AN ORGANIZATION STUDY ON

CHEMICAL INDUSTRY
(Fertilizers and Chemical Travancore Limited, Travancore Cochin chemical,
Kumar organic product limited)
An organization study report submitted in partial fulfilment of
requirement for the award of degree of
MASTER OF BUSSINESS ADMINISTRATION (CSS)-GENERAL
OF
KERALA UNIVERSITY
Submitted
ANJANA A S
Roll No: MGT1905012

UNDER THE GUIDANCE OF

Dr. Simi S V
Faculty
IMK Kariavattom

INSTITUTE OF MANAGEMENT IN KERALA

UNIVERSITY OF KERALA
THIRUVANANTHAPURAM
2019-2021

1
 DECLARATION

I Anjana A S hereby declare that the project report entitled “An organization study on The
chemical industry” submitted by me for the award of the degree of Master of Business
Administration (CSS)-General of the University of Kerala is my own work. The report has
not been submitted for the award of any other degree of this University or any other
University.

Trivandrum: Anjana A S

Date: 31/01/2021 MGT1905012

2
 ACKNOWLEDGEMENT

First I thank God for all the grace and blessings showered on me. I have taken efforts in this
organization study but the success of this study lies on the hands of many people. It would
not have been possible without the kind support of many individuals and the organization.

I express my sincere thanks to Dr. Chandrasekaran, HOD, Institute of Management in

Kerala, University of Kerala and Dr. Simi S V Faculty Guide, IMK, Kariavattom, University
of Kerala for giving me proper guidance and advice and the efforts for error rectification
during this organization study.

I also thank my parents, my friends, and all my well wishers who had encouraged and
supported me in making this organization study a success.

ANJANA A S

MGT1905012

3
 CERTIFIACTE OF THE ORGANISATION

This is to certify that the project report entitled “An Organizational Study On The chemical
industry, submitted here is a record of the work done by Ms. Anjana A S under my guidance
in partial fulfilment of the requirement for the award of Degree in master of business
administration of the university of Kerala and this work has not been submitted by him/her
for the award of any other degree, diploma or title of recognition earlier.

Head of Department FACULTY

Dr Chandrasekharan Dr Simi SV

4
 TABLE CONTENT

CHAPTER CONTENT PAGE NUMBER

CHAPTER INTRODUCTION
1
1.1 Introduction of the 9-10
study
1.2 Objective of the 10-11
study
1.3 Methodology 11
1.4 Scope of the study 11-12

1.5 Limitation of the 12

study
1.6 ChapteriaStion 12
CHAPTER INDUSTRY
2 PROFILE
2.1 Chemical industry 13-14
2.2. Indian Scenario 14-18

CHAPTER COMPANY
3 PROFILE
3.1 FACT 19-20
3.1.2 Vision / Mission 20
3.1.3 Industrial / 20-21
Business
Operation
3.1.4 production 21-22
3.1.5 marketing 22-23
3.1.6 Strategic issues 23
3.1.7 Human resource 24
management
3.1.8 Public grievances 25
redressal and

5
 welfare measures
3.1.9 Welfare, 25-26
development, and
empowerment of
women
3.1.10 Employment fresh 27
recruitment
3.1.11 Training 27
3.1.12 Sc/St grievance 27-28

3.1.13 Dealership 28-29

3.1.14 Corporate social 29
responsibility
3.2 TRAVANCORE 30-31
COCHN
CHEMICAL
3.2.1 Chemical quality 32
policy of TCC
3.2.2 Energy policy 32
3.2.3 Healthy and safety 32-34
policy
3.2.4 Growth of TCC 35
3.2.5 Achievement 36-37
3.2.6 Organizational 37-38
structure
3.2.7 Product profile 38
3.3 KUMAR 38-39
ORGANIC
PRODUCT
LIMITED
3.3.1 Manufacturing 40-41
plants
3.3.2 The facility consist 41-43
of
CHAPTER ANALYSIS
4
4.1 SwOT 44-46
ANALYSIS
4.1.1 FACT 46-47
4.1.2 TRAVANCORE 47-48
COCHIN
6
 CHEMICAL
4.1.3 KUMAR 48-49
ORGANIC
PRODUCT
4.2 PORTER’S FIVE 49-50
FORCE
ANALYSIS
4.2.1 PORTER’S FIVE 50
FORCE
ANALYSIS on
FACT
4.2.2 PORTER’S FIVE 50-53
FORCE
ANALYSIS on
TCC
4.2.3 PORTER’S FIVE 53-55
FORCE
ANALYSIS on
KUMAR
ORGANIC
PRODUCT
LIMITED
4.3 BCG ANALYSIS 58-60

4.3.1 BCG analysis on 60

FACT
4.3.2 BCG Analysis on 61
TCC
4.3.3 BCG Analysis on 62
KUMAR
ORGANIC
PRODUCT
LIMITED
CHAPTER FUTURE 63-75
5 PROSPECTS
CHAPTER CONCLUTION 75-76
6

7
 CHAPTER 1

INTRODUCTION

1.1 Introduction of the study

Organization study encompasses the systematic study and careful

application of knowledge about how people act within organizations
as individuals and as groups-act with in organisations. An
organisational study encompasses the study of organisation from
multiple view points, methods and levels of analysis. For this, the
study has been carried out in an information technology industry.

The study provides an opportunity to an industry and its

operational conditions. It also aims at have in a better
understanding of various departments and its functioning. The study
deals with critical evaluation and analysis of all the aspects of a
particular firm. It gives a clear idea about the functions and practise
of various departments and operational efficiency of the department
as a whole.

This report consist of a detailed study of the history of

the company, product profile, organisational hierarchy ,various
departments and there functioning etc . The study proved too fruitful
by familiarizing which the organisation and at the same time, it
helped to create practical awareness. Fertilisers and chemical
8
Travancore limited, Travancore Cochin chemical, Kumar organic
product limited where selected for undergoing organisational studies.

Chemical industries are the prime factors to convert the raw

materials in to desired products that we use in our day to day life. This
has brought a tremendous change in the way the things operate. It is
very important for us to understand the importance of the chemical
industry which has touched all our facets of life like agriculture,
environment, food, hygiene, décor, and transportation…etc. it has also
significantly used in recycling industries to curb the usage of virgin
products. Re-cycling helps a lot in utilizing the waste materials, and
gives one more lifecycle for the products.

1.2 OBJECTIVES OF THE STUDY

 To study the organizational structure of fertilizers and chemical

Travancore limited, Travancore cochin chemical, Kumar
organic product limited
 To study the market and familiarize with the products
 To study the organizational policies, procedures and practices
and to understand how information is used for decision making
at various levels.
 To familiarize with the different departments in the organization
and their functioning
 To relate theory with practice
 To conduct organizational analysis of the organization via-
SWOT and porters five forces analysis
9
1.3 METHODOLOGY

RESEARCH DESIGN

The study is descriptive in nature. Both primary and secondary data

is used

PRIMARY DATA

Primary data is that collected by a researcher from first hand sources.

It is collected with the research project in mind, directly from primary
sources like interaction with the workers, officials etc.

SECONDARY DATA

Secondary data is the data gathered from existing records, from

studies, surveys or experiments that have been conducted by other
people or for another research. Sources of data are:

 Annual reports of the company

 Company website
 Department manuals
 Journals and magazines
 Brochure
1.4 SCOPE OF THE STUDY

By doing the organization study, helps to get practical knowledge and

exposure to the organization and helps to improve interacting skill.
The study enables to know about the various departments and its
overall functioning of fertilizers and chemical Travancore limited,

10
Travancore Cochin chemical, Kumar organic product limited. The
study gives the information regarding chemical industry in India.

1.5 LIMITATIONS OF THE STUDY

 Limited access to confidential data
 Busy schedule of managers and employees
 Time constraints
 Website is not updated
 Lack of time and resource for an extensive study
 Response received may have personal bias

1.6 CHAPTERISATION

 Chapter 1 deals with the introduction, objective of the study,

methodology, scope of the study limitation and cauterisation of
the study.
 Chapter 2 concerned with the industry profile
 Chapter 3 deals with the company profile while contains the
history, organizational structure, products and services of the
company
 Chapter 4 deals with the SWOT Analysis, porters 5 force
analysis and BCG/DPM Analysis
 Chapter 5 deals with the future prospectus
 Chapter 6 is concerned with conclusion
CHAPTER 2

11
 INDUSTRY PROFILE

2.1 Chemical industry

Chemical industry complex of processes, operations, and

organizations engaged in the manufacture of chemicals and their
derivatives. Although the chemical industry may be described simply
as the industry that uses chemistry and manufactures chemicals, this
definition is not altogether satisfactory because it leaves open the
question of what is a chemical. Definitions adopted for statistical
economic purposes vary from country to country. Also the Standard
International Trade Classification, published by the United Nations,
includes explosives and pyrotechnic products as part of its chemicals
section. But the classification does not include the man-made fibres,
although the preparation of the raw materials for such fibres is as
chemical as any branch of manufacture could be.

