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Page 1: Jayakrishna..Organisaional study

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CHAPTER - ONE

INTRODUCTION

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INTRODUCTION

Introduction to the study

This report is based on the organizational study conducted at “KARNATAKA SOAPS

AND DETERGENT LTD”, which is one of the largest producers of sandalwood oil

and sandalwood soaps in the world. It is located at the heart of Bangalore city which is

the electronic capital of India. The company KS&DL was started in the year 1918 by

maharaja of Mysore in the name Government Soap Factory and later in the 1980 was

re named as Karnataka Soaps and Detergents Ltd. The company was in a state of

winding up in the year 1991 and was under the control of BIFR. But in 2003 the entire

carried forward loss of Rs.98 Crores wiped out and in May BIFR, declared the company

to be out of its Purview. The Company is making profit continuously, it is the only

State Public Sector unit that has come out of BIFR

The Mysore sandal brand of soaps of KS&DL is not only famous in India but in UAE,

Australia, Singapore.Etc. The company initially started with Mysore sandal soap but

later expanded their product line into Detergents, Talcum powder and Agarbathties.

The study, done for a period of one month from 2nd April to 2nd May 2014, focuses on

the structural and the functional aspects of Karnataka Soaps And Detergent Ltd., its

product profile, markets and the major competitors in their fields of business activities.

The industry and the environment of the firm is analyzed in detail and the study attempts

to identify the strengths and weaknesses of the firm while exploring its possible

opportunities and threat.

Scope of Study

The study is focused on the manufacturing facility, financial operations and Operational

activities of Bangalore unit of Karnataka Soaps and Detergents Ltd. The activities of

the company in other branches are not within the scope of this study. The structural

aspects, functional aspects of all the departments like the Finance, Human Resource,

Marketing, Materials, Research and Development and Production are covered in this

study. However a detailed study on the production process or the technology being used

or a detailed financial analysis is not done.

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Objectives of the study

The major objectives of the organizational study conducted Karnataka Soaps and

Detergent Ltd are as follows:

To have an overall understanding about Karnataka soaps and detergent ltd as an

organization, its history and the current status.

To study the products, the market which they have targeted and its business

process.

To analyse the Industry in which the firm operates and the external environment

impact over the company.

To study the organizational structure, departmental structure, their uniqueness,

their deficiencies, interactions and interrelationships.

To identify the Strength Weakness Opportunity, threats of Karnataka soaps and

Detergent Ltd (SWOT Analysis) and attempt to suggest ways in which the firm

can use its strength to exploit the opportunities and mitigate the threats.

Methodology for the study

The study is on the organization as a business entity and it is descriptive in nature.

Information and data collection was mainly done through one to one interactions with

the members of the management team and employees. Both formal and informal

methods have helped in the better understanding of the working of the business. The

study was done in a systematic manner following a predefined schedule wherein all the

departments were covered one by one. For the interaction with the key personnel and

top management, appointments were fixed and formal interviews were taken.

Secondary data sources like the Departmental manuals, Audit reports, Marketing

brochures. Material data from company website and other websites hosted by reputed

organizations were also used for this study.

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Limitations of the study

The in-depth and detail study of the organization could not be achieved due to time

constraint. The outcome of the study is highly dependent on the perception, attitude and

understanding of the informer. The Busy schedules and odd working hours (shift duty)

of the supervisors and employees had made them unavailable for interactions during

the study which could have really made the study more complete and valuable.

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CHAPTER – TWO

ANALYSIS OF

BUSINESS ENVIRONMENT

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ANALYSIS OF BUSINESS ENVIRONMENT

Analysis of remote external environment

The external environment of an organization comprises of all the entities that exist

outside its boundary, but have significant influence on its growth and survival. An

organization has little or no control over its environment but needs to constantly

monitor and adapt to these external changes, a proactive or reactive response leads to

significantly different outcome. It is actually the external environment that shapes an

organization. Any organization that easily adapts to the environment essentially

survives and the one that do not are the ones that are eliminated in the competition. The

informational resources on external environmental forces are critical to an

organization’s stability and survivability and all this data must be collected and

analyzed from which to implement strategies and to maximize the organization’s

strengths and opportunities, while minimizing its weakness and threats.

The external environmental factors that affect the company’s business could be

analyzed using PESTEL analysis. This analysis is an important tool that executives

can rely on to organize factors within the general environment and to identify how these

factors influence their Organization. PESTEL is an anagram, which means it is a word

that is created by using parts of other words. Where

P – Political Factors

E – Economical Factors

S – Social Factors

T – Technological Factors

E – Environment Factors

L – Legal Factors

Now we can see how these factors of the external environment affect the functioning

of Soaps and Detergents manufacturing Industry.

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Political environment. The political segment centers on the role of government in

shaping business. This segment includes elements such as the stability of governments

and the policies of different political parties. In the case of Soaps and Detergents

industry the political environment plays a major role. In the recent union budget,

government has increased the customs duty on caustic soda from 7.5% to 15. Caustic

soda is one of the main raw material that is being used in the production of soaps and

detergents and such a hike on customs duty will at least lead to hike in the price of

products of those companies that depends on imports of caustic soda. The industry is

also facing challenges due to higher power cost, cheaper imports and impact of

cascading duties and taxes. But there has also been relief for the soaps and detergents

industry in the recent budgets like customs duty rationalization on non-edible grade

industrial oils. However, the benefit might be too small to be passed onto the consumer.

To encourage domestic production of soaps and oleo chemicals, the government has

rationalized the customs duty structure on non-edible grade industrial oils, fatty acids

and fatty alcohols at 7.5%. Edible oils are another raw material that is used for the

production of soaps and detergents. The reduction in customs duty for non-edible oils

should have a favorable impact on input cost pressures for the soaps category. So we

can observe that there has been a mixed impact created by political environment for

soaps and detergents industry.

Economic environment. The economic segment centers on the economic conditions

within which the organization operate. It includes elements such as interest rates,

inflation rates, gross domestic product, unemployment rates, levels of disposable

income, and the general growth or decline of the economy. In the case of soaps and

detergents industry the economic environment is showing a positive swing. Penetration

of toilet soaps is high at 88.6% in the Indian economy. However per capita consumption

levels remain low India's per capita consumption of soap at 460 gms per annum for the

current year. All major soap companies are targeting the rural market for penetration as

it is showing good signs of opportunity.

