prone to global raw material price fluctuations
Marketing
7. The persistent increase in cost of raw materials, chemicals, coal etc.
8. A fragmented industry
9. The fragmented nature of the industry and several small and mid-
sized manufacturing units has resulted in steep competition across
both the private and public sector.
10.
Production
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27.Less growth in the level of Business activity.
OPPORTUNITIES
Finance
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13. India is the fastest growing market for paper globally and it
presents an exciting scenario as paper consumption is poised for a
big leap forward in sync with the growth drivers.
14. Considering growing demand for band width in telecom net work,
the Company is focusing on high fibre count Optical Fibre cable.
15. Backed by demand from the service sectors, the copier paper
market is expected to grow at 14% over the next few years.
16. India’s large and growing domestic market with increasing
purchasing power and consumerism, are strong growth drivers for
the paper industry.
17. Tremendous growth potential in copier business segment through
services sector.
18.International grade quality
19. The sustenance of strong demand for paper in India
20. Presence across all the paper grades, to result in one stop shop.
21. Post completion of expansion, the Company will be able to offer a
superior quality and command a price premium in the market.
22.The dynamics of the market have also shifted from a price led
realisation to a cost efficiency based model.
23. Strong entry barrier due to the capital-intensive nature of the
industry.
24. Increase in higher export growth and demand for high quality
packaging.
25. The increases in the demand for Optical Fibre Cable will be driven
by the use of Cable TV, roll out of Broadband Networks.
26. Strengthen existing markets in Thailand/Laos, Vietnam and
European markets.
27. Enhancing already existing business relationships with Norway.
28.Redesigning Micro Duct Cables for entering the European markets.
29.Efforts are being made to start business in South Africa.
30. West Coast Paper Mills plans to undertake various strategic
initiatives to widen its product portfolio as well as global presence.
Production
31. Internationally, the focus has been to go in for elemental chlorine
free bleaching to achieve:
• Recycling from bleach plant filtrates
• Reduction in discharge of pollutants
• Improved quality of pulp
32. The manufacturing facilities of West Coast Paper Mill spread
across 240 acres are located at Dandeli in Karnataka is in close
proximity to the main raw material sourcing areas.
33. Inter-connection of mobile networks using Optical Fibre Cable
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34. The use of OFC for laying/expanding national long distance
networks.
35. Telecom players providing value-added services (voice-to-data-to-
video) requiring high quality network and higher bandwidth. This
would require replacement of traditional copper network with fibre
cables and would further increase the demand of optical fibre cable.
36. Company initiated the production of pulp sheet that reduced the
consumption of the costly hardwood pulp.
37. The production facility was utilized for manufacture of Optical
Fibre Cables partially leading to higher sales and improved market
share.
Human Resource
38.Pioneering introduction of innovative employment-oriented
courses, the contribution of DES to the society and the nation at
large has been very significant in terms of facilitating the creation
of trained and skilled manpower to Paper and Chemical Industries,
IT-enabled fields, teaching and research areas.
39. The Company has the required infrastructure and qualified
manpower to make substantial presence in optical fibre cable
segment.
Technology
40. With changing scenario, it is expected that existing companies will
utilize idle time though may face challenges in rebuilding supply
chain components.
41. The opportunities in providing triple play services (voice data &
video) requiring higher bandwidth and e-governance projects are
driving the demand for optical fibre cables
42. Increasing use of photocopiers and printers.
43. The Company has an adequate system of internal controls to
safeguard and protect from loss, unauthorized use or disposition of
its assets.
44.The Company has implemented a state-of-the-art ERP system that
ensures proper management, controls, transparency and promotes
seamless co-ordination between the Company and its units.
45. Use of back water from various process sources in identified
process areas to conserve fresh water in Pulp Mill, Duplex Board,
Stock Preparation and Chemical Recovery.
46. Introduction of Polymer along with PAC in water treatment
resulted in better water quality and Cost savings.
47. Introduction of improved drainage aids on the duplex board
machine leading to improved productivity, reduced steam
consumption which in turn reflects in the cost savings.
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48. Improved machine runnability leading to higher production levels,
better quality of the end product.
49. The company has many first to add to its credentials. It was first in
Asia to install twin-wire Papriformer paper machine; first to have
well equipped research centre attached with a paper mill; and first
in India to establish the use of sulphuric acid as a protective agent
in conventional bleaching, amongst others.
50. Modification of identified process loop to bypass pumps and
agitators for power saving in Pulp Mill, Stock Preparation and
Chemical Recovery.
Others
51. A strong emphasis on literacy.
52.Thrust on education
53. Modernisation plans by major paper mills are completed or likely
to be completed in near future.
