Pidilite Industries – Company Analysis Adhesive & Sealant Industry Adhesives and sealants is a 20-million-tonne global industry with a sales v alue of over $30 billion. Of this, the sealant industry contributes contributes only $5 billion. Major International Players: Henkel, Avery Dennison, H.B. Fuller, 3M, Bostik-Findley, Bo stik-Findley, National Starch, Sika and UPM-Kymmene. All of these companies enjoy sales of above $1billion. Major Indian Players: Pidilite, 3M India, Huntsman, National Starch, Bostik Findley, Sika, Industrial Adhesives, Anabond, Seagull Industries, Metlok and others. The Asia-Pacific region led in dollars in 2009, with its consumption of just over $7 billion representing 34% of the global total. China was an outlet for nearly half of the region‟s dollar s and is forecast to expand at a 9% annual rate through 2014. Japan was one-fifth of the region‟s value and is a mature market. ma rket. India represented only 5% of the Asia-Pacific dollars but is the fastest growing country for adhesives. Europe consumed 32% of the global adhesive dollars in 2009, with 93% in European Union member countries. North America took 27% of the 2009 adhesive dollars. South America took 5% of the global adhesive dollars in 2009, with 57% coming from Brazil.
SWOT Analysis 1)Strengths: a) The industry has endured three trying tr ying years and the future looks bright, although althou gh recovery will be protracted. b) Globalization has led to expansion of markets. c) Construction, automobile & many other adhesive industry‟s end-markets shown good growth before recession. 2) Weaknesses: a) Slow demand. b)End users are also facing similar challenges as them. c) High unemployment coupled with stricter lending practices signal a long road to recovery. recovery. nd d) Recession in Europe which is 2 largest market for adhesive industry has still not recovered 3) Opportunities: a) Investment in innovation. Historically, we‟ve learned that this pays the best return at the turning point of a recession. b) Structural examination and/or change the cost structure of the business through complexity management. c) Strategic assessment of the health and prospects p rospects of key markets and segments, as well as the main customers they serve or intend to serve. In addition, identify risks and scenarios and develop mitigating contingency plans.
d) Adhesive usage in many developing countries generally starts with the use of natural adhesives, such as animal glue, casein, etc. Tapping these markets can lead to huge growth. e) Often, the first step for these developing nations is to use a less-costly synthetic adhesive since speed is not as major a factor due to their lower labor costs. This is expected to gradually change to higher adhesive optimization as labor costs rise and a higher growth of middle class occurs in these countries. 4)Threats: a) Certain raw materials, like isoprene and synthetic rubber, experienced shortages in the years leading up to the recession, which were mitigated due to the sharp retraction. b) Depending on the recovery rate, as well as the significant shuttering of capacity for highfixed-cost assets, we could experience shortages again in the near future. c) Fluctuating Crude oil prices.
PEST Analysis 1) Political Factors: a) Globalization has led to shrinking the boundaries of the world. b) Political unrest in many places in the world can be harmful for profit margins. c) Global & Local Terrorism. d) Introduction of new trading blocs. 2) Economic Factors: a) Challenging economic condition across the globe. b) Economic laws in various countries. 3) Social Factors: a) Employment rate in the country b) Awareness in Public about the products & industry. 4) Technological Factors: a) Developments in construction, automobile industry. b) Due to improvements in communication, creating awareness has become very easy. Pricing of consumer products by pidilite
Consumer Products Pidilite: a)Fevicol: 100g bottle for Rs.30/- (MRP) b)FeviKwik: Small Tube for Rs. 5/-(MRP) c)FeviStick: Small stick for Rs. 5/- (Also has bigger sticks with higher cost) Pidilite is the biggest player in the market.
Pidilite Industries Ltd. Year of establishment: 1959 Industry: Adhesives Tag line: “Building Bonds” Chairman: Mr. Balvant K. Parekh Vice Chairman: Mr. S.K.Parekh Turnover: Approx. Rs.2500 crores. th
BSE Stock Price: Rs.160.90 (On 20 July 2012) Stock Code: 500331 st
Total number of employees: 4223 (On 31 Mar 2012) Offices & Plants headquartered at Mumbai, has 19 manufacturing plants along with more than 25 job working units in India and abroad. The company has 14 overseas subsidiaries in countries like USA, Brazil, Singapore, Thailand, China, Egypt, Dubai and Bangladesh. Business Segments & Products There are two business segments as follows: 1) Branded Consumer & Bazaar Products: Adhesives, Sealants, Art Materials, Construction and Paint Chemicals 2) Specialty Industrial Chemicals: Industrial Adhesives, Synthetic Resins, Organic Pigments, Pigment Preparations, Surfactants. Product Descriptions The company has 33 main brands & 4 subsidiaries. The main products are as follows: 1)Fevicol: Synthetic Resin Adhesive, Mainly used in carpentry. Tag Line: “Yeh Fevicol ka jod hai tutega nahin” & “the ultimate adhesive”
2) Dr.Fixit: Construction chemicals. Tag Line: “Say good bye to leakage” 3) FeviKwik: General purpose adhesive. Tag Line: “Chutki mein chipkaye” 4)Moto Max: Automobile maintenance.