Now in the case of detergents the current per capita consumptions stands at 2.7 kg. High

consumer awareness and penetration levels will enable the market to grow at an average

8-10% per annum with slightly higher growth in the rural areas in the Indian market.

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Soaps and detergents industry is such an industry that require a huge initial investment

and it is a highly capital intensive industry, so new companies in this industry require

financial help from banks and financial institutions. In India the recent monetary

policies of RBI has decreased the Repo and reverse repo rates of banks which will

enable the commercial bank to provide loans to public and for business purposes. This

will encourage the development of new companies in India especially in the soaps and

detergents industry since it is an industry which will have demand for their products all

the time. Also all the state governments are encouraging new entrepreneurs to develop

by providing financial help at the initial stages. So all in all there is a positive swing in

the Indian economy for all industries, especially for soaps and detergents industry.

Social environment. Social factors include trends in demographics such as population

size, age, and ethnic mix, as well as cultural trends such as attitudes towards consumer

activism. Sometimes changes in the social segment arise from unexpected sources.

Soaps and detergents are an indispensable products for human beings. In the case of

soaps and detergents industry the growth of the companies depends on the population

growth especially households with children. Now India there is a huge market for both

soaps and detergents. All the cultures and religious beliefs in India encourage

cleanliness, so there is a huge demand for the products of soaps and detergents industry.

Not only in India but all over the world there is an increasing importance for cleanliness

hence there is a positive cultural support for soaps and detergents industry.

Technological Environment. The technological segment centers on improvements in

products and services that are provided by science. Relevant factors include, for

example, changes in the rate of new product development, increases in automation, and

advancements in service industry delivery. One key feature of the modern era is the

ever-increasing pace of technological innovation.

Soap and detergent manufacturing is a highly automated industry and it involves

significant capital investment in plants and equipment. Computers control production

equipment and inventory management. Many companies use electronic data

interchange (EDI) to optimize the purchasing process. Due to the high level of

automation, the average plant has fewer employees. R&D involves creating, testing,

and improving product formulation, and evaluating environmental compatibility.

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Micro encapsulation technology allows manufacturers to deliver unstable ingredients,

like vitamin C, through soap to the skin. Technological advances thus have a great

influence in this industry. Majority of the companies in this industry are private sector

companies and hence can spend a lot of funds for the up gradation of technology for

faster production. Only those companies that are technologically advanced can stand in

this industry for a longer period of time.

Environmental Factors. The environmental segment involves the physical conditions

within which the organization operates. It includes factors such as natural disasters,

pollution levels, and weather patterns. The wastage of Raw materials in the production

process is also considered as an act against the environment

The wastages created by these industry are some harmful for the environment and thus

many rules are created by the governments and international institutions for the

protection of the environment. It has made mandatory that all companies should have

ISO-14001 standards and their products must have Ecomark. Also the products should

be packaged with materials that can be recycled and re used. Hence there are certain

strict rules under the environmental factors that create a major impact on the soaps and

detergents industry.

Legal Environment. The legal segment centers on how the courts and laws of the land

influence business activity. Examples of important legal factors include employment

laws, health and safety regulations, discrimination laws, Intellectual property rights and

antitrust laws.

The courts play an important role in every industries success. The quality of soaps are

rated on the basis of TFM rate. The minimum rate that is required is 55%. Anything

less than 55% is not considered as toilet soaps, so it is a legal rule that all companies

must at least have 55% TFM rate for their soap products.

Also there is a huge global competition in this industry, many companies apply for

intellectual property rights for their products. . If it is not protected, new firms will copy

the technique and gather the profits. So rights like IPR or Patents are beneficial for

companies.

So these are some of the ways these external factors effect Soaps and Detergents

manufacturing industry and the manner in which they influence their strategies.

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INDUSTRY PROFILE

Karnataka Soaps and Detergents Limited belongs to the soaps and detergents

manufacturing industry. The soap and detergent manufacturing industry includes about

700 companies with combined annual revenue of $17 billion. Major companies in the

consumer sector include divisions of Procter & Gamble (P&G); Unilever; and Dial.

Major companies in the commercial sector include divisions of Ecolab and US

Chemical. The industry is highly concentrated: the top 50 companies hold almost 90

percent of the market. The soap and detergent industry includes companies that are

primarily engaged in manufacturing soap, synthetic organic detergents, inorganic

alkaline detergents, and crude and refined glycerin from vegetable oils and animal fats.

It is an international industry, and during the early years of 1990, world demand for its

products has increased 1 to 3 percent every year. Many of the participants in the industry

competed on a global basis. According to analysts, there is a firm correlation the

standard of living of a nation and its usage of soap and detergent products. The analysts

are expecting the industry to continue to grow in both the industrialized as well as

developing nations.

The growth of this industry depends on Population growth, especially households with

children, drives demand in the consumer sector, while growth in economy drives

demand in the commercial sector. The profitability of individual companies depends on

several factors, such as efficient operations and effective sales and marketing. Large

companies have scale advantages in domains like buying, manufacturing, distribution,

and marketing. Small companies can effectively compete with large companies by

formulating specialized products, offering superior customer service, or catering a local

market. The industry is capital-intensive with average annual revenue per worker more

than $700,000. The industry is evenly split between the commercial and consumer

sectors, both being highly competitive with large companies spending millions to

maintain market share. Marketers packaged products differently to meet the needs and

requirements of specialized users like households with infants or exclusively for men

and women. To meet the requirements of different market segments, the industry saw

a development of brands and varieties. For example, a specific large super-market

might contain more than 40 different varieties of soaps and detergent including both

liquids and powders.

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The manufacturing of soaps and detergents is highly automated, which involves

substantial capital investment in plants and equipment. Computers are used to control

production equipment and manage inventory. Many companies use sophisticated

techniques, such as electronic data interchange (EDI) to optimize the purchasing

process. Due to the high level of automation, the average plant has fewer numbers of

employees.

The soaps and detergents industry has a good opportunity for growth in the coming

years. So in order to exploit this opportunity the different companies in this industry

should develop certain strategies. One strategy can be multi-purpose products, that is.

Detergents with bleach and soaps with moisturizers and deodorant offer multiple

benefits or specialized products that target only a specific segments of the market like

anti-allergy products target consumers with sensitive skin, and products containing

natural ingredients or special biodegradability properties target environmentally

conscious consumers. The main thing that is required to stay in this industry is to have

a good customer base in the market. It is due to this companies like P&G and Unilever

are able to stay in the market for a long period of time and also enjoy the tag if being

the market leaders.

