15-02-2013, 11:59 AM
ANALYSIS OF GODREJ INDUSTRIES LTD.
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INTRODUCTION
Godrej Industries Limited (GIL) is part of the Godrej group. It is one of the leading business groups in India and is in the businesses of Oleochemicals, surfactants, finance & investments and estate management. It has substantial investments in several industries including oil palm plantation, property development, animal feeds and agro-products, personal, care poultry and household care, confectionery, etc. It’s a public limited Company and is listed on BSE & NSE. Godrej Industries ltd. is India’s largest manufacturer of oleo chemicals. Also Godrej’ Nature’s Basket is a retail venture under Godrej Industries ltd. It also has its share in many industries such as Godrej consumer products, Godrej Agrovet, Godrej Properties, etc.
Oleo chemical Industry Analysis:
Industry trend:
The global industry of basic oleo chemicals is changing at a dramatic pace. While in Europe, US and Japan, the production of fatty acids and fatty alcohols remains constant or is even decreasing, South East Asian countries, with their strong raw material base, are expanding with world scale plants and increasing rapidly their global market share. In glycerin sector, even Europe is showing good signs of growth. It can be expected in South East Asian countries, that the existing producers of basic oleo chemicals will gradually direct their future growth to the development of derivates of fatty acids, fatty alcohols, methyl esters and glycerin.
Trend in India is much better than the developed countries. With the world on the path of recovery, the demand of oleo chemicals is increasing. Also the domestic demand is increasing with development. Indian Oleo chemical market is expected to grow at around 6.8%. Domestic demand within Pacific and East Asia region is expected to continue its domination in the Asia Pacific region till 2013. Strong internal demand in China and India which drives the inter region trading will further propel East Asian and Pacific growth rates. Also the abundance of raw materials is an advantage for India. The major players producing oleo chemicals in India are Godrej, Reliance, VVF Ltd., Reliance, Rayalseema, Nirma Ltd., Foods Fats & Fertilizers., Rhodia Chemicals Ltd., & Sunshine Industries. These organizations have modern plans equipped with latest technology and also with excellent techno backup. But due to strong growth in Asian countries and sluggish growth in these countries major companies such as Uniliver ltd, Henkel, etc have already exited this market.
SWOT analysis of the Oleochemical industry:
• Strengths: Use of palm oil as a raw material provides various advantages. It is a versatile material which can be used to manufacture edible as well as non-edible products. Due to growth in the industry huge investment is done in R&D. The price of palm oil is also attractive thereby reducing the overall price. Infrastructure is also well developed in ASEAN. Strong infrastructure base helps the industry to innovate in its n\manufacturing and increase its efficiency.
• Weakness: There have been many instances of conflicts between producers and refiners. This is affecting the supply of the products. Palm oil lacks in product image. Palm oil is sold mainly on its price. It is used as a substitute of vegetables, etc. Since it has little or no image it becomes easy for anti tropical oil campaigners to dampen the image of palm oil. Lack of information to develop best practice for the industry. There are very few benchmarks to compare. Supply of palm oil cannot be high every successive year as they require time to recover after a good harvest.
Company Description:
Godrej Industries has the reputation of being India's leading manufacturer of oleochemicals. It makes more than a hundred chemicals which are in use in two dozen industries. It also manufactures vanaspati, edible oils and bakery fats. Besides, it has its operations in real estate. It is a member of the Godrej Group. It was established in 1897 and has since grown with great pace. It is now a US $ 1.875 bn conglomerate. The company was initially called Godrej Soaps. On March 31, 2001 the consumer products division got de-merged into Godrej Consumer Products and Godrej Industries. Now there were 2 separate corporate entities: Godrej Consumer Products and Godrej Industries.