The scope of the chemical industry is in part shaped by custom rather

than by logic. The petroleum industry is usually thought of as separate
from the chemical industry, for in the early days of the petroleum
industry in the 19th century crude oil was merely subjected to a
simple distillation treatment. Modern petroleum industrial processes,
however, bring about chemical changes, and some of the products of a

12
modern refinery complex are chemicals by any definition. The
term petrochemical is used to describe these chemical operations, but,
because they are often carried out at the same plant as the primary
distillation, the distinction between petroleum industry and chemical
industry is difficult to maintain.

2.2 INDIAN SCENARIO

The chemical industry is the backbone of India’s industrial and

agricultural development. Achieving the industry’s ambitious
growth targets will require a combination of policy intervention,
company-level initiatives, industry-academic partnerships, wise
investments, and greater international access.

The chemical industry’s role as the key enabler of economic growth is

well-established worldwide. From the ubiquitous cell phone, to solar
panels producing carbon-free energy, to LED lights providing
efficient lighting — all are made possible by chemical industry
products. In India, the chemical industry occupies a pivotal position in
meeting basic needs and improving quality of life as well. Although
India is severely deficient in conventional hydrocarbons, the country
has a well-developed refining industry that provides several basic
chemical industry feedstocks.

The chemical sector, which is knowledge- and capital-intensive, is the

mainstay of industrial and agricultural development, and provides
building blocks for downstream industries such as textiles, papers,

13
paints, soaps, detergents, and pharmaceuticals, among others. The
fertilizer and agrochemical industries ensure food security, and are
thus vital to India’s developing and agrarian economy. Likewise, the
synthetic fibber industry is crucial to providing affordable clothing,
and the pharmaceutical industry gives the country’s vast population
access to low-cost drugs.

The development of the chemical industry in India can be traced to

the indigenous efforts of P. C. Ray, a professor of chemistry at
Calcutta Univ. Ray established the pharmaceutical company Bengal
Chemicals and Pharmaceutical Works in 1892; it was incorporated
nine years later. During World War II (1939–1945), foreign drug
supplies decreased and several Indian pharmaceutical companies
opened, including Niche, Chemo Pharmaceuticals, Sand
Pharmaceutical Works, Chemical Industrial and Pharmaceutical
Laboratories (CIPLA), and East India Pharmaceutical Works. The
Indian government later established five public-sector companies.
Two of them— Hindustan Antibiotics Ltd. (HAL) in 1954 and Indian
Drugs and Pharmaceuticals Ltd. (IDPL) in 1961 — played
particularly important roles. During the first two decades after India’s
independence from British rule in 1947, several industrial units were
established to make basic chemicals, dyes and textile auxiliaries, and
fertilizers (Table 1). By the 1960s, India had also developed a sizeable
alcohol-based chemical industry that used ethanol as feedstock (2). A
recommendation that “molasses-based alcohol be totally reserved for
industrial use,” rather than used as an energy source (3), and stricter
14
controls on sugarcane molasses as well as alcohol prices and
allocations played a role in this development.

Synthetics and Chemicals Ltd. (Bareilly, Uttar Pradesh) was one of

several companies to begin using alcohol as feedstock for butadiene
and styrene-butadiene latex production. Other units, located in sugar-
producing states, manufactured acetic acid, acetone, butane, ethyl
acetate, ethylene, monoethylene glycol, and polyethylene at various
times over the years. Removing alcohol price controls in the early
1990s, and its diversion as a gasoline additive after a 2015 policy
shift, has made most alcohol-based chemical units unviable. Today,
only a handful operates and produces few chemicals, including ethyl
acetate and monoethylene glycol.

In the 1960s, Union Carbide set up the first ethylene cracker in

Mumbai with alcohol as feedstock, later switching to naphtha from an
adjacent oil-refinery pipeline. In 1964, National Organic Chemicals
Industries Ltd. (NOCIL), today a leading Indian manufacturer and
supplier of rubber chemicals, entered into technical collaboration
agreements with Royal Dutch/Shell to build a naphtha cracker and
downstream plants in Navy Mumbai.

The petrochemical industry continued to grow in the 1970s, with

Indian Petrochemicals Corp. Ltd. (IPCL) building its first integrated
naphtha-based cracker in Vadodara. Again, the decision was aided by
experts’ recommendations that naphtha — which was already in
surplus in the country — be used preferentially for petrochemical
15
production and made available free of taxes and duties to improve the
petrochemical industry’s competitiveness. IPCL was also the first
large Indian company to start R&D before production began. The
company’s R&D director was a full-time member of the Board of
Directors — a trend subsequently followed in other public-sector
companies, including Engineers India Ltd. (EIL) and Indian Oil
Corporation Ltd. (IOCL).

The Council of Scientific and Industrial Research (CSIR) was

established in 1942 with the mission to provide scientific and
industrial research and development to maximize economic,
environmental, and societal benefits for the people of India. Three
laboratories were created under CSIR to serve the chemical sciences:
Central Drug Research Institute (CDRI), National Chemical
Laboratory (NCL), and Indian Institute of Chemical Technology
(IICT), previously known as Regional Research Laboratory (RRL).

The Indian Chemical Manufacturers Association, now called Indian

Chemical Council (ICC), was founded in 1938 by P. C. Ray, Rajmitra
B. D. Amin, and a group of industrialists who strived to promote the
nascent chemical industry’s interests. Over the years, ICC became the
industry’s representative body and celebrated its achievements,
including those in indigenous technology development, through
coveted and prestigious annual awards.

From 2014 to 2015, India’s chemical industry was valued at US$137

billion, with overall chemical and chemical product sales of US$147
16
billion. Bulk chemicals, petrochemicals, and specialty chemicals
accounted for 65% of total sales. The fertilizer and agrochemical
industries represent important nationwide industry segments, which is
not surprising given the agrarian nature of India’s economy. Despite
its apparently large size and significant contribution to gross domestic
product (GDP), the Indian chemical industry accounts for 3% of the
worldwide chemical market, valued at US$4.3 trillion. Excluding
pharmaceutical products, it ranks 14th in chemical exports and eighth
in imports.

CHAPTER 3

COMPANY PROFILE
17
3.1. FERTILIZERS AND CHEMICAL TRAVANCORE LIMITED

The Fertilizers and Chemicals Travancore Limited (FACT)

incorporated in the year 1943 was one of the first large scale fertilizer
plants in India. Located at Udyogamandal, Kerala, FACT started
production in 1947. Initially in the private sector promoted by the
Seshasayee Brothers, FACT became a PSU in the year 1960 and
towards the end of 1962, Government of India became the major
shareholder of FACT.

From a modest beginning, FACT has grown and diversified into a

multi-division/multifunction Organization with core activities in
manufacture and marketing of Fertilizers and Petrochemicals, Design,
Engineering & Consultancy and in Fabrication & Erection of
Industrial Equipment and Engineering works.

Presently FACT is the lead fertilizer supplier of Kerala with its

production units located at Kochi and supplying fertilisers to all the
South Indian states. Company has an annual installed capacity of 6.33
laky MT of complex fertilizers (NP 20:20:0:13 under the brand name
Factamfos), 2.25 lakh MT of Ammonium Sulphate and 0.5 lakh MT
of Caprolactam. Company was shifted from Naphtha based operations
to RLNG based operations in 2013-14. 
The company could significantly improve its financial performance
during the year 2019-20. With the excellent production and marketing

18
performance, FACT could register an operating profit of 3.36 Crore
during the year. Details of performance are given in the Industrial /
Business operations section.

3.1.2 Vision / Mission

FACT’s mission is to be a significant player in fertilizers,

petrochemicals and other businesses such as engineering and
technology services.

3.1.3 Industrial / Business Operations   

 Financial Performance

(In Rs Crore) 2019-20  (Audited) 2020-21 (Actu

Turnover 2769.91 1255.54

Profit /Loss(-) before tax * 975.52 43.30

Profit /Loss(-) after tax * 975.52 43.30

*After considering the income from Land monetisation to GoK

 Physical Performance

Production performance during last two years and for the period
April- August 2020 are given below

19
 Product Annual Production (in MT)
Production 2018-19 2019-20
Capacity

Factamfos 20:20 633500 634362 844738

Ammonium 225000 141754 220951

Sulphate

Caprolactam 50000 Nil Trial Runs

   Performance Highlights 2019-20

3.1.4 Production 

•    Factamfos (NP 20:20:0:13) production of 8.45 Lakh MT is an all

time high record surpassing the previous best of 8.38 Lakh MT during
2000-01. 
•    Surpassed the MoU excellent targets for all end-products in
Production and Sales and also surpassed One million MT mark in
total fertilizer Production and Sales. 
•    Ammonium Sulphate production of 2.21 lakh MT is the highest in
19 years period 
•    All time high Factamfos production at Cochin Division (6.4 Lakh
MT) surpassing the previous best of 6.33 Laakh MT in 2000-01. 
•    All time high Sulphuric Acid production at Udyogamandal
Complex (2.58 lakh MT) surpassing the previous best of 2.55 Lakh
MT in 2000-01.

