Insta Build, Insta Growth - Case Study

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A case study on the growth plan of Everest India (P) Ltd...

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Insta Build, Insta Growth - Case Study

  1. 1. “ InstaBuild, InstaGrowth” Presented by Dr. Vijita Agarwal Ravi Dhanwariya Jaspal Singh
  2. 2. Introduction <ul><li>The case focus on the turnaround story of a company, which enjoyed over six decade of leadership in the cement roofing industry suddenly found itself at the crossroads where its future strategy not only decides for its profitability in the long run but its existence in the market. </li></ul>Company had lost its market share to its competitors and came down to the third position in term of market share. With the increasing environmentalists concerns about asbestos products, low growth rate in the industry & increasing competition due to the entry of new players and capacity ramp up contributed towards the company strategy to diversify its product portfolio and look out for new market segment.
  3. 3. Teaching Objectives <ul><li>“ It is better to invest millions to install every warning system and take precautionary steps rather than wait for the disaster to happen”. </li></ul><ul><li>The company has identified the future products and wants to obtain early mover advantage before the competitors enter into this market segment. </li></ul>The case is offering useful inputs for budding managers in term of learning the importance of product diversification. It is a study for the front line managers to understand the importance of creating new segments for products and explore new opportunities for future growth.
  4. 4. Issued Raised <ul><li>The case is addressing the following important issues :- </li></ul><ul><li>Importance of product diversification. </li></ul><ul><li>Creation of new product category and segment. </li></ul><ul><li>Identification of the potential customers. </li></ul>
  5. 5. Industry Scenario <ul><li>The Asbestos - fibre cement industry (2005-06) </li></ul><ul><li>Total Market size: 2.35 million MT/annum </li></ul><ul><li>Compound Annual Growth Rate: 17.10% last 3 years </li></ul><ul><li>Asbestos consumption: 150,000 MT/annum </li></ul><ul><li>Chrysotile Fibres Import: 110,000 MT/annum </li></ul><ul><li>Major Supplier: Canada, Brazil, Russia, Zimbabwe and Kazakhstan </li></ul><ul><li>No of Players: 17 (having 49 manufacturing plants) </li></ul><ul><li>Installed capacity: 2.50 million MT </li></ul><ul><li>Total production: 2.40 million MT/annum </li></ul><ul><li>Total Sales: 2.33 million MT/annum </li></ul><ul><li>Employment: 30,000 to 40,000 workers (skilled and semi skilled) </li></ul><ul><li>Major Usage: Automobile Industry, Industrial Manufacturing, Insulation Products, and Households. </li></ul>
  6. 6. Key Players
  7. 7. Competitor Analysis (2005-06) Notes: 1. Gross Turnover include only Asbestos Cement sales. 2. Income of wholly own subsidiary SRI RAMCO LANKA (PRIVATE) LIMITED, SRI LANKA. 3. Including interim dividend of 100%. 4. Including Interim Dividend of 40%. 63.28 9.12 0 R&D (in Lacs) 70% 4 150% 3 30% Dividend 193 614 128 Market Cap. (In Cr.) 42.69 42.15 26.26 Profit Before Tax (In Cr.) 4.99 61.18 2 0 Export (In Cr.) 254.82 208.34 213.23 1 Gross Turnover (In Cr.) 356,585 357,414 334,950 Sales (In MT) 320,694 387,970 359,288 Production (In MT) 455,000 494,000 380,000 Installed Capacity (In MT) Everest Industries Ramco Industries Visaka Industries Particular
  8. 8. Threats, Risks and Concerns <ul><li>Demand-Supply Imbalance </li></ul><ul><li>- Addition of new capacities through expansion / modernization / new projects. </li></ul><ul><li>Increase in cost of freight and raw materials like cements, fibre etc. </li></ul><ul><li>Product Substitutes </li></ul><ul><li>Steel and Galvanized Corrugated Iron sheets </li></ul><ul><li>Environmental Concerns </li></ul><ul><li>Campaign against asbestos </li></ul><ul><li>Health hazards </li></ul><ul><li>UN Policies </li></ul>