Global Scenario. Soap manufacturing was started in North America. Some American

companies with well-known names were started 200 years ago. During the middle age

soap was made at various places in Italy, France, England, and other companies. France

became famous and small factories were established there. The growth of cities and the

textile industry in the early nineteenth century increased soap usage and stimulated the

rise of soap-making firms. By 1840, Cincinnati, then the largest meatpacking center in

the United States, had become the leading soap-making city as well.

By the late 1920s three firms had come to dominate the industry: (1) Colgate-

Palmolive-Peet, incorporated as such in 1928 in New York State, although originally

founded by William Colgate in 1807; (2) Lever Brothers, and (3) Procter and Gamble.

In 1940 the "big three"—Colgate, Lever, and Procter and Gamble—controlled about

75 percent of the soap and detergent market. Procter and Gamble had about 34 percent

of the market. Lever was a close second with 30 percent, and Colgate trailed with 11

percent. This was the history about how the global soaps and detergents industry got

shaped in the world.

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Coming to the year 2014 the market size of global soap and detergent market size is

estimated to be around 56M tonne. The soap and detergent manufacturing industry

includes about 700 companies with combined annual revenue of $17 billion. The major

companies in the global market currently are 1.Unilever, 2. P&G and 3. Dial. The

industry is highly concentrated and the top 50 companies hold almost 90 percent of the

market. Toilet soaps account for more than 30% of the total market of soap and

detergents. In Asia, even though the countries like China and India are showing rapid

growth in the toilet soap section, the Japanese toilet soap industry is showing signs of

decline due to the preference of consumers for liquid soaps. This trend is also observed

in other developed markets like the US and Europe, which is adversely affecting the

toilet soap industry. Market share of body wash was estimated to be around 2% in 2014

and is showing signs of healthy growth in these markets. Major products of soap and

detergent industry include soaps, laundry detergents, dishwashing detergents,

household-cleaning products, hair cleaning products, and toothpaste. Laundry

detergents account for 40 % of the overall market, while soaps for 20 % and

dishwashing detergent for 15 %. Laundry detergents come in powder as well as liquid

form, and may contain also contain bleach additives or color brighteners. Dishwashing

detergents come in powder, liquid, gel and tablet forms. Soap comes in bars or liquid

forms and may have several properties, such as moisturizing, antibacterial, or deodorant

benefits. So some of the opportunities for growth in this industry is through acquisition,

increasing productivity and exports.

Indian Scenario. In India the first soap industry was established North West Soap

Company in 1897 at Meerat following the Swadeshi Movement.from1905 onwards few

more factories were set up.

They are: Mysore Sandal Factory At Bangalore, Godrej Soap Factory At Mumbai,

Bengal Chemicals, Tata Oil Mills, Lever Brothers Company.

When it comes 21st century we can see that the soap industry all around the world is

being dominated by the big two companies that is Unilever, and Procter and Gamble.

Around 80% of the total market share of soap and detergents industry in the world is

being held by the big two. It has been because of their good quality products and

customer loyalty these big three companies were able to hold the maximum share of

the soap market in the world for a century or more.

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The country’s per capita consumption of detergent powders and bar stands at 1.6kg and

soaps at 460 gms.Hindustan Unilever, which have clear leadership in the cleaning

business sells in all over the cleaning business in India.

The Indian soap industry continued to flourish very well until 1967-68, but began to

stagnate and soon it started to recover and experienced a short upswing in 1974. This

increase in demand has occurred due to the following matters:

1. Growth of population

2. Increase in disposable income of the people

3. Increase in consumption rate

4. Increase in urbanization

5. Growth in the mindset of people regarding the concept of personal hygiene

The Indian soap industry has been long dominated by hand full of companies. Indian

soap industry volume is Rs. 4800 crore. For the purpose of gaining a competitive

advantage, Indian companies are now Re-launching their brands with value addition to

exploit the customers across India. The recent trend has been introduction of toilet soaps

with Ayurveda content and launching of Ayurveda soaps. Also recently the target

markets of these soap industries have been rural market rather than urban. Thus started

penetrating into the rural markets.

Some of the major players in the Indian soap industries are: Hindustan Unilever,

Karnataka Soaps and Detergents Limited, Godrej Soaps Private Limited

New entrants to the Indian market are: Proctor and Gamble Limited, Wipro Ltd, Nirma

soap works

The Indian soap industry includes around 700 companies which has both major and

local players and the annual revenue generated from this industry is about $17 billion

dollars. In the Indian market the soap industry has been divided into 2 segments, they

are:

Organized sector

Unorganized sector

Karnataka Soaps and Detergents Limited comes under the category of organized sector.

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Regional Scenario. Karnataka is the original name of sandalwood in India which also

been called as “Gandhada Gudi”.Karnataka is the home of the perfumed sandalwood.

Its oil is mainly used for the manufacturing of sandal soaps .Karnataka produces the

70% of total production of sandalwood oil in the world. Karnataka Soaps and

Detergents Limited is a public sector undertaking that is engaged in the production of

soaps, detergents and extraction of sandalwood oil. Toilet soap manufacturers faces the

problem of high prices of raw materials and KS&DL in particular, confronts the

problem is shortage of raw materials and its high prices. As a result of this the products

of KS&DL are high priced when compared with its competitors. The products of

KS&DL climb better place inn certain marketing mix variables against its competitors,

in respect of cleanliness, beauty factor, attractiveness, fragrance etc. The most

important competitive product of Mysore sandals soap of KS&DL in Lux, Dove, Pears,

cinthol and Hamam.

Challenges of Soaps and Detergents Industry

Environmental Compliance. Manufacturers must comply with differing state and

country environmental regulations. Phosphates used in powder laundry detergent are

banned in many states and European countries. Companies must also comply with

regulations governing waste disposal. Some large companies are actively involved in

cleaning contaminated sites due to past operations.

Industry Concentration. Large multinational companies dominate the industry. In the

consumer segment, companies spend millions on marketing to protect brand name

products like Tide, Cascade, and Ivory. The top four companies represent almost 90

percent of the US market. Scale advantages in almost every aspect of operations present

major challenges for smaller manufacturers.

Raw Material Pricing. Volatile oil prices greatly affect suppliers of petroleum-based

surfactants. Historically, heavy competition has made suppliers hesitant to pass price

increases to detergent manufacturers, with raw materials pricing rising less than 1

percent a year. However, rising oil prices led to significant increases in raw material

pricing in 2006 for the first time in five years.

