Business level and Corporate level Strategies of Ballarpur Industries Ltd.

Strategic Management Report

Contents
1. COMPANY INTRODUCTION, VISION AND MISSION ........................................................................ 2 Mission ................................................................................................................................................ 2 Vision................................................................................................................................................... 2 2. 3. CORE COMPETENCIES ..................................................................................................................... 3 BUSINESS LEVEL STRATEGIES OF BILT ............................................................................................ 3 DRIVERS OF LOW COST STRATEGY OF BILT......................................................................................... 4 Innovations ......................................................................................................................................... 5 4. CORPORATE STRATEGY OF BILT :CORPORATE IDENTITY, OWNERSHIP, LEADERSHIP STYLE AND RESTRUCTURING ..................................................................................................................................... 6 Avantha Group .................................................................................................................................... 6 5. 6. 7. CORPORATE STRATEGY OF BILT CHANGE IN SCOPE.................................................................. 7 STRATEGY IMPLEMENTATION ISSUES ............................................................................................. 8 References .................................................................................................................................... 10

Strategic Management Report

1. COMPANY INTRODUCTION, VISION AND MISSION

Ballarpur Papers limited is India's largest paper company and the only Indian company to rank amongst the top 100 paper companies in the world. Ballarpur Papers limited is part of the US$ 4Billon Avantha Group which is Indias leading business conglomerates. The Group has business interests in diverse areas, including pulp and paper, power transmission and distribution equipment and services, food processing, farm forestry, chemicals, energy, infrastructure, information technology (IT) and IT-enabled services. Ballarpur Industries Limited (BILT) is Indias largest manufacturer of writing and printing (W&P) paper. BILTs subsidiaries include Ballarpur International Graphic Paper Holdings B.V. (BIGPH); BILT Graphic Paper Products Limited (BGPPL); Sabah Forest Industries (SFI), Malaysias largest pulp and paper company; and BILT Tree Tech Limited (BTTL), which runs BILTs farm forestry programme in several states in India. Building on its unmatched paper quality, BILT ventured into the paper-based office stationery segment. BILT has mega brands such as BILT Royal Executive Bond, BILT Copy Power, BILT Image Copier and BILT Matrix that have now become an integral part of office stationery. BILTs acquisition of SFI, Malaysia, in 2007 was a watershed event it was the first overseas acquisition by an Indian paper company, it transformed BILT into a major regional player, and elevated BILTs ranking among the global top 100.

Mission
To consistently outperform expectations and deliver superior value to our Customers and Stakeholders

Vision
To become a leading creator of Shareholder value in the Paper industry Indian paper industry is mostly concentrated in states of Andhra Pradesh, Orissa and Maharashtra. Some of the leading players are BILT Papers limited, West Coast Paper Mills Ltd, JK Papers, Tamil Nadu Newsprint & Papers Ltd and Emami Paper Mills Ltd. Over All Pulp and Paper industry (Sales Value)

Though the company ranks 2nd in the overall paper and pulp market, The company accounts for over 50% of the coated wood-free paper market, an impressive 85% of the
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bond paper market and nearly 45% of the hi-bright Maplitho market, besides being India's largest exporter of coated paper.

2. CORE COMPETENCIES
The core Competencies of BILT lies in the area of paper and chemicals. BILT has launched a Research and Development Division in Paper and Pulp (RCDP). RCDP will engage in conducting research and development studies in paper manufacturing including pulping/bleaching, stock preparation, coating and environment safety and provide expertise to the Pulp & Paper industry. BILT has also been developing Farm Forestry since 1990 through its subsidiary company BILT Tree Tech Ltd. (BTTL). Since its inception in 1989, BTTL has concentrated on developing core competency in forestry and is manned by experienced forestry professionals. BILT has taken a special care to target marginal land belonging to farmers below poverty line. Farmers covered under this scheme are assured purchase of their pulpwood produce by BILT at declared support price or market price which ever may be higher. Tailor-made bank loans on long-term basis are made available to the needy farmers. Having such a network has enabled to BILT to perform well in this business of Pulp and Paper. Bilt also has an extensive network of 350 retail distributors spread over 270 locations. We do believe that BILT would be able to handle the current socio-economic environment dynamics. Being in the business of Paper and Pulp, raw material becomes very important. In this case, the raw material comes by cutting down trees in a plantation. This is in effect deforestation. Moreover, in the present world environment, this is a serious issue. However, BILT has taken many initiatives so as to see to it that the environment doesnt get effected. On-going Research & Development activities aimed at tree improvement and clonal development have already started contributing to increased returns to farmers through improved productivity. BTTL has initiated site-specific forestry research projects to identify and produce high yielding clones of pulpwood species like Eucalyptus, Casuarina and Leucaena leucocephala. Plantations raised with high yielding clones of Eucalyptus have achieved substantial increase in yield giving significantly higher returns to farmers. The company plans to progressively increase usage of high yielding clones in the farm forestry programme by adopting tissue culture route. BILT Tree Tech Ltd has also established high quality seed orchards of above species to improve availability of good quality seed and ensure better productivity of its farm forestry programme.

