Situation Analysis of Ajanta Packaging

Assignment 1: Ajanta Packaging

A report submitted to

Prof. Rohini Patel

In partial fulfilment of the requirements of the course

Written Analysis and Communication – I

By

Avnish Bhutra

Section A

Roll No. 188058

On

08-07-2018

[pic 1]

MEMO

TO: Deepankar Agarwal, Partner, Ajanta Packaging

FROM: Avnish Bhutra Executive Assistant, Ajanta Packaging

SUBJECT: Situation Analysis of Ajanta Packaging

DATE: July 8, 2018

This is in reference to your need of situation analysis of the glass packaging. That analyses all the factors for decision making.

SITUATION ANALYSIS

Glass has been a prominent material used in the packaging industry but lately, it has been facing competition from various other forms of packaging which have evolved due to technological advancements, change in the behaviour of the customer, and also change in consumption patterns. At the global level in the year 2010 the packaging industry had a revenue of around $500 million growing at a compound annual growth rate (CAGR) of 3.1% for last 10 years whereas in India it stood at $14 billion in 2010.

Ajanta Packaging had 95% of its business coming from glass bottles in 2010. Ajanta Packaging by 2012 established itself among one of the major glass-bottle suppliers. All this was possible because of its quality, cost, customised glass packaging options and most importantly customer loyalty, i.e. 90% revenue came from the same customers which also highlights the superior customer relationship management of the company.

The growth of glass packaging industry in India from 2010 to 2012 was around 28% i.e. $14 billion to $23 billion and the growth was expected to further accelerate due to growth in middle class, changing consumption pattern and increasing urbanization. But the same didn't happen due to increase in the availability of substitutes like PET (polyethylene terephthalate) bottles, aluminium cans, tetra pack and many more. In 2012, Glass packaging had only 11 % market share of the total packaging market. Another issue faced was that the glass packaging industry was on a price war. All the suppliers in order to either retain their existing customers or to attract new customers slashed their prices and on the top of that, the price of raw material also increased. All of this resulted in decrease in the profitability of the company. Even when the Ajanta's sales were rising but the profit remained either constant or declined (see Exhibit 1).