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Reliance on Key Customers for Consumer Sales. Companies rely heavily on large

retailers like Wal-Mart, Costco, and Target for a sizable share of business. These large

retailers have the power to demand price concessions and supply chain management

services from manufacturers.

Global Exposure. Most large companies manufacture and sell products globally.

Fluctuations in exchange rates and foreign market conditions affect earnings of

companies with a large percentage of sales coming from other countries. Ecolab’s

international sales are over 40 percent of company revenue.

Future Growth & Prospects of the Industry

Competition amongst the MNCs has intensified, leading to shrinkage of margins. Low

margins and high volumes characterize the industry. Penetration of toilet soaps is very

high at 98%. However per capita consumption levels remain low, India’s per capita

consumption of soap at 460 gms per annum is lower than that of Brazil at 1,100gms per

annum which shows the light of opportunity for the firms in the midst of cut throat

competition. The market is highly fragmented, with companies having strong presence

in select segments of a regional presence only. Brand loyalty is very low, except at the

premium end and the level of disposable incomes determine the overall sector growth.

Key factors to success are distribution (in rural markets) and advertising (in urban

markets).To create awareness among the consumers, door to door campaign will be

arranged by engaging consultancy services.

.Introduction of herbal transparent soap, made out of essential oil based perfume, Aloe

Vera, Vitamin-E etc. as additive and suitable for all types of skin and all seasons and

introduction of new trade schemes to increase sales.

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INDUSTRY ANALYSIS

Porter’s five forces Model. Porter's Five Forces of Competitive Position Analysis was

developed in 1979 by Michael E Porter of Harvard Business School as a simple

framework for assessing and evaluating the competitive strength and position of a

business organization.

This theory is based on the concept that there are five forces that determine the

competitive intensity and attractiveness of a market. Porter’s five forces help to identify

where power lies in a business situation. This is useful both in understanding the

strength of an organization’s current competitive position, and the strength of a position

that an organization may look to move into. Strategic analysts often use Porter’s five

forces to understand whether new products or services are potentially profitable.

By understanding where power lies, the theory can also be used to identify areas of

strength, to improve weaknesses and to avoid mistakes. A change in any of the forces

normally required a company to reassess the marketplace. The overall industry

attractiveness does not imply that every firm in the industry will receive the same

profitability. Firms are able to apply their core competences, business model or network

to achieve a profit above the industry average. A clear example of this is the airline

industry. As an industry, profitability is low and yet individual companies, by applying

unique business model have been able to make a return in excess of the industry

average.

Here the analysis is made on soaps and detergents industry. It is one of the fast growing

industry under the FMCG sector. All the recent trends show a dramatic increase in the

sales and turnover of this industry. Now using the poter’s five forces this industry can

be studied.

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Figure 1

Porter’s five forces of competitive position analysis

Source: .edrawsoft.com

The five forces are:

Threat of new entry

Threat of substitution:

Buyer power:

Supplier power:

Competitive rivalry:

Five forces of Soaps and Detergents industry

Threat of new entrants. The threat of new entrants is medium in this industry as it is a

highly capital intensive industry. Even if the market shows remarkable profits, new

firms cannot come up in the short-run, as the industry require a huge initial investment.

The new firms have to make huge investments in setting up distribution network and

promoting brands. Spending on advertisements is also aggressive in this industry.

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Advertisements plays a huge role in the growth of companies in his industry. The

market is being dominated by few companies and they capture 90% of the market share,

so we even if new companies develop they can capture industry’s market share only

after 4 to 5 years. By this time the existing companies can take necessary steps to retain

their market position. Also the existing companies have a greater customer base and

brand loyalty in the markets, so it would be tough for new entrants to capture the market

share of existing companies in the short run.

Currently the major players are, Hindustan Unilever Ltd, Godrej Soaps And Private

Ltd, Proctor and Gamble, Wipro and Nirma.

Threat of substitute products. In the case of soaps and detergents industry there is a

high chance for threats created by the substitute products. In this industry there is

presence of multiple brands and narrow product differentiation under many brands.

Therefore there is a huge chance of price war created by the companies under this

industry. Some of the substitute products that can be used for bar soap is liquid soap.

So the companies in this industry should analyze the market and make quick

innovations to their products in order to stand in this highly competitive industry.

The Bargaining Power of Buyers: Buyers or customers can exert influence and have

control over an industry in certain circumstances. This happens when,

There is little differentiation over the products and substitutes can be found

easily

Customers are sensitive to price

Switching to another product is not costly

In the case of soaps and detergents industry, there is only little differentiation found in

the market. Moreover, there is low switching cost between products under this industry

which induces the customers to shift from one product to another. Although for some

top companies there is a huge customer base and brand loyalty in the market, it can

change at any time because of the availability of many substitute products. Also the

customers in this industry has a huge influence on the marketing strategies and

promotional activities adopted by companies in this industry. It is because soaps and

detergents industry is such an industry whose growth completely depends on the

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population growth and the disposable income of the customers. Hence the bargaining

power of customers is high in this industry.

Bargaining Power of Suppliers: Suppliers are also essential for the success of an

organization. They also have power. This power comes from,

If they are the only supplier or one of few suppliers who supply a particular raw

material

If it is costly for the organization to move from one supplier to another(known

as switching cost)

If there is no other substitute for the product.

The companies under this industry mainly depend on suppliers for chemicals for the

production and materials for their packing. In the case of soaps and detergents industry

their main raw materials are surfactants, solvents, phosphates, silicates, alkalis, salts,

and perfumes.

There are many suppliers who supply these materials to the manufacturers. Many big

companies in this industry have their own plants and machines to create these raw

materials, so the suppliers have a less influence on this industry. Hence they have a very

low bargaining power on this industry.

The Intensity of Competitive rivalry: If the entry to an industry is easy, then the

competitive rivalry is likely to be high. Generally competitive rivalry will be high if,

There is little differentiation between the products sold between customers

Competitors are approximately the same size of each other

If the competitors all have similar strategies

It is costly to leave the industry, hence they fight to just stay in(exit barriers)

For soaps and detergents industry the competitive rivalry is very high as there are no

much legal barriers for the entry into this industry. Also as mentioned above there is

very little differentiation between products which are sold by different companies,

hence competitors influence play a major role in deciding the marketing strategies and

also fixation of prices.