20
•    ISO 50001: 2018 certification for FACT Udyogamandal
Complex  

 3.1.5 Marketing

•    Total fertilizer sale of 11.17 lakh MT is a record in last 18 years

•    Factamfos sale of 8.35 Lakh MT is the highest in last 19 years
period 
•    Ammonium Sulphate sale of 2.36 Lakh MT is the highest in 19
years period 
•    All time high City Compost sale (13103 MT) for the year
(previous best 9370MT)
•    122 MT Bio-fertiliser sale for the year. 
•    Imported one parcel of NPK 16:16:16 (27000 MT) for augmenting
fertilizer sales
•    Started marketing Ammonium Sulphate in the states of
Maharashtra and West Bengal. 

FACT tied up with oil companies for RLNG supply for captive
Ammonia production for entire year. This helped the company in
maximizing fertilizer production during the year. 

The trial runs of the Caprolactam plants were completed during 2019-
20. The plants were shut down since 2012 due to economic reasons.
FACT is planning to commence continuous run of the plant in 2020-
21 in line with the PM’s view of Atma Nirbhar Bharat. 

21
 FACT is awarded “Sreshta Suraksha Puraskar” for the outstanding
safety performance (Cochin Division) among very large industries in
Kerala, from National Safety Council, Kerala Chapter 

Marketing Performance

Sales during the year 2019-20 and sales for the period April- August
2020 are given below.

Product   (in MT) 2019-20 A

Factamfos 20:20:0;13 835098 3,

Ammonium Sulphate 235922 88

Organic / City Compost 13103 5,

Traded Products (NPK / MOP) 26827 47

3.1.6 Strategic issues

 FACT tied up with oil companies for RLNG supply for captive
Ammonia production for 2019-20 and continuing the same strategy
for the year 2020-21. This helped the company in maximizing
fertilizer production during the period. 

 Company has submitted a financial restructuring proposal, focusing

on leveraging the land resources for settling the outstanding dues and
strengthening production & port facilities. The proceeds from the sale
of land along with proposed revival plan, would enable the company

22
to clean the balance sheet making the net-worth positive and will
ensure sustainable operation in the long run. 

Following the Cabinet approval, FACT has leveraged 481.79 acres of

its land at Cochin division to Government of Kerala and received an
amount of Rs.967 Cr. on 10.12.2019 towards consideration for the
sale. The board approved CAPEX plan is submitted to DoF. Tender
for the major capex schemes NP plant, Ammonia Storage Tank &
Ammonia Barge were floated, due date is extended on account of the
restricted activities under lockdown. 

3.16 Human Resource Management

Manpower as on 01.07.2020 

  Employees SC

A 324 52

B 980 109

C 388 46

D 146 23

TOTAL 1838 230

3.1.7 Public Grievances redressal and Welfare Measures

A Public Grievance Cell is functioning in the Company, as per norms

laid down by Government of India.
23
A Grievance Management System exists in the Company.  Generally,
the grievances are related to work, work place, shift arrangement,
grant of increment, promotion, salary fixation, transfer, etc.  An
aggrieved employee may submit a complaint /

with the decision of the Division Head, it may be submitted before the
appropriate Grievance Committee. A separate grievance committees
examines and redresses of grievances of managerial and non-
managerial employees.  The individual concerned is given an
opportunity to present his grievance in person before the committee, if
required.  The respective committee deliberates on the grievance and
gives its recommendations to the management for appropriate action.
In addition, there is a SC/ST Grievance Cell to looks int complaints
received from SC/ST employees.

3.1.8Welfare, Development and Empowerment of Women

 Equal opportunity has been provided to women in recruitment to

posts both in technical and administrative disciplines with exception
for jobs involving round the clock shift-work. Equal remuneration is
paid to employees of both genders doing the same type of work.
There is no discrimination on grounds of gender. This has enabled
some of our women officers to excel in their respective field of
activities leading to their being chosen for the coveted Merit Award
given for outstanding performance and achievement Women
executives occupy key positions in the Management cadre as General
Managers, Dy. General Managers & Asst. General Managers in
24
various Engineering disciplines like Chemical, Instrumentation,
Electrical, Civil, Computer etc. and administrative disciplines like
Finance, Human Resources, Materials, Marketing etc.

Women employees are entitled for maternity leave of 26 weeks and

medical benefits associated with pregnancy, delivery, miscarriage etc.
Under the provisions of the Factories Act, the working hours of
women employees covered under the Act is restricted between 6 a.m.
and 7 p.m.  Nursing mothers are given two intervals of 15 minutes
each as feeding time, or alternatively as a working arrangement of 30
minutes at a stretch, for feeding their infants, up to a maximum of
fifteen months after confinement.  As per GOI Orders, women
employees undergoing family planning operation are given special
leave up to 2 weeks. 

A Complaints Committee is functioning to look into complaints of

sexual harassment to women employees at work place under the
Sexual Harassment of Women at Workplace (Prevention, Prohibition
& Redressal) Act, 2013.  Not less than half of the members are
women including an external member who is a lady Professor of a reputed
Social Work College.

3.1.9 Employment / Fresh recruitment

The Company has taken all measures for maintaining reservation of

SCs / STs in employment in accordance with the Presidential

25
directives. During the current year, 7 SC & 3 ST candidates have been
appointed against a total of 50 appointments.

3.1.10Training

In service training to company employees is arranged through the

Training Department. Maximum representation is ensured for SC / ST
employees to attend in house trainings. For engagement of
Apprentices under the Apprentices Act, representation as per rules is
provided.

3.1.11 SC / ST Grievance Cell

An SC / ST Grievance Cell is functioning at Corporate Level

comprising the Chairman, who is also the Chief Liaison Officer for
matters pertaining to reservation of SC / ST and their grievances in
the company, Liaison Officers of the various divisions and two
officers each belonging to SC and ST. The grievances received are
examined in detail by the Cell and appropriately redressed and if
found necessary they are called by the cell to present their cases in
person.  The employee concerned is informed of the decision / action
taken on the grievances by the Grievance Cell.   Further, there are
associations representing SC / ST employees and these associations
also take up individual grievances of SC / ST employees with the
management for direct redressel.

3.1.12 Reservation of Dealership:

26
Status as on 31-08 2020 

FACT is having 6234 dealers for distribution of fertilizers.  FACT is

encouraging SC/ST category dealers to apply for the dealership in
accordance with policy of Department of Fertilizers, Government of
India.

Total number of dealers and the representation of SC/ST in dealership

as on 31.08.2020 is given below.

Sl. No State Total Dealers SC

1 Kerala 2628 196
2 Tamil Nadu 905 108
3 Karnataka 1539 122
4 Telangana 515 13
5 Andhra Pradesh 647 31
  TOTAL 6234 469

Steps taken for increase of SC/ST dealers:   There is no restriction on

the appointment of dealers under SC/ST category unlike general
category applications.  SC/ST dealers are exempted from payment of
security deposit and there is no prerequisite of furnishing fixed
deposits as in general category dealers. 

3.1.13 Corporate Social Responsibility

Company continued to give priority on various Social Responsibility

measures during the period.  Considering the financial constraints,

27
CSR activities are mainly focused on supply of drinking water, farmer
education programs such as Soil testing services, village adoption
programme and marketing of organic manures etc. Distribution of
school bags, sports & study kits to under privileged students etc were
made, wheel chairs were also given to local physically challenged
personnel.  
In view of COVID-19 pandemic, Company has cleaned & sanitised
the common areas like Shopping complex, Bus Stop, ATM Counter
etc near production Divisions at Udyogamandal & Cochin Division.
Company medical centre at Udyogamandal is open for local public
also. Company also supplied provisions to community kitchen run by
local authorities, facilities like beds and washing machine were
donated for the COVID first line treatment centers and also made
contribution to the PM CARES fund. 

