Business Strategy - Richardson Hindustan Limited


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  • Very nice presentation. I have worked with RHL in 1983 to 1988 and it was a most admirable company of that time. I have seen the turnaround of this company by Mr. Gurusharan Dass, the magician. That time Mr. Bharat Patel, Jayant Kapoor, Ravi Chaturvedi and Prakash Thakkar (Now Late) were the best managers I have ever seen. For me this was the fantastic and unforgettable experience I have ever enjoyed. I still have the price list of Vicks products of 1983 singed by Mr. Jayant Kapoor.
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Business Strategy - Richardson Hindustan Limited

  1. 1. Richardson Hindustan Limited- Subsidiary of RVI<br />SP JAIN NETWORK OF CASE STUDIES : TALK SHOW<br />Hosts- Nirupama & Stanlin<br />
  2. 2. Vicks Commercial<br />
  3. 3. Parent and its child<br />RVI<br />RHL<br />Worldwide marketer whose product line is traced back to 1905.<br />Company’s strategy – meeting distinct customer needs.<br />Overseas market sales growing faster than domestic.<br />One of the 30 subsidiaries founded in 1964.<br />By 1965, 45% equity with Indians and by 1983, a record sales of $23 million.<br />
  4. 4. Company in trouble – 1981<br />Strategies to turnaround:<br />Increase profitability<br />New opportunities for <br />future growth<br />Labour Situation <br />Managing People Strategy<br />Gurucharan Das – Contribution to RHL<br />Think Global<br />Act Local<br />???<br />
  5. 5. Managing People Strategy<br />
  6. 6. Sources of Competitive advantage<br />
  7. 7. PESTLE Analysis for external factors<br />
  8. 8. PESTLE Analysis for external factors<br />
  9. 9. RHL constituencies comprised 4 stakeholders.<br />RHL’s role in maintaining stakeholders value<br />
  10. 10. Complex and tough tax structure<br />RHL paid effective income tax at rate of 76%.<br />Company’s objective of reducing the tax burden by following means:<br />Directing business investments for social and economic development<br />Manufacturing products which excused RHL from the excise tax payment.<br />Efforts directed to convince the government to eliminate advertising disallowance.<br />Indian Government laws <br />
  11. 11. Government regulations led to change in RHL’s shareholders structure.<br />RHL came under FERA as a result of more than 40% RVI ownership.<br />Outgrowing industrial licenses issued by the Indian government.<br />Additional grant requests for increasing production capacity rejected<br />Shareholders structure<br />
  12. 12. Employees- Valuable assets<br />RHL’s success attributed to the development of the employees.<br />Creation of an environment which fosters innovativeness and excellence.<br />Investing in the employees to help them grow.<br />Adoption of a consultative and participative management style.<br />
  13. 13. Financial objectives within 5 years<br /><ul><li>Double sales revenue
  14. 14. Triple profit
  15. 15. Decrease tax rate</li></ul>Medium for growth<br /><ul><li>12 new products & 1 re-introduction
  16. 16. Ayurverdics
  17. 17. Dextromethorpan – Hydrobromide factory</li></ul>Optimistic or Realistic plan?<br />Strategic Plan<br />
  18. 18. Ansoff Matrix<br />12<br />
  19. 19. Financial Projection<br />Sales CAGR 15%<br />EBT Growth 9.2%<br />Tax decrease approx. 48%<br />Triple profit!!<br />
  20. 20. Current tax rate of almost 76%<br />Target to improve PAT<br />PAT improved by decreasing tax rate<br />Sales and earning growth means nothing without tax rate reduction<br />PAT Improvement<br />
  21. 21. Investment on DXM factory<br />Duty drawback on imported materials<br />Cash incentives on export<br />No income tax for seven years<br />Payback within 2 years<br />Building satellite plant<br />Tax holiday for 8 – 10 years<br />Tax cut on almost 45% of the profit<br />Cut from excise tax<br />Tax Reduction<br />
  22. 22. Investing in the manufacturing plant for development of hydro bromide.<br />Launch of new products.<br />Building on the R&D - ayurvedics as the base for new products.<br />Building satellite plant to decrease tax rate.<br />Strategic alliance with major players – strong in manufacturing division.<br />Recommendations<br />
  23. 23. Thank You !!!!!<br />Stanlin<br />Nirupama<br />Erick<br />Pratik.B<br />Saurabh<br />