  9. 9. Issues with Asbestos <ul><li>Types of asbestos: Chrysotile (White Asbestos), Amosite (Brown Asbestos) and Crociodlite (Blue Asbestos). </li></ul><ul><li>Blue asbestos which lead to health problems was banned through out the world including in India. </li></ul><ul><li>White asbestos causes lung cancer; mesothelioma, an otherwise rare cancer of the chest lining; and fibrosis of the lung (asbestosis), a progressive disease involving scarring of lung tissues. </li></ul><ul><li>Fibre used in the West and the purpose for which it was used in the West (mixture containing about 95% blue fibre for insulation) is totally different from the chrysotile fibre 8-10% being used as a bonding material in Asbestos Cement Sheets, which is considered to be safe. </li></ul>
  10. 10. About the Company <ul><li>Eternit Everest Ltd (EEL) was set up by Turner & Neual Ltd, a Manchester based company, and the Etex Group of Belgium in 1934. </li></ul><ul><li>The UK government declared in 1983 that no company should be operational in UK, having any association with asbestos producing companies. Thus the Turner & Neual Ltd decided to divest their stakes and sold their units or manufacturing plants to Etex Group. </li></ul><ul><li>In February 2002, Associated Cement Companies Ltd (ACC) acquired the entire fifty per cent shareholding of Etex Group in the company. </li></ul><ul><li>In June 2005, name of the company changed to Everest Industries Limited. </li></ul><ul><li>In October 2005, M/s Everest Finvest India Pvt Ltd (EFL acquired about 50% stake holding in EIL from ACC. </li></ul><ul><li>M/s Everest Finvest (India) Pvt. Ltd. holds 50.09% of share capital of the company whereas 29.01% of share capital is with the public. </li></ul>
  11. 11. Product portfolio <ul><li>Roofing Solution </li></ul><ul><li>Everest Hi-tech </li></ul><ul><li>Asbestos Cement Sheets </li></ul><ul><li>Fibre cement Boards </li></ul><ul><li>E-Board </li></ul><ul><li>E-Board Classic, </li></ul><ul><li>E-board Endura </li></ul><ul><li>Prefab Solution </li></ul><ul><li>Everest InstaBuild </li></ul><ul><li>Rapicon Modules </li></ul><ul><li>Other Products </li></ul><ul><li>Acostyle (Mineral fibre acoustic ceiling tiles) </li></ul><ul><li>E-Grid (Suspended ceiling grid systems) </li></ul><ul><li>Everest Radial Exhausts </li></ul>
  12. 12. Turnaround Story <ul><li>Since its inception, the main focus of the company has been providing roofing solutions to the rural and industrial market. </li></ul>The company biggest bet in the future lies with the pre-fabricated housing solutions for rural & semi-urban households. Company has started focusing on these areas with higher realizations. Asbestos Based Products Asbestos Free Products Fibre - Based Products E-Board Compressed Board Pre – Fabricated Structure
  13. 13. InstaBuild <ul><li>Everest InstaBuild (Pre-fabricated modular structures) is a revolutionary concept of single storey and multi-storey prefab construction of temporary, semi-permanent and permanent houses. All these houses are built in Complete-knocked-down (CKD) kits and are fully dismantleble and re-erectable type. The concept is quite common in the developed countries but still a new concept for Indian housing industry. </li></ul>
  14. 14. InstaBuild – Product Range <ul><li>The products range include:- </li></ul><ul><li>- Single Bedroom Shri Lanka model houses </li></ul><ul><li>- Two Bedroom Shri Lanka model houses </li></ul><ul><li>- Forty Seats Portal Cabin School </li></ul><ul><li>- Single house with kitchen, living cum dining & toilet </li></ul><ul><li>Single Two Bedroom, Kitchen, Toilet & Verandah cottage </li></ul><ul><li>- Two Bedroom house with kitchen, living cum dining & toilet </li></ul><ul><li>Toilet Block </li></ul><ul><li>- Prefabricated Structure size 4.88 mtrs X 7.32 mtrs with Verandah </li></ul><ul><li>- Prefabricated Structure size 19.52 mtrs X 4.88 mtrs with Verandah </li></ul>