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Competitor Analysis. In the present era, competitors have a very important role in

marketing. To prepare an effective marketing strategy a company must study its

competitors as well as its actual and potential customers. Companies need to identify

competitor’s strategies, objectives, strengths, and weakness and reaction patterns. They

also need to know how to design an effective competitive intelligence system, which

competitors to attain and which to avoid.

A company’s closest competitors are those seeking to satisfy the same customers and

need and making similar offers with good competitive intelligence, generally

competitors are the ones who have similar strategies (e.g. targeting the same segment,

targeting a same geographic area or compete on same strategic lines of cost leadership

or differentiation).

Brand Competition is very dangerous because the company seeks to capture the major

market share with the companies offering a similar product and services to the same

customer at similar prices. Competition is a benefit for customers. The consumer gets

the best product at a fairer price. In order to overcome the competitors the company

should have to maintain the good quality, quantity and reasonable price. Karnataka

soaps and Detergents Limited facing cut throat competition in national and

international market. Some of the main competitors are:

• Hindustan Unilever Ltd

• Godrej Consumer Products Limited

• Wipro

Hindustan Unilever Limited. Hindustan Unilever Limited Is India's largest Fast

Moving Consumer Goods Company with a heritage of over 80 years in India and

touches the lives of two out of three Indians. Hindustan Unilever Limited works to

create a better future every day and helps people feel good, look good and get more out

of life with brands and services that are good for them and good for others.

With over 35 brands spanning 20 distinct categories such as soaps, detergents,

shampoos, skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods,

ice cream, and water purifiers, the Company is a part of the everyday life of millions of

consumers across India. Its portfolio includes leading household brands such as Lux,

Lifebuoy, Surf Excel, Rin, Wheel, Fair & Lovely, Pond’s, Vaseline, Lakmé, Dove etc.

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The Company has over 16,000 employees and has an annual turnover of INR 30,170

crores (financial year 2014 – 15). HUL is a subsidiary of Unilever, one of the world’s

leading suppliers of fast moving consumer goods with strong local roots in more than

100 countries across the globe with annual sales of €48.4 billion in 2014. Unilever has

67.25% shareholding in HUL.

Godrej Consumer Products Limited (GCPL). Godrej Consumer Products Limited is

an Indian consumer goods company based in Mumbai, India. GCPL's products include

soap, hair colourants, toiletries and liquid detergents. Its brands include 'Cinthol',

'Godrej Fair Glow', 'Godrej No.1' and 'Godrej Shikakai' in soaps, 'Godrej Powder Hair

Dye', 'Renew', 'ColourSoft' in hair colourants and 'Ezee' liquid detergent. The Consumer

Products business was part of the erstwhile Godrej Soaps Limited (GSL) and was

demerged into Godrej Consumer Products Limited in April 2001. GCPL operates in the

domestic and international markets in the 'Personal and Household Care' segment.

Some of the categories are soaps, hair colourants, toiletries and liquid detergents. In the

soaps category, GCPL brands compete with 'Lux' and 'Lifebuoy'- Hindustan Unilever

Limited, 'Nirma' – Nirma. GCPL has a widespread distribution network across India. It

makes sales in both urban and rural markets, enabling it to benefit from the

opportunities in both segments. Its distributors and sub stockiest cover around 650,000

retailers in India. GCPL has linked its major distributors in India through a system

called 'Sampark', a collaborative planning, forecasting and replenishment system with

its ERP system leading to reduced inventory levels.

Wipro Consumer Care business. includes soaps, toiletries, personal care products,

baby care products, wellness products, electrical wire devices, domestic and

commercial lighting and modular office furniture. We have a strong brand presence

with significant market share in identified segments. In addition, we have a strong

presence in the personal care and skin care products market in South-East Asia and

Middle-East.

Wipro Consumer Care (WCCLG) is today among the top FMCG companies and

amongst the fastest growing FMCG companies in India. It has presence in over 40

countries with over 8300 employees worldwide. It has 8 production plants in India and

7 overseas. Wipro Consumer Care organic growth has been led by growth in toilet

soaps. The key brands include – Santoor (a Toilet soap brand) Chandrika soap, and

Yardley soap

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Table 1:

Competitor Analysis

Basis

Hindustan

Unilever Ltd

Godrej

Consumer

Products

Limited

Wipro

Consumer

Care

KS&DL

Turnover

(2013-2014)

In crore

5694

4300

837

315

Net Profit

(2013-2014)

In crore

634

564

78

32

No of

Products (in

India)

20

9

10

6

Market Share

(Premium

Segment)

64

10

4

11

From the table it is evident that HUL has a complete dominance in the Soaps industry

with a market share of 60% and turnover of Rs. 5600 crores. The market share is given

in the premium market segment of soap not the complete markets of soaps. Compared

to other competitors KS&DL has less turnover and profits, but all other are private

companies and KS&DL is a completely government owned so it has certain limitations.

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Table 2:

Market Share of Soap Companies in India (Premium Segment)

SL/NO:

PARTICULARS

MARKET SHARE (%)

1 Hindustan Unilever ltd 64

2 Karnataka Soaps and

Detergents Limited

11

3 Godrej Soaps 10

4 Proctor and Gamble 4

5 Wipro 4.6

6 Others 6.4

Figure 2:

Market share of toilet soap companies in India (Premium Segment)

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CHAPTER – THREE

ORGANISATION ANALYSIS

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ORGANIZATION ANALYSIS

An Overview of the Organization

History of soaps. India is a rich land of forest; ivory, silk, sandal; precious

gems are magical charms of centuries. The most enchanting perfumes of the world got

their exotic spell with a twist of sandal. The world’s richest sandalwood resource is

from one isolated stretch of forests land in South India that is Karnataka.

The origin of sandalwood and its oil in Karnataka, which is used in making of Mysore

sandal soaps, is well known as Fragrant Ambassador of India & Sandalwood oil is in

fact known as “Liquid Gold”.

By the Inspiration of His Highness Maharaja of Mysore late Jayachamarajendra

Wodeyar, the trading of sandalwood logs started which was exported to Europe and

New destinations, but with commencement of First world War India faced Severe Crisis

on the business of sandalwood.

This situation gave rise to start of an industry, which produces value added products

i.e., of Sandalwood oil. His Highness Maharaja of Mysore created this situation as an

opportunity by sowing the seed of the Government Sandalwood Oil Factory, which is

the present KS&DL. The project was shaped with the engineering skills and expertise

of the top level. Late Sir M.Visvesvaraya, the great Engineer who was the man behind

the project.