3. BUSINESS LEVEL STRATEGIES OF BILT

Business level strategy of the firm ie how to compete in the business is a companies foremost choice in crafting an overall strategy and beginning its quest for competitive advantage.
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BILT follows a low cost provider strategy in most of the product ranges in which it operates. It is to be noted that the low cost has not to be connected with quality but the fact that the firm is able to achieve low cost means that the various activities across the value chain are performed in a better way than the competitors . This results in 1) Products of BILT provides same benefits to the customers vis a vis competitors in terms of quality ,reliability ,image and service but at a slightly lower price. Eg copier paper. 2) Nearly the same benefits provided to the customers but at significantly lower prices.eg pencil and other stationery products 3) BILT offers product that provides value to the customer in terms of cost benefit of the given product qualitatively different from those of competitors.

DRIVERS OF LOW COST STRATEGY OF BILT

1) Economies of scale : BILT being Indias largest manufacturer of paper and also is the largest exporter is using state of the art specialised machines which helps in achieving volume production in short period of time. BILT made major investments in 2008 at its Ballarpur unit for improving processes. Because of larger production , average cost per unit decreases. 2) Learning /experience curve : The large volume production at BILT and continuous engagement of the work force for considerable periods of time provides opportunities to them to improve their skills and thus becomes valuable company assets and aids the management in designing of efficient layouts , assembly procedures etc. 3) Operation of facilities at full capacity : BILT plants are operating at or near full capacity and this results in significantly lower per unit costs. 4) Larger sales offsetting other overheads: Overhead costs like administrative costs, finance costs, selling costs , advertising costs , all are getting significantly reduced with larger volumes of operation.ion capacity employees , learning experience curve of the employees significantly increases and also lower per unit overhead costs are encountered. 5) Supply chain management: The company is keeping a continuous track of daily sales record of its bulk distributors , shipments are delivered when the stock reaches at the reorder point. This online tracking eliminates administrative costs ad improves efficiency in the system. 6) Integration across the entire value chain: BILT owns the activities across the entire value chain ie from raw materials , which includes wood pulp derived from the plantations controlled by the firm. Captive power plants for in house power requirements , distribution channels are also owned by BILT which results in significant reduction of the cost.
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Innovations
The basic production processes on which firms rely have undergone a fundamental transformation since the early 1800s, beginning with the invention of the Fourdrinier paper machine in France and England which paved the way for mass production of paper products, much like Henry Ford's production line did later for automobiles. Where earlier production processes relied on the craft knowledge of skilled operators and superintendents, newer production processes incorporate sophisticated sensors, information systems, and software-based process controls. Today, new paper machines are nearly 40 feet wide, hundreds of feet long, and over two stories high. The Industry's capitalintensive pulping and papermaking facilities, are designed as high tech computer-based operating systems with paper machines that run at speeds exceeding 60 miles per hour with production outputs of up to 500,000 tons per year. This significant technological advancement in the Paper Industry has required investments of hundreds of billions of dollars. This has required firms to develop and manage increasingly complex relationships with external and internal suppliers of ever more complex production equipment (including software controls). Automated process control systems also have introduced far-reaching changes into the types of skills needed by production crews, requiring firms to make substantial investments in the training of hourly workers and supervisors, growing numbers of process engineers, and new organizational systems for operations management. These shifts have required a highly focused effort on the part of Paper Industry's management teams, which have devoted much of the last several decades to developing and perfecting their massive, capital-intensive operating systems. The net outcome has been a management paradigm that has been steeped in the construction of large, complex technical systems for the mass production of paper, thereby achieving economies of scale. The Industry's world view has thus been long term in focus, technically and production efficiency-oriented and, by design, risk-averse. Some of the other major innovations in the paper industry over the years have been listed below: Minimisation of paper consumption by the introduction of innovative and efficient systems. Maximising Recycled paper content The paper industry attributes this apparent reduction to a rising proportion of energy from wood fuel and black liquor. Black liquor is a sludge of chemicals and lignin that is a by-product of the pulping process. Emissions from these sources are currently excluded from measurements of greenhouse gases. However, this practice is extremely controversial and is currently being reviewed by the U.S. Environmental Protection Agency and others Exposure to international products have forced the Indian firms to change product p
ackaging.Firms have started improving the printing and packaging of their products retain the product appeal among the customers both in Indian and abroad 5 to

