PIONEER INSTITUTE OF PROFESSIONAL

STUDIES, INDORE

DILIGENCE & EXCELLENCE

SWOTANALYSIS

ONWEST COAST PAPER

MILLS

PRESENTED BY :- ANKITA SINGHAI

1

CONTENTSPHASE - I

Company Profile

Promoters

Vision and Mission

Product Mix

Mergers/Alliances/Take over

Top Management

Location of Manufacturing unit and Touch points

PHASE – II

Current Goals and Objectives

Financial Aspects of the Company

Stakeholders of the Company

PHASE – III

SWOT Analysis

2

COMPANY PROFILE

The West Coast Paper Mills Limited engages in the manufacture and sale of paper and paperboard products in India.

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 provides coated duplex boards that are used in pharmaceuticals, food packaging, garments, liquor cartons, agarbati, match boxes, garments, hosiery, engineering parts, personal care products, book covers, shoes, corrugation, and garment inserts packaging applications.

In addition, the company provides optical fiber cables; and engages in the thermal power generation with a capacity of 70 MW.

It also exports its products to Africa, the Asia Pacific, Europe, and the Middle East.

The company was founded in 1955 and is based in Bengaluru, India.

Flagship company of Kolkata based – S K Bangur group contributes to 60% of groups revenue.

3

PROMOTORS

S.No Name Designation

1 Mr.S K Bangur Chairman and Managing director

2 Lt. Gen.Utpal Bhattacharyya Director

3 Mr.Saurabh Bangur Director

4 Mr.P N Kapadia Director

5 Mr.C K Somany Director

6 Mr.Sanjay Kothari Director

7 Mr.Krishna Kumar Karwa Director

8 Mr.R N Mody Director

9 Mrs.Shashi Devi Bangur Director

10 Mr.K L Chandak Executive Director

VISION AND MISSION

4

VISION

To intensify the development activities towards fibre resource management, quality improvement, up gradation of technology to achieve energy efficiency, to be environmental friendly and ergonomic coupled with effective utilization of human resources.

MISSION

To excel in servicing demands of paper and paper products worldwide.

PRODUCT MIX

5

WCPM's business segments include Paper and Paper Board, Optic Fibre Cables and Wind Mills.

Its paper and paperboard products include writing and printing

paper, and industrial paper.

Writing and printing paper products include uncoated paper (maplitho paper, MG poster paper and board, and cream wove paper), surface size paper (copier paper and surface-sized paper with additives), and specialty paper (magnetic ink character recognition (MICR) check paper, parchment paper and security paper).

Under the industrial paper category, the Company offers packaging paper, including coated duplex board.

WCPM manufacturers the following products also in premium range:

Sud. MICR Cheque Paper

SS Maplitho Classic

Ultrashine Maplitho

SS Pulp Board UHB

Legend Copier

B2B Copier

Budget Copier

Parchment

 

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.

The Company provided technical assistance to the APPM for

increasing its capacity from 21,000 MT to 71,000 MT per annum.

The installed capacity of APPM has since gone up to 2,41,000 MT

per annum

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. The present holding is 36.32%. The capacity of RNPL is 1,32,000 MT p.a. The acquisition was completed in January 2004.

7

TOP MANAGEMENT

CEO = Mr. S.K.Bangur

CFO = Mr. K.L.Chandak

Managing Director = Mr.S.K.Bangur

8

LOCATION AND TOUCH POINTS

The Company - promoted by Shree Digvijay Cement Company Limited, Sikka, Gujarat State in 1955 - is located at Dandeli in Karnataka. Location:

The Mill is located on leasehold land of 240 acres. Dandeli town, is connected with Broad gauge railway line on Miraj-Bangalore section at Alnavar Junction. The Company has railway siding up to the factory site. The Pune-Bangalore highway is about 35 KM from factory site. The company also has lease of additional 80 acres of land for Effluent Treatment Plant, Railway Siding etc.

TOUCHPOINTS:

The Company is dependent on private cultivators and procures the same from within the state as well as from Andhra Pradesh, Tamilnadu & Pondicherry.The company exports its products to Malaysia, Egypt, Middle East, Kenya, Indonesia, Fiji, Mauritius and Greece, amongst others.

9

PHASE – II

CURRENT GOALS AND OBJECTIVES

10

CURRENT OBJECTIVE:-

The Company, with an objective to intensify the development activities throughan ambitious expansion cum modernisation plan for increased production facility in their existing mills.

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:

* Supply genetically high quality planting stock.