Tag Line: “The ultimate look for your ride”
5) M-seal: epoxy putty, used for leakages (Mainly plumbing) Tag Line: “Ghar mein rakhiye hamesha. M-Seal!” & “Fixes.Joins.Builds.Seals” 6)Fevistick: Paper glue. Tag line: “No chip chip, No jhik jhik.” 7)Fevicryl hobby ideas: Various hobby products like glue & gloss, colour sprays, candle making kit etc. Tag Line: “ India‟s first and finest chain of art, craft and hobby stores”
Innovation 1) In year 1973, the company started selling Fevicol in an innovative tube-pack to reach end consumers. 2) In year 1983, To fill the gaping need in the market for a lime binder, Pidilite developed its own solution that was easy, quick-drying, and offered a durable bond – the DDL Lime Binder. Thus was born a new segment. 3)In year 1985, Introduced FeviKwik, Super-fast drying application and extremely long-lasting when used. 4)In year 1995, Fevicryl was the first water-soluble acrylic color range in India that didn‟t require any medium. Today Fevicryl Hobby Ideas offers the largest range of hobby and craft products in the market. 5) In year 2005, Fevikwik‟s shell-pack was introduced at an attractive price of Rs. 5/- to capture the mass market. Its efficient size makes for more effective use of the product as well.
History & Milestones 1) Started with adhesive Fevicol. Which was an alternative to animal fat glue. Now in India, Adhesives mean Fevicol. 2) In 1963, The first modern manufacturing plant for pigments and emulsions is set up in Kondivita village, Mumbai; the premises of which today serve as the corporate head-office of Pidilite. 3) From 1980‟s company has been growing with steady rate. 4) In year 2000, M-seal, leading brand of epoxy compounds acquired, thus laying the foundation for the Maintenance Division of the compan y. 5) In year 2001, Pidilite launches the Dr. Fixit range of Construction Chemicals, thus diversifying its product range. The extensive product range is used for waterproofing and repair for both new & old constructions. 6) In year 2002, Steelgrip, a leading brand of PVC insulation tape in India is acquired. Another segment added to the product portfolio of the brand. 7) In year 2004, The company grows a 1000 times in 45 years. The annual turnover touches a pivotal 1000 crores.
8) In year 2004, Pidilite acquired the Roff brand of Construction Chemicals. Ro ff is a pioneer in construction chemicals in India and is well known for modern tile fixing solutions like tile-ontile and waterproof tile joints. 9) In year 2005, To further international ventures and foreign acquisitions, Pidilite launches its first-ever international, wholly-owned subsidiary under the banner Pidilite International in Singapore. 10) In year 2005, acquired Chemson Asia Pvt. Ltd, a Singapore-based brand that manufactured waterproof coating and emulsion paints. 11) In year 2005, Pidilite takes over Jupiter Chemicals in Dubai. Furthering its international operations, the company incorporates two more subsidiaries in Brazil and Middle East. 12) In year 2006, Pidilite acquires Tristar Colman brand and business, now known as Colstar. Tristar Fine Art, is a market leader in brushes for drawing and painting while Tristar Colman is a well-known brand of canvas and student art colours. 13) In year 2006, Pidilite USA Inc., acquires businesses and assets of Sargent Art Inc., makers of art materials which has been selling world-class art materials in USA for over 50 years. 14)In year 2006: The company also acquires Cyclo Industries LLC, makers of Automotive Maintenance products. The product range includes maintenance, performance and appearance products for DIY (Do-it-Yourself) and professional car care segment. Cyclo products are sold in USA and over 50 other countries. 15) In year 2006, Pidilite establishes its R&D centre in Singapore to attract international talent and expand product innovation strategies. 16) In year 2007, Pidilite Brazil [Pidilite Do Brasil Desenvolvimento De Negocios Ltda] acquired Pulvitec, an Adhesives & Sealants company in Brazil. 17) In year 2008, Pidilite acquires Holdtite business of Hard Castle Ltd. (Sealants). 18) In year 2009, Pidilite acquires Woodlok, retail wood working brand of Henkel. 19)The company till now have won 19 awards for its ad campaigns.