Strategic Management Report

4. CORPORATE STRATEGY OF BILT :CORPORATE IDENTITY, OWNERSHIP, LEADERSHIP STYLE AND RESTRUCTURING
Ballarpur Industries Limited (BILT) is a flagship of the US$ 4 bn Avantha Group and India's largest manufacturer of writing and printing (W&P) paper. The current chairman of the company is Gautam Thapar, who succeeded his late uncle L.M. Thapar. Lala Karam Chand Thapar established company in 1945 as Ballarpur Paper and Straw Board Mills Limited, with 'Three Aces' (paper) and 'Wisdom' (stationery) being its first two brands. In 1969 Shree Gopal Paper Mills Limited in Yamunanagar was merged with the company. In 1975, the organisation was renamed Ballarpur Industries Limited. In the 1990s the company was under siege from Southeast Asian companies, who set up Greenfield projects in India. But in 2001, Ballarpur Industries turned around and was able to buy out its Indonesian competitor's Sinar Mas Group Indian division. The name BILT emerged after a corporate rebranding exercise in 2002. Today, it is a wellestablished name, associated with not just paper, but also stationery products. BILT has six manufacturing units across India, which give the company geographic coverage over most of the domestic market. BILT has a dominant share of the high-end coated paper segment in India. The company accounts for over 50% of the coated wood-free paper market, an impressive 85% of the bond paper market and nearly 45% of the hi-bright Maplitho market, besides being India's largest exporter of coated paper.

Avantha Group
BILT is part of Avantha business group which is family owned. Avantha Group is an Indian business conglomerate in India chaired by Gautam Thapar. The US$ 4 billion company is one of Indias largest business conglomerates. Its businesses include power generation and distribution, power transmission and distribution equipment and services, paper and pulp, food processing, farming, forestry, chemicals, infrastructure, Information Technology and Information Technology Enabled Service (ITeS), also referred to as business process outsourcing (BPO).[3] Avantha Group operates in fifteen countries with 20,000 employees. Business units include, Crompton Greaves, (CG) Indias largest power transmission and distribution Equipment Company, and Ballarpur Industries (BILT), Indias largest paper manufacturer, both listed on the Indian Stock exchanges. Other group entities include Solaris ChemTech Industries, Avantha Power & Infrastructure, Biltech Building Elements, Salient Business Solutions and Avantha Technologies. Solaris ChemTech Industries is Indias largest manufacturer of bromine, brominated flame retardants, specialty bromine chemicals, and orthophosphoric acid. Avantha Power & Infrastructure is involved in power generation, while Biltech Building Elements manufactures lightweight autoclaved aerated concrete (AAC) from fly ash. Salient Business Solutions and Avantha Technologies are IT and IT-enabled services companies.
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BILT had revenue of US$ 0.916 FY 2011. It contributes to 23% of the revenues of Avantha group. BILT underwent a corporate rebranding exercise in 2002. BILT also ventured into the stationary business with the launch of its new brand MATRIX comprising of notebooks which changed the stationary landscape in India. Matrix went on become a premium brand and BILT has since then expanded its products in the stationary to pencils, Tapes, Files & folders to Art series. BILTs acquisition of SFI in 2007 was a watershed event it was the first overseas acquisition by an Indian paper company. This acquisition transformed BILT into a major regional player, and elevated the company's ranking among the global top 100. The genesis of the Avantha Group lies in the erstwhile Thapar Group, amongst India's top ten business houses, founded by Lala Karam Chand Thapar in Calcutta (now Kolkata) more than eighty years ago. Indias second largest producer of coal prior to coal nationalisation, the Thapar Group also had interests in sugar, paper, chemicals, textiles, banking, insurance, and engineering products and services. The Thapar Group went on to establish some of Indias most respected institutions, including Oriental Bank of Commerce, Oriental Insurance and Thapar University, to name a few. The partition of the Thapar Groups assets amongst its family members was done in 1998. Previous to that, three years were disastrous for the company, and in 1998, Gautam Thapar took over as managing director He was instrumental in the revival of the group and since then has been performing a fabulous job. CG acquired Pauwels (Belgium) in 2005, Ganz (Hungary) in 2006, Microsol (Ireland) in 2007, Sonomatra (France) in 2008, MSE Power Systems (USA) in 2008 and Power Technology Solutions (UK) in 2010. BILT acquired Sabah Forest Industries (SFI) of Malaysia in 2007. Another group entity, The Global Green Company, acquired Intergarden (Belgium) and Puszta Konzerv (Hungary), while in 2010, the group announced the acquisition of US-based Pyramid Healthcare Solutions, a healthcare BPO firm. The new identity, Avantha, was launched worldwide on 15 November 2007.