3.2 TRAVANCORE COCHIN CHEMICAL

The Travancore Cochin Chemicals Ltd, popularly known as TC Ltd is

a statepublic sector undertaking owned by the government of
Kerala.TCCsituated at Udyogamandal in cochin Industrial belt. Incorp
orated in 1951,TCC is one of the oldest chlora-Alkali unites in the
country.TCC is a largechemical industry engaged in the manufacture
and marketing of caustic soda,chlorine, Hypochlorite acid, soda
bleach and related chemicals. TCC is anISO 9001-2000

28
certifiedcompany. The company supports a large number of Industrial
units of strategic importance by supplying basic chemicals.
The Travancore Cochin Chemicals Ltd was established in 1951 and
started commercial production in 1954 with an installed production
capacity of 20tones of caustic soda per day. The idea of establishing
the unit was conceived by M/s Shehasayee Brothers the managing
agent of FACT. This was for to supply HCL to FACT for making
Ammonium Chloride utilizing Ammonia from their newly started
plant. FACT and MCIC (mettur chemicals and Industrial Corporation)
registered as a joint venture company under the name Travancore
Mettur Chemicals (TMC) in 1950. The partnership was unable to
complete the project due to shortage of finance. TMC has taken up
their problem with the Travancore Cochin state government. By that
time two other companies(Hindustan Industries Ltd.(HIL)& Indian
Rare Earth Ltd(IRE)) were setting up their plants at Udyogamandal
with a view to receive chlora alkali products from TMC. As the
stoppage of TMC could affect three major companies the Travancore
Cochin State government gave financial assistance to TMC and the
company was renamed as Travancore Cochin Chemicals (TCC) in
1951.Travancore Cochin Chemical (TCC) is the first unit in India to
manufacture Rayon grade Caustic soda. The company has
implemented an number of technical renovations to improve
productivity of the plant. They now use membrane cell Technology
for their production. At present TCC has production capacity of 175
TPD of caustic soda.

29
TCC is the only one chlor-alkali unit in Kerala. In India, there
areapproximately 40 Chlor-Alkali units as competitors. TCC owns
109 acres of land and around 786 employees are working in three
shift plants arefunctioning by utilizing full capacity. The company has
helped in attractingnew industries
to Kerala in past like Indian Rare Earth Ltd, HindustanInsecticides
Ltd, Hindustan News print Ltd , Kerala minerals & Metals Ltd etc.
though assuring the availability of raw materials.
 

• To continuously improve the plant and operational safety and to

work within the emission limits set up by pollution control board.

• To continuously up – grade the quality of human resources of the

companyand to ensure organizational development.

•To ensure corporate growth by expansion and diversification.

 • To care for the community around.
 
3.2.1QUALITY POLICY OF TCC
“We are committed to enhance customer satisfaction by providing
products and related services complying with a continually improving
quality management system.”
 
3.2.2ENERGY POLICY
We are always committed to conservation of energy by all possible
means. To accomplish our mission we strive for :

30
• Technological up-gradation reduce specific energy consumption
• Conducting energy conservation studies including energy audit &
adopting the apt measures for conserving energy
• Contacting other organizations& enriching our experience on energy
conservation
• Using renewable energy sources to the external possible
 • Disseminating knowledge &information on energy conservation to
our employees
• Low energy fuels also to be tried depending up on feasibility.

3.2.3 HEALTH & SAFETY POLICY

 TCC is committed to provide a work every one of its efforts to

manufacture high quality products at competitive price. The
company will comply with all statutory requirements in this
regards.
 The company will provide a work environment in which
identified hazards are controlled if elimination is not feasible
whenever necessary.

 Accident prevention is the direct responsibility of the Line

Management & will be an important criterion for performance
appraisal Line Management will ensure that all safety measure
are incorporated in the operating and maintenance procedure as

31
 well as in any process technology changes in the plant /
infrastructure.

 Consideration of health & safety will be given proper weight

age in selection and deployment of the personnel.

 The company will ensure that health and safety aspects are
given due consideration in decision regarding purchase of plant
equipments machinery and materials.

 very employee of the company shall perform his / her job

adopting safety and proper work methods and using appropriate
safety equipments understanding that their career advancement
is linked with safe performance.

 Contractors, sub-contract workers, transporters and visitors

entering the factory shall be required to observe health & safety
practices of the company in all their activities

 All contract jobs will be carried only through the laid down
procedures with appropriate supervision

 1The company will carry out safety audits, risk assessment

studies, emergency mock drills, and periodic assessment of

32
 health of its employee as well as status of environment &
implement remedial measures.

 Employee, consumer & public awareness where necessary will

be imparted with the required education, training & returning
on safety& health aspects related to the process and products.

The company will include a resume of its health & safety

performance in its annual reports. Since the success of the company
depends on the health & safety
of its imperative that work place hazards be identified appropriately e
valuatedand effectively controlled to achieve this goal whole hearted
co-operation of its is solicited for this.

3.2.4 GROWTH OF TCC

1956 A continuous caustic Fusion plant with a capacity to produce 20t
ones of caustic soda per day
was added1958 A chlorine liquefaction plant wa added mainly to mee
t demandfrom the newly set up plant of Hindustan insecticides Ltd,
Udyogamandal.1960 Production of caustic soda was raised
to 30 tons per day1963 The caustic soda capacity was raised to new le
vel of 40 tons perday.1967 The third stage of expansion capacity was 
raised to 60 TPD 1970 A 60 TPD CCF plant was set up. The sets its o

33
wn water treatmentplant1975 Fourth stage expansion a new 100 TPD 
caustic soda plantemploying Mercury cell Technology which was
installed from Germany. TCC started its started its own water
treatment197580 Exported commercial Hydrochloric acid to gulf cou
ntries1983 Installed indigenously developed plant to recover mercury 
fromEffluents.1987 Installed Hydrogen firing system1988 Replaceme
nt of Graphite anodes by titanium anodes1990 Brine dechlorination u
nit commissioned1992 A research and development section was set u
p1997 The company commissioned 100 TPD caustic soda plant in tec
hnicalcollaboration with ASAHI GLASS company of Japan using the
Membrane Cell technology. The advantage of membrane cell
technology was that the energy consumption got reduced by 30%and
avoided the use
mercury2000 The company set up a brine purification plant2002-03 T
he Company was increased its production
capacity of membranecell Plant 125TPD2004-05 25 TPD caustic soda 
plant employing membrane cell technologiesfrom M/s UHDE,
Germany was commissioned2005-
06 25 TPD caustic soda plant employing membrane cell technologyfr
om M/s UHDE, Germany was commissioner.
 
3.2.5 ACHIEVEMENTS
TCC is always in the forefront to adopt and incorporate the latest
technology in its plants. Several innovative and modernization
schemes were implemented to achieve higher production and

34
productivity energy conservation environmental protection and
economy inputs. TCC has been dynamic to be proactive to market
conditions and thus to came out as a profitable public sector
undertaking TCC was bestowed with various awards for excellent
performance with regards to productivity, energy conservation and
environmental protection which is considered as an award for
commitmenratherefficiency.1981 Best performance award for safety i
n the state from directorate of Factories and boilers, Government of
Kerala1988-
89 Best pollution control award under group “Heavy In organic
Industries “ In Kerala from Kerala state pollution control board
 1989 Award for best performance in safety in India under: chemical
Industries group from national safety council1989-90 Prize for
productivity from Kerala state productivity
council1993 Best performance award for energy conservation in the st
ate of 
Kerala under group “Chemical and Fertilizers above 3000
KVA from Government of Kerala1994-95 Best performance awards
for the productivity in the state of Kerala
under group “Large Industries” from Kerala state productivity
council1998 Best performance award for energy conservation
in the state of Kerala
under group “Major Industries “ from energy management centre,
Government of Kerala

35
1998 Performance award for energy conservation under group chlor
alkali.
Sector” Ministry of power, Government of India
2003 Kerala state energy conservation award in the category of Large
Scale Industries
2005 National Energy conservation award “Chlor Alkali Sector 
2008 “Pollution Control” award from Kerala state Pollution Control
Board

3.2.6 ORGANIZATION STRUCTURE

The organizational structure involves arrangement of activities and
assignment of personnel to these to achieve organizational goals. It is
a way by which various parts of an organization are tied together in a
coordinate manner and it illustrates the various relationship among
various levels of the hierarchy within the organization as well as
horizontal relationship among various aspects of the organizational
operations. As well planned organizational structure results in better
use of resources.
An organizational structure is a mostly hierarchial concept of
subordinates area number of clustered entitles. The structure of an
organization is usually setup in one variety of styles, dependent on
their objectives and ambience organizational structure allows the
expressed allocation of responsibilities for different functions and
process to different entities.

36
  Each individual in the organization is assigned a role ,
responsibility and necessary authority. Each person who is
assigned to an activity must know his position, his role and
relationship with others.
 
 The activities of all individuals are coordinated and integrated
into a common pattern in order to achieve the organizational
objective. Organization is needed for the purpose of integration
of diverse activities in a cohesive manner.
 
 The optimum use of human skill and efforts is achieved. It
helps in smooth operations and smooth flow, thus avoiding
bottlenecks, idle time and idle machine.