* Improve land productivity and yields from pulpwood plantation

* Provide fuel wood etc. for local use

* Improve the economic conditions of the growers through

Clonal plantation

FINANCIAL ASPECTS OF WEST COAST PAPER MILLS

11

S.NO Key Financial Ratios of west coast Paper Mills

------------------- in Rs. Cr. -------------------

Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

1 Operating margin (%) 13.90% 18.28% 18.65% 19.52% 17.83%

2 Gross profit margin (%) 13.63%

18.15%

15.15%

16.31% 14.03%

3 Net profit margin (%) 5.97% 11.84% 13.67% 14.46% 8.67%

4 EPS (Rs) 35.82 74.34 14.28 14.99 7.84

5 Return on net worth (%)

17.66% 28.63% 20.51% 18.42% 9.16%

6 Dividend payout ratio 41.87% 20.17% 21% 13.34% 25.51%

7 PBDIT 86.01 108.82 124.92 127.89 119.01

8 Depreciation 36.95 20.98 20.43 19.90 23.77

9 PBIT 49.06 87.84 104.49 107.99 95.24

10 PBT 32.67 74.35 94.27 100.45 81.70

11 PAT 32.03 66.46 81.90 90.54 54.70

12 Net profit 32.03 66.46 81.90 90.54 54.70

INTERPRETATION OF RATIOS

12

1. Operating margin (%):- Operating Cost Operating margin = -------------------- *100 Net Sales

Operating cost = Cost of goods sold + Operating Expenses

As it is shown in ratios that the operating margin (%) is being increased from 06 to 09 and than decreased in 2010. This decrease in operating margin is due to decrease in operating expenses by the company.

2. Gross Profit margin (%):-

Gross profit Gross Profit margin (%) = -------------------- *100 Net Sales

Gross profit ratio reveals profit earning capacity of business with reference to its sales.

Increase in gross profit ratio is due to reduction in cost of production or direct expenses or sales done at reasonable good price.

The gross profit margin has been increased in 07 and 09 and again it decreased in 2010, this decrement is due to decrease in Net Sales that year.

3. Net Profit margin (%):-

Net Profit Net Profit margin (%) = -------------------- *100 Net Sales

Its shows operational efficiency of business. Decrease in the ratio of last year i.e. 2010 indicates managerial

inefficiency & excessive selling & distribution expenses. It is decreased due to decrease in net sales of the company.

4. Earning per share :-

13

PAT – preference dividend Earning per share = -------------------------------------- * 100 Number of Equity shares

Since EPS has been decreasing from 07 and this is because of decrease in number of equity shares.

5. Return on net worth (%):-

Net profit Return on net worth (%) = -------------------------------------- Shareholders investments

Return on net worth is the net income which company is able to earn as a percent of stockholders' investment.

Return on net worth is decreasing due to decrease in Shareholders equity.

6. Dividend payout ratio:-

Dividend per share Dividend payout ratio = ---------------------------- Earning per share

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.

7. Profit Before Depreciation Interest and Tax (PBDIT):-

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:-

14

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.

12. Net Profit/PAT:-

Net Profit = (Gross profit + Operating & non-operating income - operating &non-operating expenses)

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

15

Number of shares

Indian Promoters = 32481383

Banks Fin. Inst. and Insurance = 4634305

FII's = 3363722

Private Corporate Bodies = 6021709

NRI's/OCB's/Foreign Others = 1017526

Others = 227797

General public = 15000866

16

SWOT ANALYSIS

STRENGTHS

Finance

17

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.

Marketing7. 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 specialist11.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.

Production14.Cheap factors of Production.15.The Company commenced commercial production over five

decades ago with an initial capacity of 18,000 TPA, whichwas 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.

18

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 initiatives19.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 team27.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.

19

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.

Technology33.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 systems37.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 power40.Technology at par with the global majors41. Continuous innovation and quality control42.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

20

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

54.Move towards developing fully integrated state-of-the-art infrastructure results in better efficiencies.55.Additional equipment for effluent treatment plant, environmental protection and to improve basic infrastructure.

R&D 56.The company has set up a separate R&D department with the modern research centre.57. The company has a fully equipped laboratory for quality control.

Safety58.The company has facilities for Industrial Safety.59.Comply with all applicable Occupational Health and Safety Legislations.60.The company has facilities for industrial safety, which are more than required by the law. The safety department has qualified and trained personals and is fully equipped with safety equipments.

Others61.By proactively responding to the challenges of sustainable development and raw material availability, the Company is creating value and prosperity for its stakeholders and the surrounding communities over the long term.62.They have created a knowledge-based environment, with the highest standards of work ethics and transparency.

WEAKNESSES

Finance1. Capital intensive industry2. Long gestation period3. Depreciation of Indian Rupee against the US Dollar could

negatively impact debt servicing of the Company.

21

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 industry9. 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

11.Not the largest of capacities in India in paper sector.12.Low levels of corporate plantation, thereby increasing dependency

on external farmers. These challenging circumstances make procurement one of the key contributors to their performance.

