report

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.

2


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.

3


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

4


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

5


List of Figures

Sr. No. Figure No. Page No.

1. Figure 1 10

2. Figure 2 31

6


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.

7


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.

8


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.

9


Organisational Chart

*Figure No. 1

10


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.

11


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.

12


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

13


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.

14


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.

15


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.

16


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

17


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

18


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

19


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

20


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

21


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

22


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

23


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

24


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

25


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

26


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

27


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

28


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

29


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

30


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

31


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


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

32


Ltd Aviation, Railway, ONGC

MDR

Electronics

(Maharashtra)

USB cables, USB


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

33


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].

34


Analysis of Data.


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.

35


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.


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.

36


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.

37


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

38


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

39

report

Documents

project guide

manager project department

project period

home nilkamal

table of contents

company guide

summer project report

nilkamals manufacturing