Today’s famous Mysore sandal soaps credit goes to late Sri Sosale Garalapuri Shastri

who incorporated the process of soap making using Sandalwood oil. He was an eminent

scientist in the field working at the Tata Institute, Bangalore. He was sent to England

to master the fine aspects of soap manufacturing.

The Maharaja of Mysore & Diwan Sir.M.Visvesvaraya established the Government

Soap factory during the year 1918. The factory was started as a very small unit near

K.R.Circle, Bangalore with the capacity of 100 tons P.A. In November 1918 the

Mysore sandal soap was put into the market after sincere effort and experiments were

undertaken to evolve a soap perfume blend using sandalwood oil as the main base to

manufacture toilet soap.

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The factory shifted its operation to Rajajinagar industrial area, Bangalore in July 1957,

where the present plant is located. The plant occupies an area of 39 acres (covering

Soaps, Detergents and Fatty Acid divisions), on the Bangalore – Pune Highway, easily

accessible by transport services and communication. Another sandal wood oil division

was established during the year 1944 at Shimoga, which stopped its operations in the

year 2000 for want of Natural Sandalwood.

This factory started at a moderate scale in year 1916. The first product was washing

soap in addition to the toilet soap in the year 1918. The toilet soap of the company was

made up of sandal wood oil.

In 1950 Government decided to expand the factory in two stages. The first stage of

expansion was done to increase the output to 700 tons per year and was completed in

the year 1952 in the old premises.

The next stage of expansion was implemented in 1954 to meet growing demand for

Mysore sandal soap and for this purpose Government of India sanctioned license to

manufacture 1500 tons of Soaps and 75 tons of glycerin per year. The expansion project

worth of Rs.21 lakhs includes the shifting of the factory to a newly laid industrial

suburban of Bangalore.

The factory started functioning in this new premise [i.e., present one] from 1st July

1957. From this year onwards till date the factory had never looked back, it has achieved

growth and development in production scales and profits.

The industry has 2 more divisions one at Shimoga and another at Mysore where sandal

wood oil is extracted. The Mysore division started functioning from 1917 and only

during 1984 manufacturing of perfumed and premiere quality agarbathies at was

started. Right from the first log of sandalwood that rolled into the boiler room in 1916,

the company has been single – minded pursuit of excellence. The project took shape

with the engineering skills and expertise of top-level team under the leadership of Sir.

M.Visvesvaraya, Prof. Watson and Dr.Sudbrough. Like this soap factory was started as

a small unit and now it has grown up to a giant size.

On 1st October 1980, the Government Soap Factory was renamed as “Karnataka Soaps

and Detergent Limited” The Company was registered as a public limited company.

Today Company produces varieties of products in the toilet soaps, detergent,

Agarbathies and Cosmetics.

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Trademark of KS & DL is the sharabha, which is a mythological creation from the

“puranas” which has a body of a lion and head of elephant, which embodies the

combined virtues of wisdom and strength. It is adopted as an official emblem of KS&

DL to symbolize the philosophy of the company.

The sharabha thus symbolized a power that removes imperfections and impurities. The

maharaja of Mysore as his official emblem adopted it. And soon took its pride of place

as the symbol of the Government Soap Factory of quality that reflects a standard of

excellence of Karnataka Soaps and Detergent Limited.

Nature of Business Carried. The company Karnataka Soaps And Detergent Limited

is a premiere soap manufacturing company based in the state of Karnataka. Its nature

of business is basically manufacturing of toiletries including soaps, detergent, incense

sticks, talcum powder and hand wash. The company is in operation for hundred years

with a wide range of product that are tailored to meet the needs of the customers from

both higher and lower income strata of the market. The company believes on the

philosophy of carrying on business not only with aim of making profit but also to serve

the society by providing job opportunities and also preserve and protect the culture of

the society.

Markets. The soap market in India is divided into premium segment, economy segment

and popular segment. Karnataka Soaps and Detergents limited is focusing mainly on

the premium segment of the soap market, then they have a small market share in

detergents and agarbathies segment. The main soap with which they occupy the

premium segment of soap market is through Mysore sandal soaps and variants.

Currently they are having a market share of 11% in the premium segment of soap.

Business Performance. During the year 2013-2014 the company had a turnover of 315

crores. Compared to last year the company has an increase of 110% increase in revenue.

The current net profit of the company is Rs. 32 crores.also the company has occupied

shelf spaces in all major stores like Big Bazzar, Spar stores, Reliance stores and Lulu.

As a result of this the products of the company has even become famous in the northern

states of India. Hence the company is growing in its revenue and customer loyalty year

by year.

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Net Profit for the Last 5 Years

Year

Net Profit in Crores

2010

5

2011

9

2012

15

2013

21

2014

32

Figure 3:

Net profits of KS&DL for the past Five years

Financial Analysis

1. Current ratio

Items Amount

Current Asset 168,46,89,526

Current Liability 63,34,42,659

Current Ratio = CA/CL

CR = 2.65

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Since the company is having a current ratio above 2.5, it shows that the company is

liquid and has the ability to pay current obligations in time as and when they become

due.

2. Debtors Turnover Ratio

Items Amount

Net Sales 315,71,67,354

Average Debtors 52,81,85,622

Debtors Turnover Ratio = Net sales/ Average Debtors

DTR = 5.97 times

Average Collection Period = No.of working days / Debtors turnover Ratio

Average Collection Period = 60 days

Hence the company has to wait 60 days convert its receivables into cash.

3. Net Profit Ratio

Items Amount

Net Profit 32,83,74,699

Net Sales 315,71,67,354

Net Profit Ratio = Net Profit/Net Sales

NPR = 9.49%

4. Debt Equity Ratio

Items Amount

Debt 33,77,20,917

Equity 903,17,74,686

Debt Equity Ratio = Debt/Equity

Debt Equity Ratio = 0.03

So it can be seen that of the total capital only 0.03% is financed through Debt, which is

a good sign as the company has less fixed interest to be paid every month.

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Turnover Details. The Total turnover for KS&DL for the period 2013-2014 was

Rs. 315, 71, 67,354 (last year Rs. 286, 21, 32,818).so compared to last year there has

been an increase of 110% in the revenue for the company.

The maximum revenue is earned by the company from the sale of Toilet Soaps.It shows

that of the total revenue earned by the company 86% is earned from the sale of Soaps

(both domestic and export sales).

