Ajanta Packaging

Assignment 1: Ajanta Packaging

A report submitted to

Prof. Preeta Vyas

In partial fulfilment of the requirements of the course

Written Analysis and Communication – I

By

Piyush Sevaldasani

Section C

Roll no. 188175

On

08-07-2018

[pic 1]

MEMORANDUM

To: Deepankar Agarwal, Partner

From: Piyush Sevaldasani, Executive Assistant

Date: July 8, 2013

Subject: An examination of factors to be taken into consideration while deciding diversification to PET bottles

Considering the recent growth of alternatives in packaging materials such as PET, plastics, tetra packs etc. and the price war initiated by the competitors, I have presented below an analysis of factors which needs to be considered while making the decision to continue with the present business of supplying the glass bottles or to diversifying into PET bottles.

Various factors such as the growth in the global packaging industry, Indian packaging industry, new alternatives available in the market, the growth of various Industries in India, financial statements of Ajanta and the price war initiated by the competitors in the glass market has been considered for analysis.

Situational Analysis

In the recent times, new alternatives to packaging material have arrived in the market. These modern packing materials solve many shortcomings of the traditional packaging materials.  Conventional forms of packaging such as glass are fragile, heavy and costly. On the other hand, new packaging materials made up of plastics (PET), paper cardboards etc. are cheap, durable and light in weight making it convenient for transit purpose. Also, plastic can be customised easily.

Ajanta Packaging, the supplier of glass bottles, is facing fierce competition from other packing alternatives such as PET in the market. Though the company has seen enormous growth in the past from 1981 to 2012, the growth in the past five years has been quite stagnant with decreasing operating profit margins (see exhibit 1). It has always been a quality focused and customer centric firm. Over the years it has established a robust procurement and supply-chain system. It has eliminated risk from operations by increasing the number of suppliers. Also, it has established various warehouses across the country to provide customers with service on time leading to lower inventory cost. Lower freight costs have led to more sales for Ajanta. Another astounding fact is that 90% of the revenue proceeds comes from recurring customers. This is seen as a good sign as despite cheaper alternatives present customers are satisfied with Ajanta owing to quality CRM practices.