3.2.7 PRODUCT PROFILE

Caustic soda, Chlorine, Hydrochloric acid, Caustic soda flakes and

sodium hypochlorite are the products of the company. Caustic soda,
Chlorine and Hydrochloric Acid from the backbone of chemical
industry. These are important to the country’s economy very much
like steel and cement. TCC‟s main raw materials are common salt
(sodium chloride), electricity and water. The company requires about
2650 units of electricity and 1.72 tons of raw salt per tones of caustic
soda produced common salt is mainly produced from Kacch in
Gujarath and Tamilnadu.

37
3.3 KUMAR ORGANIC PRODUCTS LIMITED

Kumar Organic Products Limited (KOPL) is a research based

specialty ingredients company, established in 1991.

At KOPL, we synergize the right chemistry to provide our clients the

best active ingredient for their Hair Care, Skin Care, Sun Care, Paints
& Coatings and Food & Healthcare products. In a journey of 26 years,
KOPL has relentlessly strived for excellence meeting the demands of
customers from around the world. Today KOPL has a wide variety of
50 products which is manufactured at five world class manufacturing
plants and a State of Art Research and Development Centre in India.

Our branch offices and subsidiaries in Singapore, Basel(Switzerland) ,

Bahnhofstraße (Germany), Luton(UK), New Jersey(USA) are
strategically located to ensure seamless service to customers the world
over. Our exports reach more than 80 countries through distribution
network spread across the USA, UK, Switzerland, Singapore, South
America and MEA(Middle East and Africa).

KOPL units are certified for ISO 14001:2015 (Environmental

Management System) and ISO 9001: 2015 (Quality Management
System) as well as GMP and inspected by US-FDA.

3.3.1 Manufacturing Plants

Kumar Organic Products Limited (KOPL) has successfully integrated

capabilities and capacities to deliver a wide product portfolio that
caters to the needs of diverse market with an extensive range of

38
manufacturing equipment and process capabilities. Plants are
equipped with particle size modifications systems to meet particle size
requirement of product. Manufacturing is backed by warehousing
systems that offer ambient control room temperature (CRT).
Kumar Organic Products Limited (KOPL) has manufacturing
facilities at five locations which ensures high quality production of
Pharmaceutical, Cosmeceuticals and Specialty chemicals;
1. Bangalore – Plot no 64, Jigani,Karnataka.
Unit -1: APIs & Specialty Chemicals
Unit -2: (EOU) APIs
2. Bangalore – Plot no 84, Jigani, Karnataka.
Unit -3: APIS & Nutraceuticals
3. Hassan (Pharma SEZ), Karnataka.
Plant 1: Specialty Chemicals
Plant 2: APIs
Plant 3: Biotech
4. Baroda, Gujarat : Specialty Chemicals & Coatings.
5. Dahej(SEZ), Gujarat : Specialty Chemicals.
for Quality Management and ISO 14001:2015 for Environmental
Management System. Also all locations are GMP approved, conforms
to international standards and conforms to international standards.

 Product Development and Application Lab

Kumar Organic Product Limited is an R&D driven business entity

where the Product Development Lab is the Epicentre of growth and

39
existence. KOPL emphasize that new product development is
essential to any business to keep up with market trends and changes.

Our Product development team has its focus on markets and product
categories consistent with organization's objectives, resources,
capabilities and strength. New product categories include 'new to the
world' products, new product lines, product line extensions,
improvements and revisions to existing products, repositioning, cost
reduction etc.

Comprehending the current market which is rapidly embracing green

products, our development group has redefined research as
development natural ingredients, recycled materials &
biodegradables, allowing for the release of an eco-friendly products.
We have an enthusiastic cluster alert to quickly develop opportunities,
identify the needs in the market and fill them. Our intellects follow a
new product from grams to kilogram level and beyond to the
marketplace till its consumption and feedback from the end user.

With a successful presence of over 20 years in the Beauty and

Personal Care industry, we believe in concept selling rather than just 

3.3.2 The facility consist of

 Application Lab

40
With a successful presence of over 20 years in the Beauty and
Personal Care industry, we believe in concept selling more than just
supplying raw materials. Formulation is an essential stage that
determines both the effectiveness of the active ingredient and the
performance perceived by the consumer. At KRC Application lab our
goal is to align with our clients’ objective as provider of R&D and
commercial solutions, thereby supporting them in their research
hurdles and help to overcome limitations .Although you remain
ultimate expert, we can help you save some precious time by helping
you begin with some prototype formulation that we can make for you
or solving any technical issues , so that you can focus on core job of
developing a differentiated product .
 Biotech Centre
The quest for innovation and the desire to anchor on natural science, has
culminated in the conception of Biotech Centre.Self motivated at research, the
state of art expertise is aimed at bio-actives from natural reserves. The centre
focuses primarily on the growing segments of the cosmetic markets which are
benefiting from the trend towards healthy and young skin, hair care, oral care
and anti-bacterial.
 Technical Services
Leveraging the fermentation technology the centre conducts high
value R&D for bioactive molecules discovery and development for a
diverse global clientele. With state of the art facilities, dedicated
connectivity and highly qualified researchers, the centre offers its
customers a powerful value advantage in the field of outsourced

41
research and development. Biotech centre is mainly focused for the
development of bio-actives molecules like:
• Anti ageing mucopolysaccharides
• Bioactive nucleosides
• Antibacterial
• Anti-inflammatory
• Antioxidants
• Carotenoids
• Radiation protectants
• Emollient esters

CHAPTER 4
ANANLYSIS

4.1 SWOT ANALYSIS

42
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats,
and so a SWOT Analysis is a technique for assessing these four
aspects of your business. You can use SWOT Analysis to make the
most of what you've got, to your organization's best advantage. And
you can reduce the chances of failure, by understanding what you're
lacking, and eliminating hazards that would otherwise catch you
unawares.

Better still, you can start to craft a strategy that distinguishes you from
your competitors, and so compete successfully in your market.

Strengths

Strengths are things that your organization does particularly well, or

in a way that distinguishes you from your competitors. Think about
the advantages your organization has over other organizations. These
might be the motivation of your staff, access to certain materials, or a
strong set of manufacturing processes.

Weaknesses

Now it's time to consider your organization's weaknesses. Be honest!

A SWOT Analysis will only be valuable if you gather all the
information you need. So, it's best to be realistic now, and face any
unpleasant truths as soon as possible.

43
Weaknesses, like strengths, are inherent features of your organization,
so focus on your people, resources, systems, and procedures. Think
about what you could improve, and the sorts of practices you should
avoid.

Opportunities

Opportunities are openings or chances for something positive to

happen, but you'll need to claim them for yourself!

They usually arise from situations outside your organization, and

require an eye to what might happen in the future. They might arise as
developments in the market you serve, or in the technology you use.
Being able to spot and exploit opportunities can make a huge
difference to your organization's ability to compete and take the lead
in your market.

Threats

Threats include anything that can negatively affect your business from
the outside, such as supply chain problems, shifts in market
requirements, or a shortage of recruits. It's vital to anticipate threats
and to take action against them before you become a victim of them
and your growth stalls.

Think about the obstacles you face in getting your product to market
and selling. You may notice that quality standards or specifications

44
for your products are changing, and that you'll need to change those
products if you're to stay in the lead. Evolving technology is an ever-
present threat, as well as an opportunity!

4.1.1 Fertilizers and Chemical Travancore Limited

Strenghths

 Company with high TTM EPS Growth

 High Revenue and Profit Growth with High Return on Capital
Deployed (ROCE) and Low PE ratio
 Growth in Net Profit with increasing Profit Margin (QoQ)
 Growth in Quarterly Net Profit with increasing Profit Margin
(YoY)
 Annual Net Profits improving for last 2 years
 Company with Zero Promoter Pledge
 Stock gained more than 20% in one month

Weaknesses

 Red Flag: High Interest Payments Compared to Earnings

 Low Piotroski Score : Companies with weak financials

Opportunities

 Profit making Companies with High ROCE and Low PE

45
   Results Screener: Stocks with upcoming results which are
seeing positive shifts in share price
  Turnaround companies- loss to profit QoQ
  Negative to Positive growth in Sales and Profit with Strong
Price momentum
 Highest Recovery from 52 Week Low
 Stock with Low PE (PE < = 10)
 RSI indicating price strength
 High Volume, High Gain

4.1.2 Travancore Cochin Chemical

Strength

o Good record of physical and financial performance in the past

o No strike reported on the last fewW years
o Excellent manager relation
o The company is a feeding industry to other companies
o TCC is a pioneer in the chloral alkali market and has created
reliability creditability among the customers
o Excellent transport facilities

Weaknesses

46
 o Lack of profit motive leads to poor performance
o Employees cost is high compared to other firms
o Large consumption of energy
o Transportation cost is very high

Opportunities

o New project of synthetic retile plant. Retile companies are big

profit in the state due to the availability of the materials in the
state.
o Economic development of the country may results in higher
demand for the product speciality for chlorine in near future.
o Proposal of hide project

Threats

o Competition from foreign countries

o High cost of production
o Higher in price of electricity
o The infrastructure of the company is obsolete compared to
others

4.1.3 KUMAR ORGANIC PRODUCT LIMITED

STRENGTH

47
 o High flexibility due to small structures
o Highly innovative
o Good quality of products

Weaknesses

o High cost due to small structures

o Low budgets
o No platform for knowledge exchange

Opportunities

o Strong demand for regional organic products

o High quality produce available

Threats

o Competition from imported products

o Procurement of specialist inputs

4.2 PORTER’S FIVE FORCE ANALYSIS

Porter's Five Forces is a model that identifies and analyzes five

competitive forces that shape every industry and helps determine an
industry's weaknesses and strengths. Five Forces analysis is

48
frequently used to identify an industry's structure to determine
corporate strategy. Porter's model can be applied to any segment of
the economy to understand the level of competition within the
industry and enhance a com pony’s long-term profitability. The Five
Forces model is named after Harvard Business School professor,
Michael E. Porter.