Table 3:

Revenue Earned from Domestic markets

Source: Annual Reports 2013-2014

Table 4:

Revenue Earned through Exports

Source: Annual Reports 2013-2014

Sr.No Class of Goods Revenue (in Rs.)

1 Soaps (Mysore Sandal) 7,10,97,359

2 Detergents 83,90,475

3 Talcum Powder 7,65,900

5 Agarbathies 27,10,440

Total 8,29,64,174

Grant total (Domestic + Exports) = Rs. 315, 43, 67,191 (total turnover)

Sr.No Class of Goods Revenue (in Rs)

1 Soaps (Mysore Sandal) 267,12,69,313

2 Detergents 8,88,23,057

3 Talcum Powder 4,88,51,015

4 Sandal Wood Oil 51,56,527

5 Agarbathies 18,12,40,615

6 Coconut oil 4,98,21,123

7 Others 2,62,41,367

Total 307,14,03,017

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Company Profile.

1.

Incorporated name

KARNATAKA SOAPS AND DETERGENTS

LIMITED

2.

Address

Karnataka Soaps and Detergent Limited (KS&DL)

Bangalore – Pune Highway.

Post box No: 5531 Rajajinagar,

Bangalore – 560055

3.

Phone no

080; 22164800. Connected to all Departments

4.

E-Mail

[email protected]

5.

Website

www.mysoresandal.com

6.

Year of

Establishment

1918

7.

Management

Wholly owned by the Government

of Karnataka undertaking.

8.

Products

Toilet Soaps,

Detergents

Talcum Powders,

Agarbathies,

Sandalwood Oil.

Figure 4:

Company profile of Karnataka soaps and detergents limited

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MILESTONES OF KS&DL

1918 – Government Soap Factory was started by Maharaja of Mysore and the Mysore

Sandal Soap was introduced into the market for the first time.

1950 - The factory output rose to 500 M.Tons with the following modifications.

Renovating the whole premises.

Installing new boiler soap building plant and drying chamber.

1954 – Received license from Government to manufacture 1500 tons of soap

and 75 tons of glycerine per year.

1957 – Factory shifted its operation to Rajajinagar industrial area.

1974 – Mysore sales international limited was appointed as the sole selling agent, for

marketing its products.

1975 – Rs.4 Crores synthetic detergent plant was installed based on Italian technology

by Ballestra SPA.

1980 - On 1st October 1980 the Government Soap Factory was converted into a public

sector enterprise and renamed as “Karnataka Soaps & Detergents Limited”.

1981 – Production capacity increased to 6000 tons and Rs.5 Crores Fatty Acid Plant

was installed.

1984 – Manufacturing of premium quality of Agarbathies at Mysore division.

1985 – Production capacity was raised to 26,000 M.Tons Per Annum. A large variety

of toilet soaps at attractive shapes, colours and fragrances introduced to meet the

varieties & tastes of consumers.

1992 – The company was registered with the Board for Industries and Financial

Reconstruction (BIFR), New Delhi in December for rehabilitation, as the company

suffered losses continuously since 1980 at its net worth fully eroded.

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1996 – The BIFR approved the rehabilitation scheme in September & the Company

stated making Profits.

1999 – ISO-9002 Certificate for quality assurance in production, installation and

Servicing.

2000 – ISO-14001 certificate pertaining to environmental management system.

2003 – The entire carried forward loss of Rs.98 Crores wiped out and in May BIFR,

declared the company to be out of its Purview. The Company is making profit

continuously, it is the only State Public Sector unit that has come out of BIFR.

2004 – The ISO-9002 was upgraded to ISO-9001-2004, Quality Systems.’

2008- Company has introduced Hand wash liquids under the trade name of Herbal

Hand Wash and Rose Hand Wash liquids. Company has also introduced liquid

Detergent under the trade name of KLEENOL liquid with different variants for Floor

wash, Dish wash and Automobile wash.

2009- Company has established In-House state of the Art manufacturing and filling of

Mysore sandal, Talcum powder and Mysore sandal Baby powder.

2010- The ISO Certification was upgraded to ISO 9001:2008.

2011-Company launched Mysore sandal Dhoop.

2012- Launched Super Premium Mysore Sandal Millennium Soap and also The

Company reached highest sales turnover and Profit of Rs.262.00 crores.

2013 –they reached highest sales turnover and profit on 22nd of Aug “National Award

for Excellence Cost manufacturing” Karnataka Soap and Detergents Ltd was the

winner in the public manufacturing (Medium Organization) Category.

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2014- The Company reached highest sales turnover and profit during 2013-2014 and

is on progressive during year 2013-2014 was Rs.315.7Crores with a net profit of

Rs.32.83Crores.

Vision. Karnataka Soaps & Detergents Limited has clear Vision for all round

development of the Company. This is reflected in the form of a well conceptualized and

rational blue print called VISION 2013. The VISION 2013 sets the goals and

milestones and suggests the strategies and plans necessary to realize the Vision. The

Vision of the KS&DL is embodied in the following statement:

“KARNATAKA SOAPS & DETERGENT LIMITED will leverage latest soap

manufacturing technology and information technology by imbibing professional

management techniques to improve its functional activities, transparency, business and

to transform itself into a competitor in the FMCG market in India and also to spread

its fragrance in the FMCG global market”.

Mission. The mission of the company is to serve the National economy and to attain

self-reliance. It also strives to promote purity & quality products, to maintain the Brand

loyalty of its customers and to build upon the reputation of Mysore sandal soap based

on pure sandal oil.

Quality Policy

Communicate its environment policy and best practices to all employees for

implication.

Set targets and monitor progress through internal and external audits.

Strive to design and develop products, which have friendly environmental

impact during manufacturing, also reuse and recycle materials wherever

possible and minimize energy consumption and waste.

An ISO-9001 Company. KS & DL with a tradition of excellence of over eight

decades is committed to customer delight, through total quality management and

continuous improvement through the involvement of all employees. KS&DL has got

ISO 9002 certificate.

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To improve the quality management system and to facilitate TQM in the process of

soap and detergent, the management took decision to obtain ISO-9002 by end of March

1999. Accordingly action plan was drawn and a committee was set up for the purpose

during October 1998 with a mission statement.

The company gives initial training including conducting employee’s awareness

programme, document quality manual and quality system procurement.In this direction

company obtained the guidance from Consultancies, Bangalore and Bureau of Indian

Standards, Bangalore. Accordingly, company standards registered for ISO 9002 by the

end of March to the Bureau of Indian Standards. Obtained the certificate by the end of

March 1999 itself.