  15. 15. Superior Attributes <ul><li>Speed </li></ul><ul><li>Pre-engineered & Faster construction reduces project completion, time & cost. </li></ul><ul><li>500 sft house can be build within 24 hours by employing only 8 people. </li></ul><ul><li>Flexibility & Accessibility </li></ul><ul><li>reach any remote location with ease. </li></ul><ul><li>reconfigurable according to the changing needs </li></ul><ul><li>re-locatable </li></ul><ul><li>Economy </li></ul><ul><li>Lightweight, easy to transport in kits. </li></ul><ul><li>less construction time. </li></ul><ul><li>Requires minimal skills to erect. </li></ul><ul><li>Strength </li></ul><ul><li>Offer superior strength to weight ratio. </li></ul><ul><li>Capacity to withstand dead and live loads. </li></ul><ul><li>Durability </li></ul><ul><li>Fire-resistant & Moisture-resistant. </li></ul><ul><li>Termite-proof. </li></ul><ul><li>Earthquake-resistant. </li></ul><ul><li>Environmental Friendly </li></ul><ul><li>Constructed using environment friendly materials. </li></ul>
  16. 16. Superior Attributes <ul><li>Speed </li></ul><ul><li>Pre-engineered & Faster construction reduces project completion, time & cost. </li></ul><ul><li>500 sft house can be build within 24 hours by employing only 8 people. </li></ul><ul><li>Flexibility & Accessibility </li></ul><ul><li>reach any remote location with ease. </li></ul><ul><li>reconfigurable according to the changing needs </li></ul><ul><li>re-locatable </li></ul><ul><li>Economy </li></ul><ul><li>Lightweight, easy to transport in kits. </li></ul><ul><li>less construction time. </li></ul><ul><li>Requires minimal skills to erect. </li></ul><ul><li>Strength </li></ul><ul><li>Offer superior strength to weight ratio. </li></ul><ul><li>Capacity to withstand dead and live loads. </li></ul><ul><li>Durability </li></ul><ul><li>Fire-resistant & Moisture-resistant. </li></ul><ul><li>Termite-proof. </li></ul><ul><li>Earthquake-resistant. </li></ul><ul><li>Environmental Friendly </li></ul><ul><li>Constructed using environment friendly materials. </li></ul>
  17. 17. Superior Attributes <ul><li>Speed </li></ul><ul><li>Pre-engineered & Faster construction reduces project completion, time & cost. </li></ul><ul><li>500 sft house can be build within 24 hours by employing only 8 people. </li></ul><ul><li>Flexibility & Accessibility </li></ul><ul><li>reach any remote location with ease. </li></ul><ul><li>reconfigurable according to the changing needs </li></ul><ul><li>re-locatable </li></ul><ul><li>Economy </li></ul><ul><li>Lightweight, easy to transport in kits. </li></ul><ul><li>less construction time. </li></ul><ul><li>Requires minimal skills to erect. </li></ul><ul><li>Strength </li></ul><ul><li>Offer superior strength to weight ratio. </li></ul><ul><li>Capacity to withstand dead and live loads. </li></ul><ul><li>Durability </li></ul><ul><li>Fire-resistant & Moisture-resistant. </li></ul><ul><li>Termite-proof. </li></ul><ul><li>Earthquake-resistant. </li></ul><ul><li>Environmental Friendly </li></ul><ul><li>Constructed using environment friendly materials. </li></ul>
  18. 18. Superior Attributes <ul><li>Speed </li></ul><ul><li>Pre-engineered & Faster construction reduces project completion, time & cost. </li></ul><ul><li>500 sft house can be build within 24 hours by employing only 8 people. </li></ul><ul><li>Flexibility & Accessibility </li></ul><ul><li>reach any remote location with ease. </li></ul><ul><li>reconfigurable according to the changing needs </li></ul><ul><li>re-locatable </li></ul><ul><li>Economy </li></ul><ul><li>Lightweight, easy to transport in kits. </li></ul><ul><li>less construction time. </li></ul><ul><li>Requires minimal skills to erect. </li></ul><ul><li>Strength </li></ul><ul><li>Offer superior strength to weight ratio. </li></ul><ul><li>Capacity to withstand dead and live loads. </li></ul><ul><li>Durability </li></ul><ul><li>Fire-resistant & Moisture-resistant. </li></ul><ul><li>Termite-proof. </li></ul><ul><li>Earthquake-resistant. </li></ul><ul><li>Environmental Friendly </li></ul><ul><li>Constructed using environment friendly materials. </li></ul>