Financial Performance 1)The company has achieved a growth rate of 18.9% Net Sales. 2) Net profit increased by 10%. 3) The Company‟s net worth grew at a Compounded Annual Growth Rate (CAGR) of 21%. 4) The market capitalization of the Company on 31st March 2012 was 90133 million and has grown at a CAGR of 31.00 % since the IPO in 1993.
Segment wise performance 1) Branded Consumer and Bazaar Products Segment contributed 79% of the total net sales of the Company and grew by 22.8%. 2) Speciality Industrial Chemicals contributed 20.6% of the total sales of the Company and grew by 9.5%. 3) Others: This segment largely consists of the Vinyl Acetate Monomer (VAM) manufacturing unit. The revenue in this segment was only 16 million as compared to 21 million in the previous year.
SWOT analysis for company 1)Strengths: a) Very strong in advertising & marketing. Fevicol ad -campaigns have shown it every time. b) Strong R&D keeps the company with changing times. c) Brand name of Fevicol is so strong that it has become synonymous with adhesives. This popularity is helping other products. d) Brand value & recall are very strong for Pidilite. e) M-seal comes 2nd after Fevicol in revenue. 2) Weaknesses: a) The biggest weakness is over dependence on Fevicol & M-seal for revenue generation. This causes less investment on other products. b) Acquisition of the Cyclo brand of car care products is a weak factor as India exhibits a very fragmented market for the same with very little customer loyalty. 3) Opportunities: a) Pidilite organizes many events for children. Which helps them promoting their brand value. b) Chemical industry is growing at very fast pace. c) There are many opportunities in the developing countries. 4) Threats: a) Pidilite has very strong competitors. b) Weak rupee & higher price of crude oil puts pressure on margin for short term. c) The relative small size of overseas subsidiaries renders them vulnerable t o local political/economic uncertainties, competitive and inflationary pressures.
CSR by Pidilite The Company continues to support Gram Nirman Samaj, Hanumant Hospital, Mahuva Education Trust and Triveni Kalyan Education Trust in carrying out activities in the areas of rural development, education and healthcare
1) Rural Development & Education: a) During the year 149 water conservation projects including percolation tanks, farm ponds, village ponds and check dam were constructed. b) Houses were constructed under Indira Awas Yojana, for giving shelter to the rural poor. c) The Company distributed at Science City, Bhavnagar 3000 sets of story books written by French author Jules Verne.
d) Eight literacy classes covering 159 women from economically weaker sections and children were conducted. 2) Healthcare: a) Hanumant hospital treated over four lakh outpatients, in addition to handling several emergency cases and surgeries, since the setting up of the hospital b) The hospital expanded its dialysis and urology departments. A separate Urology department with an operation theatre and ward facilities was started during the year. c) The orthopedic department is now equipped for joint replacement surgeries and arthroscopy surgeries. d) Hanumant Hospital runs a Rubella Vaccination Centre and has conducted 42 vaccination camps and awareness campaigns at different places. More than 3200 girls were vaccinated. e) Divya Jyoti scheme (for cataract surgery) and Jivan Raksha scheme (for dialysis) were launched and free cataract surgeries and dialysis were conducted. f) The Company also works with the Lata Mangeshkar Medical Foundation, Pune to provide better health care facilities particularly in Obstetrics & Neonatal Intensive Care Units. 3) General Semantics: a) Shri B. K. Parekh, the founder of Balvant Parekh Centre for General Semantics and Other Human Sciences was presented the J. Talbot Winchell Award instituted by the Institute of General Semantics on 28th October 2011 for his contribution in the field of General Semantics. b) The second regional workshop for school teachers on the theme „Facilitating Constructive Pedagogy and Harmonious Interpersonal Relations in Classroom: A General Semantics Approach‟ was conducted in collaboration with Tejas Vidyalaya during the year.
RECENT NEWS A report by Hindu Business Line on 29 Mar 2012, 1)FeviKwik is becoming one of the trusted brand along with company‟s legendary product Fevicol. 2) M-seal have grown 20 time since the brand was bought from Mahindra. 3) MotoMax, a car care range is starting in Pune. th
(Sources: pidilite website, pidilite‟s annual report, MBAskool.com, adhesivesmag.com,dnaindia.com, bseindia.com)