5. CORPORATE STRATEGY OF BILT CHANGE IN SCOPE

Ballarpur industries have diversified heavily over the years. The revenues from the paper and pulp division accounted to roughly around 67% whereas the stationary division accounted to around 33%. Hence the diversification type of BILT can be termed as Related. However, within the paper and pulp division, the company has concentrated on lowering the cost of raw materials by going for vertical integration. BILT acquired Sabah Forest Industries which operates an integrated paper and pulp mill in Malaysia. Also, it has
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concentrated on Farm Forestry since 1990 through its subsidiary company BILT Tree Tech Ltd. (BTTL). Backward integration was also done with its caustic soda/chlorine manufacturing facility, which is a vital raw material in the production process of paper. BILT has expanded its presence in global market through the acquisition of Malaysian firm Sabah Forest Industries which too was into the business of paper and pulp. Hence, with in paper and pulp division, the companys diversification can be termed as Related linked. However, in the stationary division, BILT has launched numerous products. It started with the premium notebook brand MATRIX. It then went on to launch stationary products such as pencils, Tapes &Glue sticks, sticky notes, Art series, Files & Folders etc. This can be termed as an unrelated diversification. On the whole, BILTs diversification type can be termed as Related Linked diversification. Avantha group on the other hand has many companies each in different sectors. Some of the industries under Avantha group include BILT which is into paper and pulp industry, Crompton Greaves Ltd. which is into Electric engineering, The global green company which is into retail and food service, Solaris chemtec which is into chemicals, BILT power limited which is into power generation, BILTECH which is into construction and few more. Also, Avantha group has acquired heavily across the geographies. CG acquired Pauwels (Belgium) in 2005, Ganz (Hungary) in 2006, Microsol (Ireland) in 2007, Sonomatra (France) in 2008, MSE Power Systems (USA) in 2008 and Power Technology Solutions (UK) in 2010. BILT acquired Sabah Forest Industries (SFI) of Malaysia in 2007. Another group entity, The Global Green Company, acquired Intergarden (Belgium) and Puszta Konzerv (Hungary), while in 2010, the group announced the acquisition of US-based Pyramid Healthcare Solutions, a healthcare BPO firm. With such high diversified businesses across sectors and geographies, the diversification type of Avantha group is Unrelated Multi business. THE FACT THAT THE BILT GROUP IS OWNED BY THAPER GROUP WHICH IS AMONG ONE OF TEN LARGEST INDUSTRIAL HOUSES OF INDIA AND ARE THE OWNERS OF SOME REPUTED BRANDS IN INDIA LIKE CROMPTON GREEVES PROVIDES VALUE TO THE BILT AND HENCE ITS PRODUCTS.THIS VALUE HELPS IN INCREASING THE SCOPE OF THE BILT ALSO AS IS EVIDENT FROM ITS ACQUISITION OF THE MALAYSIAN FIRM

6. STRATEGY IMPLEMENTATION ISSUES

One of the most important raw materials for the paper and pulp industry is the availability of wood. However the availability of wood might create a serious problem in the coming future. The depletion of forests and restrictions might be a major reason to worry. Moreover, BILT has always been in the low cost business. However, of late they have been trying to enter into high value products which would compel them to price their products
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much higher. This would go against the image that BILT has in the market. With growing competition where retaining the market share is going to be serious challenge, this could cause even more trouble.

Strategic Management Report

7. References
www.wikipedia.com http://www.bilt.com/ http://www.avanthagroup.com/ http://www.biltpaper.com/ http://www.slideshare.net/jaaaspal/indian-paper-industry-presentation http://www.indiainfoline.com/Markets/Company/Background/Company-Profile/BallarpurIndustries-Ltd/500102 http://www.infinityfoundation.com/mandala/t_es/t_es_tiwar_paper_frameset.htm http://www.iloveindia.com/economy-of-india/paper-industry.html

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