  19. 19. Superior Attributes <ul><li>Speed </li></ul><ul><li>Pre-engineered & Faster construction reduces project completion, time & cost. </li></ul><ul><li>500 sft house can be build within 24 hours by employing only 8 people. </li></ul><ul><li>Flexibility & Accessibility </li></ul><ul><li>reach any remote location with ease. </li></ul><ul><li>reconfigurable according to the changing needs </li></ul><ul><li>re-locatable </li></ul><ul><li>Economy </li></ul><ul><li>Lightweight, easy to transport in kits. </li></ul><ul><li>less construction time. </li></ul><ul><li>Requires minimal skills to erect. </li></ul><ul><li>Strength </li></ul><ul><li>Offer superior strength to weight ratio. </li></ul><ul><li>Capacity to withstand dead and live loads. </li></ul><ul><li>Durability </li></ul><ul><li>Fire-resistant & Moisture-resistant. </li></ul><ul><li>Termite-proof. </li></ul><ul><li>Earthquake-resistant. </li></ul><ul><li>Environmental Friendly </li></ul><ul><li>Constructed using environment friendly materials. </li></ul>
  20. 20. Superior Attributes <ul><li>Speed </li></ul><ul><li>Pre-engineered & Faster construction reduces project completion, time & cost. </li></ul><ul><li>500 sft house can be build within 24 hours by employing only 8 people. </li></ul><ul><li>Flexibility & Accessibility </li></ul><ul><li>reach any remote location with ease. </li></ul><ul><li>reconfigurable according to the changing needs </li></ul><ul><li>re-locatable </li></ul><ul><li>Economy </li></ul><ul><li>Lightweight, easy to transport in kits. </li></ul><ul><li>less construction time. </li></ul><ul><li>Requires minimal skills to erect. </li></ul><ul><li>Strength </li></ul><ul><li>Offer superior strength to weight ratio. </li></ul><ul><li>Capacity to withstand dead and live loads. </li></ul><ul><li>Durability </li></ul><ul><li>Fire-resistant & Moisture-resistant. </li></ul><ul><li>Termite-proof. </li></ul><ul><li>Earthquake-resistant. </li></ul><ul><li>Environmental Friendly </li></ul><ul><li>Constructed using environment friendly materials. </li></ul>
  21. 21. Marketing Strategy <ul><li>Company is initially offering their services primarily to public institutions. Their major clients of the prefabricated structures are defense, paramilitary forces, and state governments. </li></ul><ul><li>The company took up tenders with State governments for building sanitation structures in Tamil Nadu, primary health services in Chattisgarh, primary schools in Chattisgarh and Delhi. </li></ul><ul><li>Company don’t offer completed solutions but the housing kits are provided with a detail instruction manual. They have linkages with number of architects, interior designers and contractors for assistance. </li></ul>
  22. 22. Marketing Strategy <ul><li>Company have a trading division which supplies InstaBuild products and it has plans to enter into retail sales in near future and has decided to invest hugely for the promotion of InstaBuild. </li></ul><ul><li>Company has targeted the people living just above the poverty line and below the middle class status, besides the institutional buyers, as projected customers of InstaBuild . </li></ul><ul><li>Company has also planned to enter into agreement with different agencies to provide housing solution in case of disaster like Tsunami, earth quakes etc and has planned to tie up with some banking institutions. </li></ul>
  23. 23. Ramp up Strategy <ul><li>Technology transfer agreement with </li></ul><ul><ul><li>M/s. Dansk Eternit of Denmark </li></ul></ul><ul><ul><li>M/s. Brasilit SA, Brazil </li></ul></ul><ul><li>An Agreement with an Australian company for technology transfer to launch light gauge steel frame in line of InstaBuild house. </li></ul><ul><li>Installed 5th Vat on SM2 line at Maharashtra facility. </li></ul><ul><li>Research & Development expenditure is Rs 63.28 Lacs i.e. 0.25% of turnover. </li></ul>
  24. 24. Future Outlook <ul><li>National Housing Board has initiated a project of offering Rs. 1 Lacs house which will be build around the industrial towns and clusters. </li></ul><ul><li>Other sectors such as adventure tourism and resorts can boost the demand. </li></ul><ul><li>As per the Tenth Plan of India (2002-07), the housing units demand will be close to 24 million in rural area. </li></ul>
  25. 25. Thank You

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