Porter's Five Forces is a business analysis model that helps to explain

why various industries are able to sustain different levels of
profitability. The model was published in Michael E. Porter's book,
"Competitive Strategy: Techniques for Analyzing Industries and
Competitors" in 1980.1The Five Forces model is widely used to
analyze the industry structure of a company as well as its corporate
strategy. Porter identified five undeniable forces that play a part in
shaping every market and industry in the world, with some caveats.
The five forces are frequently used to measure competition intensity,
attractiveness, and profitability of an industry or market.

1. INDUSTRY COMPETITORS

2. PRESSURE FROM SUBSTITUTE PRODUCTS

3. BARGAINING POWER OF SUPPLIERS.

4. BARGAINING POWER OF BUYERS.

5. POTENTIAL ENTRANTS.

4.2.1 PORTER’S FIVE FORCE ANALYSIS ON FACT

Industry Rivalry:
49
 Industry rivalry is one of the porter’s five forces used to determine
the intensity of competition in an industry. Industry rivalry usually
takes the forms of jockeying for position using various tactics. The
rivalry among existing firms shows the number of competitors that
give tough competition to the FACT. High rivalry shows FACT can
face strong pressure from the rival firms, which can limit each other
growth potential. Profitability in such industries is low as firms adopt
aggressive targeting and pricing strategies against each other.

The rivalry among existing firms will be low for FACT if,

o There are only a limited number of players in the market

o The industry is growwing at a fast rate
o There is clear market leader
o The economic psychological switching costs for consumers are
high
o The exit barriers are low, which means firms can easily leave
the industry without incurring huge losses.

Similarly, some factors increase the Rivalry among existing firms

for FACT. It should focus on the implicit needs and expectations of
its customers to strengthen the differentiation basis. It should raise
switching costs by developing long-term customer relationships.
The organization should also invest in research and development
activities to identify new customer strengths.

Threat of new entity

50
 As the value in use could not be assessed with reasonable accuracy,
the company has considered net selling price for ascertaining
impairment loss. Threat of entity are the

Due to dematerialization
No risk of loss
Misplacement
Theft
Damage of share certificates

Bargaining power of suppliers

The amount of interest paid in terms of section 18 along with the

amounts of the payment made to the supplier. Claims for liquidated
damages against suppliers are accounted for on recovery of the same
from their bills and adjusted to the cost of assets or to the materials/
works as the case may be.

Bargaining power of buyers

Effects for streaming logistics operation on cost effective basis

continued this year also and 87% of the products were directly
delivered to the dealers and dealer to buyers.

Finished products are valued at lower of cost or net realizable value

including final/ estimated subsidy.

Threat of substitution

51
Benefits derived as a result of the above efforts, e.g. product
improvement, cost reduction, product development, import
substitution, etc.

Continuous losses have arisen due to cost and time over run during
revamp of Ammonia and Urea Plants.

4.2.2 PORTER’S FIVE FORCE ANALYSIS OF TCC

Supplier Power

What kind of power do the suppliers have over the organization?

Some examples of the power may include:

 The number of suppliers the organization has for a particular

resource

 The scarcity of supply for a resource

 If there are substitute suppliers for a resource

 Are suppliers contractually tied to the organization?

There is an ultimate threat from suppliers of Forward Integration.

Forward integration is when a supplier takes over the business
functions of an organization further down the supply chain. For
example a computer manufacturer who typically sold goods to stores
who in turn sold to the customer, may consider setting up their own
website to sell their products directly - cutting out the middle man.

52
Buyer Power

Buyer power is the flip side of supplier power. What pressures could
the buyers from the organization place upon it? Some examples may
include:

 How large is the buyer?

 How easy it is for a buyer to switch to a competitor?

 Are the buyers tied to the organization by contracts?

The ultimate threat from buyers is that of Backward Integration.

Backwards integration is when a buyer takes ownership of one of its
suppliers. For example a computer manufacturer may take over the
supplier who provides it with computer cases. Doing this makes the
entire chain more efficient and profitable.

Market Rivalry

What is the competition like in the market place? How strong is the
organization in comparison to the competition? What pressures could
the competition place on the organization (reducing prices to be more
attractive to customer etc).

Threat of New Entrants

When we are looking at the threat from new entrants we tend to talk
about the barriers to entry. The pressures/forces identified detail what

53
are the things that stand in the way of new entrants entering the
market place. Ideally the organization wants to have as many barriers
to entry as possible to make it as difficult as possible for new entrants
to join the market.

Substitute Products

Substitute products includes any products in the market place which

fill a similar need to the product or service provided by the
organization and how easy it is for a customer to switch to a substitute
product.

4.2.3 PORTER’S FIVE FORCE ANALYSIS OF KUMAR

ORGANIC PRODUCT LIMITED

Supplier Power

Often, the first step is to assess how easy it is for the suppliers to
increase prices of inputs. This depends on the following factors:

 The number of suppliers of the key input

 How unique their product or service is

 Their strengths and how much control they have over you

 The cost of switching from one to another

54
Fewer number of supplier choices means you need suppliers’ help
more. This also means that fewer suppliers make them more
powerful.

Buyer Power

When assessing buyer power, you have to ask yourself how easy it is
for the customers to bring prices down. This depends on the following
factors:

 The number of buyers

 The importance of each customer to a business

 The cost to consumers switching from your offering to products

and services by another company.

If you handle only some powerful purchasers, they often dictate the
terms to you.

Competitive Rivalry

The critical thing to consider here is the number and capability of

your business competitors. If there are many competitors and if they
offer equally appealing products and services, you will perhaps have
very little power. This is because suppliers and buyers will choose the
competing companies if they do not like the deal you are offering.

55
You will be very powerful if your product or service is unique. If
competitors cannot offer what you provide, you will have immense
strength. In short, the factors to be considered in this step are:

 The number of competitors

 The quality different between your product and competitor’s

product

 Any other differences

 Switching costs involved for suppliers and buyers

 Customer loyalty

Threat of Substitution

The ability of your buyers to find an alternative is considered here. If

you provide unique software which automates a significant process,
consumers can easily substitute by conducting the process manually.
They may choose to outsource it as well. If the substitution is easy
and viable, it weakens your business. Factors you can assess are:

 Performance of the substitute product

 Cost of change

Threat of New Entry

56
Other’s ability to enter the market can affect power too. The below
factors affect this:

 Time and cost of entering the market and competing

 If there are few economies of scale in place

 The amount of protection for the key technologies

The new businesses can swiftly enter the market and weaken your
position. However, if the market has strong and durable barriers to
entry, you can maintain a favorable position.

4.3 BCG ANALYSIS

The Boston Consulting Group (BCG) growth-share matrix is a

planning tool that uses graphical representations of a company’s
products and services in an effort to help the company decide what it
should keep, sell, or invest more in.

The matrix plots a company’s offerings in a four-square matrix, with

the y-axis representing the rate of market growth and the x-axis
representing market share. It was introduced by the Boston
Consulting Group in 1970.

The BCG growth-share matrix breaks down products into four

categories, known heuristically as "dogs," "cash cows," "stars," and
“question marks.” Each category quadrant has its own set of unique
characteristics.
57
  Dogs (or Pets)

If a company’s product has a low market share and is at a low rate of

growth, it is considered a “dog” and should be sold, liquidated, or
repositioned. Dogs, found in the lower right quadrant of the grid, don't
generate much cash for the company since they have low market
share and little to no growth. Because of this, dogs can turn out to be
cash traps, tying up company funds for long periods of time. For this
reason, they are prime candidates for divestiture.

