Assignment 1: Ajanta Packaging

A report submitted to

Professor Preeta Vyas

In partial fulfillment of the requirements of the course

Written Analysis and Communication-I

By

Vinod Sekar

Section C

Roll No: 188282

On

08-07-2018
MEMORANDUM

To: Deepankar Agarwal, Partner, Ajanta Packaging

From: Vinod Sekar, Executive Assistant

Date: April 30, 2013

Subject: Situation Analysis on the provided information pertaining to Ajanta Packaging

Mr. Deepankar,

Based on the information available to me, I submit a well charted out, comprehensive analysis
encompassing all the future possibilities that Ajanta Packaging might face as a result of changes
and fluctuations in industries related to packaging.

Please let me know if there is anything more you need me to do with this report.

Regards,

Vinod Sekar

Executive Assistant

Ajanta Packaging
SITUATION ANAYSIS

Ajanta Packaging, which primarily supplied glass-bottles, had to take an important decision
about the changing trends in the packaging industry. They had warehouses in multiple locations
so they were able to lower freight costs and offer just-in-time supplies. With a very high quality
of service and superior CRM, 90% of the revenues came from repeat customers. Though Ajanta
diversified into pharmaceutical PET bottles, 95% of its business came from glass bottles. With
such high customer loyalty and well established infrastructure, Ajanta will be able to adapt to
changes and diversify along with times.

Both the global and Indian packaging industry had grown steadily with CAGR 3.1% and
15%. After the adoption of narrow neck glass-bottles, the weight of the bottles dropped by 25%
which improved the control over glass distribution. In the past five years there has been a threat
to the glass-bottle-packaging industry from other packaging solutions, primarily PET bottles. In
2010, 80% of the packaging in India was rigid and 20% was flexible packaging. This shows that
Indian people still use conventional form of packaging. The glass packaging had only 11%
market share of the total packaging market. Moreover the aesthetics had gained importance and
for products like soft drinks, cosmetics and liquor the glass bottles had become highly seasonal.
This increased the storage costs of the companies. The Consumers, Marketers and the retailers
preferred PET bottles because they were sturdy, light, had longer shelf-life, were cost-effective
and they allowed innovative package designs. The global PET was expected to reach 23.4
million tons by 2020 with a forecasted CAGR of 6.4%.

The glass-bottle industry depended on three major industries such as Soft-drinks,

Pharmaceutical and the Indian Made Foreign Liquor (IMFL). These industries were growing at a
very fast pace. IMFL was expected to grow at a CAGR of 30% and Soft Drinks industry had a
growth rate of 5%. Pharmaceutical was estimated to become a US$15 Billion industry by 2014.
In all the three industries the future of glass-bottle had a negative impact. These industries were
shifting to PET bottles because it was cheaper, less breakages, easy transportation, less weight,
small pack size and convenient disposal. Yet around 85% of the soft drinks were still sold in
returnable bottles. And moreover the consumer preferences for premium brand liquor were
increasing. The premium brands were more unlikely to shift from glass-bottles.
 The raw material prices and the operational expenses were affected due to inflation which
increased the cost price. Though Ajanta Packaging had established a top position as a primary
glass-bottle supplier in India, it only contributed to around 5% of the total revenue (see Exhibit
1). Cleary we can see that it had a lot of competitors and because of that it was not able to
increase its selling price. These were the main reasons why even though the sales were
increasing every year, Ajanta Packaging was not able to increase their profits (see Exhibit 2).
EXHIBIT 1: MARKET SHARE OF AJANTA’S GLASS-BOTTLE-PACKAGING
Total Packaging Market Share US$18.5 Billion in 2012

Glass bottle
Packaging
(11%) US$2
Billion

Ajanta’s market share in Glass-bottle-Packaging

Ajanta
Packaging(US$1
02 Million) 5%
 EXHIBIT 2: SALES AND PROFIT OF AJANTA PACKAGING (IN US$
MILLIONS)

120

100

80

Sales Turnover
60
Total Expenses
Operating Profit
40

20

0
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