54. Factors like increasing literacy, education thrust, growth in the
service sectors, increase in the advertising spending & commercial
spending will provide a positive demand thrust for printing &
writing paper.
55. Demand potential for the OFC segment is strong as teledensity
continues to grow rapidly across the country.
56. With the increased manufacturing capacity, new international grade
copier paper manufactured in the new facilities, excellent
dealership networks, the Company is confident making further
impressive inroads into the copier paper segment. The Company is
confident of better operating margin with the modernisation of
manufacturing processes.
57. The Strategy of Vertical Integration used by the company.
58. Can have differentiation by growing more into Agro products.
59. Foreign publishers today look at India as an important destination
for their printing solutions.
60. The growth in service sector fuels the demand for paper.
Threats
Finance
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4. Stringent environmental laws as per CREP guidelines which
requires the paper mills in the industry to upgrade their facilities
5. Foreign exchange currency fluctuations impact the imported raw
material prices.
6. Increase in the cost of Raw material and threat of their availability.
7. High power requirement with the expansion.
8. Lack of High skilled manpower.
9. Decrease in demand of Paper.
10.slow growth in literacy rate
11.Use of upcoming Technologies
12.Increase in competitors for the use of Optical Fibre Cables.
13.Frequent changes in technology.
14. The fragmented nature of the industry and several small and mid-
sized manufacturing units has resulted in steep competition across
both the private and public sector. This has resulted in non-
remunerative price.
15. Emerging new technologies like CDMA based WLL also to some
extent is outpacing conventional cable base business.
16.Electronic media may be a possible substitute to the use of paper.
17.The growing global concerns arising out of the impact of crude
prices along with increased inflation on domestic front may stifle
the robust GDP growth rate of the Indian economy and in turn slow
down the growth of the paper industry. However, long term
fundamentals are intact.
18. Delay in completion of project would lead to escalated cost Higher
dependence on external factors for raw material requirements.
19. The export opportunity for Europe and United States of America is
decreasing due to higher growth in Asian paper production.
20. The resultant slowdown in demand coupled with the significant
hike in oil prices has lead to distinct inflationary pressures in the
economy.
21. Raw material procurement is one of the biggest challenges for the
paper industry. With the Government policy forbidding companies
from utilising barren land for plantation and pulp production, the
industry depends largely on small plantations owned and cultivated
by the farmers. This results in a risk of procuring required raw
materials timely and at competitive costs.
22. Threat of an oversupply, resulting in lower margins and increased
costs for the paper companies.
23. A decline in paper realisations could severely dent profitability and
growth.
24. Lower demand from private telecom operators.
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25. Unavailability of pulpwood and key raw material could severely
hamper production.
26. Non compliance with environment protection policies or related
issues could dent operation and can get work to a complete
standstill.
27.Shortage of Raw materials.
28. Obsolescence of Technology.
29.High basic input costs.
30.Inability to fully automate lowering efficiencies.
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PHASE III
The BCG matrix measure market attractiveness by market growth rate and
it assesses the firm ability to compete by, its relative market share. The
BCG matrix assumes the causal relationship between market share and
profitability.
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West Coast Paper Mills Ltd. (WCPM) operates an integrated pulp
and paper mill in India. It also has interests in telecom cables and
power sector. WCPM’s business segments include Paper and Paper
Board, Optic Fibre Cables and Wind Mills.
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given an opportunity to the company to go for furthur
expantion.
Dogs – A business unit that has a small market share in a mature
industry. Unless a dog has some other strategic purpose, it should
be liquidated if there is little prospect for it to gain market share.
– The premium brands offered by the company having small
market share comes under the dogs.
Question Mark – A business unit that has a small market share in a
high growth industry. These business units require resources to
grow market share, but whether they will succeed and become stars
is unknown.
– The company has also owned a land which can be a question
mark for them.
Strategies that can be opted by the company
– It can export its raw materials.
– It can grow in Agro business.
– It can improve more in Telecom sector.
With changing technology now a days the company should go for
Differentiation strategy as they can grow in telecom cable division.
Suppliers
power
Substitutes Consumers
Rivalry
power power
New
Entrants
Suppliers Power
– Impact of inputs on cost or differentiation.
– Cost relative to total purchases in Industry.
Consumers Power
– Buyer Information
– Price Sensitivity
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– Product differentiation
– Substitutes available
Substitutes
– Switching cost
– Buyers inclination towards substitutes
New Entrants
– Access to Inputs
– Switching costs
Rivalry
– Industry Growth
– Diversity of rivals
– Product differentiation
BENCHMARKING
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• The company has its own farm and power generation.
• The expansion plan has given an opportunity to the company to
increase its production.
REFERENCES
www.moneycontrol.com
www.indiainfoline.com
www.wikipedia.com
www.economictimes.com
www.westcoastpaper.com
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