 Cash Cows

Products that are in low-growth areas but for which the company has
a relatively large market share are considered “cash cows,” and the
company should thus milk the cash cow for as long as it can. Cash
cows, seen in the lower left quadrant, are typically leading products
in markets that are mature.

Generally, these products generate returns that are higher than the
market's growth rate and sustain itself from a cash flow perspective.
These products should be taken advantage of for as long as possible.
The value of cash cows can be easily calculated since their cash flow
patterns are highly predictable. In effect, low-growth, high-share cash
cows should be milked for cash to reinvest in high-growth, high-share
“stars” with high future potential.

58
  Stars

Products that are in high growth markets and that make up a sizable
portion of that market are considered “stars” and should be invested in
more. In the upper left quadrant are stars, which generate high income
but also consume large amounts of company cash. If a star can remain
a market leader, it eventually becomes a cash cow when the market's
overall growth rate declines.2

 Question Marks

Questionable opportunities are those in high growth rate markets but

in which the company does not maintain a large market share.
Question marks are in the upper right portion of the grid. They
typically grow fast but consume large amounts of company resources.
Products in this quadrant should be analyzed frequently and closely to
see if they are worth maintaining.

4.3.1 BCG MATRIX OF FACT

This company lies on question marks because business operating in a

high market growth, but having a low market share. They are a
starting point for most business. Question marks have a potential to
gain market share and become stars, and eventually cash cows when
market growth slows. If company does not succeed in becoming a
market leader, then after perhaps years of cash consumption, they will
degenerate into dogs when market growth declines. Question marks

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must be analyzed carefully in order to determine whether they are
worth the investments required to grow market share.

4.3.2 BCG MATRIX ON TCC

Although commodity and specialty chemical producers face different

issues, they share a common imperative: responding to both growing
cost pressures and customer expectations. BCG helps companies find
innovative ways to meet these challenges.

BCG’s chemical consulting practice covers the breadth of the global

chemical industry, whether it’s working with upstream producers of
petrochemicals to optimize their assets’ deployment or helping
downstream players with a personalization of their nutrition
ingredients. We also help chemical companies deal with
commoditization and develop unique offerings with defendable
margins.

BCG’s comprehensive approach combines deep knowledge of dozens

of chemical industry subsectors and end-user industries with global
coverage of key business topics such as operations, engineering,
marketing, business development, and change management. The
breadth of our experience and work gives us the perspective and
ability to advise multinationals looking for effective chemical
strategies in multiple subsectors, including in petrochemicals and
commodity chemicals, along with niche players in specialty

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chemicals, differentiated chemicals, chemical distribution, and
chemical equipment manufacturing.

4.3.3 BCG MATRIX ON KUMAR ORGANIC PRODUCT

The BCG matrix depends on the item life cycle hypothesis that can be
utilized to figure out what needs ought to be given in the item
arrangement of a specialty unit. As indicated by this method,
organizations or items are delegated low or superior workers relying
on their market development rate and relative piece of the overall
industry. The fundamental thought behind it is that the greater the
piece of the pie an item has or the quicker the item’s market develops
the better it is for the organization.

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 CHAPTER 5

FUTURE PROSPECTS

The Indian chemical industry is among the established traditional

sectors of the country that play an integral role in the country’s
economic development. This sector forms a part of the basic goods
industry and is a critical input for industrial and agricultural
development.

The Indian chemical industry is one of the oldest industries in India

and has made immense contribution to the industrial and agricultural
development of India. It encompasses both large and small-scale
units. The fiscal incentives granted to the small-scale units in the mid-
1980s provided the thrust to the growth of MSMEs in the sector. The
chemical industry serves the needs of sectors such as textiles, leather,
plastics, paper, printing inks and food stuffs, among others.

The chemical industry is among the most diversified industrial sectors

and includes basic chemicals and its products, petrochemicals,
fertilizers, paints, gases, pharmaceuticals, dyes, etc. The sector covers
over 70,000 commercial products, and provides the feedstock to many
downstream industries such as finished drugs, dyestuffs, paper,
synthetic rubber, plastics, polyester, paints, pesticides, fertilizers and
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detergents. Over the years, the industry has been evolving with a shift
towards product innovation, brand building and environmental
friendliness. Besides, customer focus is gaining significance in the
industry.

o High potential for growth in chemical industry

The industry comprises both small-scale and large units (including

MNCs) and produces thousands of products and byproducts ranging
from plastics and petrochemicals to cosmetics and toiletries. The
industry consumes a significant share (around one-third) of its own
production. The industry has a 14% weight age in the overall Index of
Industrial Production (IIP) which gives an indication of its importance
in the country’s industrial growth. A robust chemical industry ushers
in many economic and strategic benefits for the nation. Indian
Chemical industry to touch USD 190 billion by end of 2016.

The Indian chemical sector accounts for 13-14% of total exports and
8-9% of total imports of India. In terms of volume of production, it is
the twelfth-largest in the world and the third-largest in Asia.
Currently, the per capita consumption of products of the Indian
chemical industry is one-tenth of the world average, which reflects the
huge potential for further growth. The Indian advantage lies in the
manufacturing of basic chemicals that are also known as commodity

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chemicals that account for about 57% of the total domestic chemical
sector.

o Industry structure

The chemical industry can be broadly classified into two segments –

organic and inorganic chemicals. Organic chemicals cover over half
of all known chemical compounds, and include petrochemicals, drugs,
cosmetics, agrochemicals, etc. Inorganic chemicals comprise alkalis,
dyes and dyestuffs.

Based on a more functional classification, chemicals can be divided

into basic, specialty and fine chemicals.

Alkali chemicals form the highest chunk in the total chemical

production in India. During FY10, alkali chemicals production (till
February 2009) was 5.5 MMT and accounted for around 71% of the
total chemical production. The dyestuff sector is one of the important
segments of the Indian chemical industry and has forward and
backward linkages with a variety of sectors such as textiles, leather,
paper, plastics, printing inks and foodstuffs. The textile industry
accounts for 70% of the consumption of dyestuffs.

o Trend in production of the chemical industry

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In the Indian chemical industry, alkali chemicals enjoy the highest
contribution in the total production. Since FY02-FY09, the
representation of alkali chemicals in the total production has been
around 70%, followed by organic chemicals at around 20%. The share
of dyes and dyestuffs and pesticides, on the other hand, remain
extremely low; however, the production of dyes and dyestuffs has
been increasing steadily since FY04 due to its growing significance in
sectors such as textiles, leather, plastics and foodstuffs. Nonetheless,
the growth in production of organic chemicals has been extremely
sluggish. During FY03-FY09, the production of inorganic chemicals
rose steadily as compared with the steady production growth of alkali
and organic chemicals, therefore this segment grew at comparatively
healthier CAGR than the industry as a whole.

 In the case of alkali chemicals, soda ash has been enjoying the
highest share in total production since FY03. However, from
FY08, the production of caustic coda has been surpassing soda
ash; the contribution of caustic soda increased to 38% in FY09
from 29% in FY04.

 In the organic chemicals segment, the share of carbon black has

been over 70% of the total production since FY04 whereas in
the inorganic chemicals segment, out of the 19 products,
methanol, acetic acid and acetaldehyde constitute over 50% of
the total production.

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  Imports dominate international trade of the Indian chemical
industry

Imports of chemicals dominate the total trade of major chemicals; in

fact, imports have been representing around 68% of the total
international trade volume since FY03. During FY08, the chemical
industry exported around 3.4 MMT of major chemicals while it
imported 7.4 MMT of the same. The top importing and exporting
destinations are China and Saudi Arabia, and China and Africa,
respectively. Due to the attractive incentives available to chemical
producers in China, their products are comparatively cheaper in the
global markets, and give a tough competition to Indian chemical
players. During FY03-FY08, organic chemicals had a dominating
share in imports and contributed an average of around 57% in the
total volume of imports.

In FY08 organic chemicals contributed over 60% to the total volume

of imports at 1.2 MMT due to the strong domestic demand by end-
user industries such as plastic and petrochemical industries, which
have been witnessing healthy growth since the past few years.
However, domestic players have been finding it difficult to meet the
ever-increasing domestic demand due to inadequate technologies.
Thus, the production level of organic chemicals has been stagnating,
even though the capacity of organic chemicals is being added since
FY04.

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 o Gloomy export scenario seeks to curb anti-dumping activities

The exports of the chemical industry depict a sluggish performance

and have been on a declining trend after FY05. In FY08, around 7%
of the total production was exported. The key export destinations of
the chemical industry are the US, China, UAE and the UK.

In case of composition of total exports, dyes and dyestuff, which form

around 1% of the total production, have been leading contribution at
around 27% since FY03. The segment provides good opportunities
for international trade considering its end-user industries – textiles,
plastics, leather and foodstuffs.