13.The J.F.T.C. plant was not operated through out this year as well as last year for want of orders. However, the facilities were partially utilised for production of Optical Fibre Cable during these years.

14.The production level is stagnant as there is no addition to the capacity on the existing paper machines.

15.Limited supply of wood as it is a different kind of agricultural commodity; the production of which cannot be increased in the short term

16.High energy costs impacting the overall cost of production.17.

Technology18.Optical cable business underperforming.19.Technology driven industry20.Water intensive manufacturing process21.Lack of adaptability or up gradation catering to new technologies

in the telecom sector. Others

22.Domestic raw material availability initiatives still at nascent stage in the industry.

23.Several environmental concerns related to degradation of forests. 24.The growth in the demand for paper in this segment depends, on

the growth in the printing industry.25.Slow growth in the level of literacy.

22

26.Less Public and Private spending on Education.27.Less growth in the level of Business activity.

OPPORTUNITIESFinance

1. Due to the fundamental strengths and strong advances in private consumption and investment in the next two years, India’s economic growth is projected at 10% in 2011-12.

2. The global paper and paperboard consumption is estimated at approximately around 402 million tonnes in 2009-10.

3. The low cost base of Indian printing industry is attracting many outsourcing projects from the foreign publishers and hence it is expected to grow at a CAGR of 15% over the next few years thereby fuelling further growth in the paper industry.

4. Revenues from newspaper publishing are expected to grow at CAGR of 9.1% over the next 5 years and are projected to reach Rs. 245.4 billion by 2013.

5. The magazine publishing segment is expected to grow at a CAGR of 8.1% over the next 5 years and is projected to reach Rs. 20.5 billion by 2013.

6. Strong economic growth forecasted7. The industry is projected to grow at a rate of 6% p.a. in case of

writing and printing varieties and 15% for packaging grades. 8. The per capita consumption is projected to reach 9 kg by 2010,

which necessitates creation of additional capacity of 1 million tonnes.

9. Increase in per-capita income.10.The proceeds from the equity issues have been utilized for

expansion-cum-modernisation programme.11.Company has plans to cover around 1 Lac acres of land under

afforestation in a period of 5 to 6 years under Company’s Plantation Scheme.

12.The Company used to adjust the foreign currency exchange rate differences on amounts borrowed for acquisition of fixed assets, to the carrying cost of fixed assets.

Marketing

23

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 quality19.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

24

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 Resource38.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.

Technology40.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.

25

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.

Others51.A strong emphasis on literacy.52.Thrust on education53.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

1. Cheap dumping of products from China2. A slowdown in the economy would have direct impact on the paper

industry3. Increasing competitive pressures from unorganised sector

26

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 rate11.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.

27

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.

28

PHASE III

STRATEGICAL ANALYSIS OF THE COMPANY

Boston Consulting Group Matrix (BCG MATRIX)

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.

29

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. 

Stars – A business unit that has a large market share in a fast growing Industry. If successful, a star will become a cash cow when its industry matures.

– With the implementation of the strategy of Expansion the company has gained much profit. With the growing market of paper board the company had planned to grow in the field of Telecom and optical fibre which can by future growth become cash cows.

Cash cow – A business unit that has a large market share in a mature, slow growing industry. They require little investment and generate cash that can be used to invest in other business units.

– Paper Industry is the growing industry in India. It has given a large market for Growth.

30

– Pulp and Paper board and Duplex board manufacturing has helped the company to gain large market share which has 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.

PORTERS FIVE FORCE MODEL

31

SubstitutesSubstitutespowerpower

NewNewEntrantsEntrants

ConsumersConsumerspowerpower

Suppliers Suppliers powerpower

RivalryRivalry

Suppliers Power – Impact of inputs on cost or differentiation.

– Cost relative to total purchases in Industry.

Consumers Power

– Buyer Information

– Price Sensitivity

– 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

The working results of the Company were marginally affected owing to prevailing sluggish paper market conditions which compelled the Company to reduce its sale prices. On the other hand, the cost, of production lies been on the Increase due to hike

32

in the rates of several inputs, viz., raw material (wood), fuel. chemicals, besides increased interest charges.

The new expansion has successfully commissioned and poised to yield the desired benefits in terms of speedier and higher production of superior quality paper, further with the paper market conditions looking up. the working results of the current year are expected to gear up.

The export of paper, paperboard and duplex board increased from 4,291 MT worth Rs. 16.20 Crores (FOB) in 2008-09 to 4,881 MT worth Rs.17.07 Crores (FOB) in 2009-10 even though realisation was at lower side. The Company exported 1,808 km of Cable worth Rs.3.78 Crores in 2009-10 compared to 2,361 km of Cable worth Rs.8.26 Crores in 2008-09.

BENCHMARKING

The company has undergone the Backward integration which has helped the company to reduce its expenses.

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

33