Besides dyes and dyestuffs, alkali chemicals and inorganic chemicals

also form a significant part of the total exports. The growing demand
of soda ash in the industries such as glass and detergents has boosted
the exports of alkali chemicals. However, the exports of alkali and
inorganic chemicals have been declining consistently and in FY08
they decreased by around 69% and 20%, respectively, over FY06.

The industry will continue to be affected by the anti-dumping

activities undertaken by some countries like China. Due to the export
incentives granted to producers of some countries an oversupply is
created in the global market that affects the domestic players who
then seek further fiscal incentives from the government. Further, the

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stringent global environmental norms continue to impede the export
opportunities available to domestic players. Recently, the government
imposed a 20% safeguard duty on soda ash. It is now deliberating on
imposing duties on the affected chemical products as well. Though a
short-term measure, but in the current scenario of economic
slowdown, this would bring some relief to the export players.

o Technology up gradation is required essentially for improving

efficiency

The capacity utilization of the industry remained at a moderate level

of around 79% during FY04-FY08. It has been observed that the
industry has been finding it difficult to source the advantage of
additional installed capacities into production. This trend is seen in
the case of organic chemicals industry that has been adding installed
capacity but has not been able to produce commensurately. During
FY07-FY08, the growth in production of the organic chemical
industry was almost stagnant. The same trend reflected in the industry
figures as well; during FY06-FY08, the total installed capacity rose at
a much faster rate than production.

Over the years, the industry has been implementing technology up

gradation to achieve efficient production; however, the lack of
technology or the deficiency of funds to promote adequate technology
continues to plague the industry. Higher access to technological

68
initiatives, fund to implement these initiatives into production process
and adequate availability of trained and skilled manpower may help
the industry improve its utilization rate and achieve efficient
production levels.

The other problems faced by the industry include: high price of basic
feedstock such as crude oil/natural gas, the price fluctuation mar the
profit visibility and viability for the companies. High fragmentation of
manufacturing units, mostly SSIs and limitation in capacity in the SSI
sector put them in disadvantageous position while tapping export
opportunities with large volume. Another area that poses challenge
for the companies is the lack of coordinated marketing, branding and
distribution development. The low levels of technology and R&D
investments hamper the way for new product and technology
development, leading to lower levels of profitability.

o Investment

The government has made 100% FDI permissible and has de-licensed
most chemical products except those that are hazardous in nature to
drive investments in the sector. During FY01-FY09, the total FDI
investments made in the chemical industry (excluding fertilizers) was
about USD 9,567 man.

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The extent of investment attracted by the chemical sector was evident
in the number of industrial investment proposals it received, inclusive
of the Industrial Entrepreneur Memoranda (IEMs)/LOIs/DILs. During
August 1991 to July 2009, the total number of proposals, filed or
granted, stood at 9,898 and represented around 12% of the total
proposals filed/granted during the same period. The total proposed
industrial investments in chemicals (excluding fertilizers) formed
around 9% of the total industrial investment that stood at around Rs
4,763.6 bn. The proposed investments were stated to generate
employment in excess of 1.3 men. According to the data available
with the Secretariat for Industrial Assistance (SIA), the Department of
Industrial Policy and Promotion implemented 1,149 IEMs during
August 1991 to July 2009 for an investment of Rs 445.6 bn. During
January 2009 to July 2009, Rs 4.4 ban was invested.

The investment in the sector has been consistent and points towards
the rising interest of investors; however, it is imperative for the
companies in the sector to devise new processes and technologies,
develop new products and to follow prudent environment norms to
garner more investments and investor interest.

o Government initiatives

The government has taken various steps to improve the productivity

and efficiency in the chemical sector. The government policies such

70
as 100% FDI and SEZ and industrial parks model of development
have also led to increase in the overall investment in the sector. Some
major initiatives taken by the government for the sector are:

 The licensing requirements have been removed except in the

case of hazardous chemicals. Entrepreneurs are now allowed to
set up chemical industries through the Industrial Entrepreneurs’
Memorandum (IEM) route

 In the Union Budget 2009-10, the Department of Chemicals and

Petrochemicals was granted an outlay of Rs 239.7 bn. Likewise,
the textile sector, which is the most important consumer of the
chemicals, was granted an outlay of Rs 450 ban to
concomitantly sustain textile sector growth and boost demand
for chemicals.

 In order to develop the country as a major chemical hub, the

government set up petroleum, chemicals and petrochemical
investment regions (PCPIR). These regions directed investments
for establishing manufacturing facilities for domestic and export
led production of petroleum, chemicals and petrochemicals. The
PCPIR may include one or more SEZs, industrial parks, free
trade and warehousing zones, EOUs, or growth centers, duly
notified under the relevant central or state legislation or policy.
All the benefits available under the relevant legislation or policy

71
 will continue to remain available to the said zones or parks, as
the case may be, forming part of the PCPIR.

 To mitigate the impact of the anti-dumping activities, the

government imposed a 20% safeguard on soda ash and imposed
such safeguard duties for other affected chemical products as
well.

Under the National Industrial Classification, the chemical industry

includes basic chemicals and its products –petrochemicals, fertilizers,
paints, varnishes, gases, soaps, perfumes, toiletries and
pharmaceuticals. For the purpose of the cluster and industry study, the
chemical industry is classified into five major segments and these are
as follows: alkali, inorganic chemicals, organic chemicals, pesticides,
and dyes and dyestuff. Accordingly, any reference made to the Indian
chemical industry hereon will include the information on these five
major segments exclusively.

o Focus on core competencies and technological innovation

The Indian chemical industry is endowed with availability of low cost

labor. The allied industries such as leather, plastics, food processing,
rubber, textiles offer huge growth opportunities in the long term for
the chemical industry. Besides, the government is also undertaking
several initiatives to sustain the growth of the industry. The promotion

72
of Special Export and Investment Zones, SEZs, cluster development
and monetary incentives through fiscal and policy initiatives will
foster the growth of the industry. Infrastructure sector has gained
significant importance and is a priority focus of the government.
Thus, the increased spending on infrastructure will help in reducing
the infrastructural bottlenecks in the long run. However, issues like
inadequate technologies, skilled labor, environmental norms and need
to innovate remain a threat to the industry.

The players must focus on specializing in their areas of expertise in

line with the global trend. Innovation is gaining importance as it
enables focus on core competence and enables players to lead in
specialty products. The idea is to focus on one’s core competency and
select business segments where competitive advantage exists.
Likewise, the industry must focus on improving its product and
production processes by investing in technology development and
building R&D capabilities. Such a step will enable the industry to not
only build its expertise in a chosen field but also will lead to cut down
in production costs. Adherence to environmental and public safety
norms and promotion of safe management of substances are also
pivotal areas that need focus right from the design, end use, to its final
disposal (hazardous waste) of products.

Logistical bottlenecks, high raw material and fuel prices and anti-
dumping activities are posing a threat to the industry in the short run.

73
Thus technology up gradation, access to skilled manpower and funds
at a reasonable cost, adequate infrastructure support and economical
input costs are essential for the sustained growth and development of
the Indian chemical industry. Even though this industry is currently
affected by economic recession, in the long term it will benefit
immensely from the high growth foreseen in its consuming industries
and the improvement in export markets.

CHAPTER 5

CONCLUSION

This chapter summarizes the upcoming mega trends and potential

challenges and opportunities and outlook for the chemical industry.
The world will have the potential to host the largest, wealthiest and
healthiest society in human history. This formidable potential will
bring not only enormous opportunities, but also formidable challenges
for the world and the industry; like the need to grow while reducing
green house emissions and energy consumption. The chemical
industry is expected to lead in this revolution as it did during the
previous ones; however, that task will not be easy. Enabling massive
economic growth and much higher levels of innovation while
reducing the industry energy consumption and emissions will present
a for challenge to the industry and the world economy. The challenge
74
will be gigantic, but the opportunities, responsibilities and rewards are
out of question. The chemical industry will play again a leading role
due to the next upcoming revolution; we just hope this time we will
not forget it so soon.

The chemical industry converts raw materials into more than 70,000
different products. These products have a broad range of uses in the
food, healthcare, building and construction, consumer goods,
agriculture and transportation industries. Common chemical sector
products include surfactants, pigments, synthetic rubber, polymers,
fertilizers and materials for batteries, to name but a few. As the
chemical industry lies at the heart of several value chains and acts as
a solution provider to other sectors of the economy, it plays a pivotal
role in leading a sustainable recovery. Today, chemical innovations
already contribute to several sustainable development challenges
such as energy and climate, transport, health and food, among
others.

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BIBILIOGRAPHY

 K. Lanz, Around the World Chemistry (1980)

 G. Taylor, Du Pont and the International Chemical Industry
 F. Aftalion, A History of the International Chemical Industry
 www.infoplease.com
 www.scribd.com
 Docshare01.docshare.tips
 www.slideshare.net

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