This is to project in the national and international market and also to improve quality

of products offered to the consumers with the assurance of quality in the message. The

Company got itself upgraded to ISO-9001-2004, Quality Systems in the year 2004-05.

An ISO-14001 Company. The company is located in the heart of the Bangalore

city. The management of the company took a decision to get the ISO-14001 and become

model to other public sector for the techniques used and also to other Government units

to spread the message of maintenance of environment. The environment management

system adopted in the company through this motive is as follows:

Conservation of Energy.

Conservation of Surrounding.

Conservation of Resources.

Area of Operation. “Global Favorites for Their Natural Goodness”

KS&DL has a long tradition of maintaining the highest quality standards, right

from the selection of raw materials to processing and packaging of the end product. The

reason why its products are much in demand globally & are exported regularly to UAE,

Bahrain, /Saudi Arabia, Kuwait, Qatar, South East Asian countries as well as North

America & South America. The sandalwood oil, of course, is much sought after by the

leading perfume houses of the world. All the toilet soaps of KS&DL are made from oils

& fats of vegetable origin & totally free from animal fat.

Ownership Pattern. “Wholly owned by Government of Karnataka”

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Present Status. The company has entered into shampoo, dish wash, detergent bar &

room refresher. The company is striving to develop new perfumes for soaps detergents,

agarbathies & shampoo. The company wants to improve the existing products in terms

of quality.

Infrastructural Facilities, Karnataka soaps and Detergents limited has its

manufacturing units located at three places, they are at Bangalore - which has Toilet

Soaps, Detergents& Cosmetics plants, Mysore - Sandalwood Oil Extraction plant and

Shimoga – Sandalwood Nursery. Then the company has a well-developed library with

all major books and journal, a good research and development section, seminar hall

with Wi-Fi connectivity and a canteen.

Future Growth & Prospects

Competition amongst the MNCs has intensified, and the companies like KD&DL has

to make innovations in their products in order to stay in the market. Some of the future

plan of actions of the companies for the next fiscal year are:

Working on the development of premium quality soaps with unique shapes in

two different fragrance variants like Lavender and Deo especially to sell in

super markets and malls.

Working on the modifications of existing batch of Mysore carbolic soaps for

better appeal and improved enhanced performance of the product

Working on Eco-friendly packing of products and reduction of Non-

Biodegradable products.

Effectively working for the replacement of existing cosmetic colours used in the

variants of toilet soaps of KS&DL. All these colours have been approved by

FD&C and REACH.

The company is working on the modification of various perfume brands of the

company in order to have global standards.

Also the company proposes to manufacture the Tooth Paste in its own brand

known as “Mysore Sandal Ivory”.

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PRODUCT PROFILE

KS&DL is the true inheritor of golden legacy of India. Continuing the tradition of

excellence for over eight decades, using only the best East Indian grade Sandalwood

oil & Sandalwood soaps in the world. The main product categories of KS and DL are:

Toilet Soaps

Detergents

Agarbathies

Talcum Powder

Sandal Wood Oil

Liquid Soap

Toilet Soaps. Karnataka Soaps And Detergent Limited produces the only soap that

has a TFM rate of 80%.They produces one of the best quality soaps which are available

all over the global market. Some of the different types or categories of toilet soaps

produced by KS and DL are as follows:

Name Of The Products Units of Grams

Mysore Sandal Soap 75, 125

Mysore Sandal Classic Soap 75

Mysore Sandal Gold Soap 75, 125

Mysore Sandal Baby Soap 75

Mysore Special Sandal Soap 75

Mysore Rose Soap 100

Mysore Sandal Herbal Care Soap 100, 125

Mysore Jasmine Soap 100

Wave Soap 100

Mysore lavender Soap 150

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Mysore Sandal bath tablet 150

Mysore Sandal classic bath tablet 150

Mysore Jasmine bath tablet 150

Mysore Special Sandal tablet 150

Mysore Sandal rose tablet 150

Mysore Sandal Guest tablet 17

Figure 5:

Toilet Soaps of Karnataka soaps and detergents limited

Detergents. KS&DL also manufactures high quality detergents applying the

latest spray drying technology with well-balanced formulation of active matters & other

builders; they provide the ultimate washing powder. Some of the different types of

detergent powders produced by KS& DL are:

Name Of The Products Units in Grams

Mysore detergent powder 1000

Mysore detergent powder 500

Mysore detergent Cake 125

Mysore detergent cake 250

Figure 6:

Detergent products of Karnataka soaps and detergents limited

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Agarbathies. Some of the products produced in Agarbathies section are:

Name of the Products

Mysore Sandal Premium Parijata

Mysore Sandal Regular

Sir M.V.100

Mysore Rose

Venkateshwara

Nagachampa

Durga

Suprabhatha

Ayyappa

Mysore Jasmine

Meditation

Figure 7:

Agarbhatie products of Karnataka soaps and detergents limited

Talcum Powder. The talcum powder products of KS and DL are: Mysore

Sandal Talc and Mysore Sandal Baby Talc.

Liquid Soap. The Liquid Soap products of KS and DL are: Wave duo liquid

body washes and Wave herbal wash.

Achievements and Awards for KS and DL

The company was awarded by Government of Karnataka .Dept. of Industries and

Commerce State Export Promotion Advisory Board. “EXPORT AWARD” 1974-75.

Then it has received national award from ICWA for Excellence in Cost Management

2007. Then again an EXPORT AWARD” by the company received from chem. excel

in 2009 and lastly it received Ratna Award by Chief minister in 2012

Market share of the company

Currently Karnataka Soaps and Detergents Limited is having a market share of 11% all

over India and a market share 24% in south India in the premium segment of soaps.

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HUL is the market leader in the premium segment of soap with 60% share .Followed

by Godrej consumer products limited.

But Mysore sandal soaps has a great customer base and loyalty since it uses purest

sandalwood in its soap for aroma and it is the only soap which has the essence of purest

sandalwood in the world.

Strategic Planning Programme of KS & DL

The current strategy adopted by Karnataka Soaps And Detergent Limited for the time

period is:

PRICE COMPETITIVENESS

Strategies are usually adopted by companies to get competitive advantage in the market

and to build up core competency. So strategies are very essential for the survival of

companies. Supply chain management is one of the main strategy adopted KS&DL.

Through this strategy the company is able to reduce the cost of production, which would

automatically increase the profitability of the company. And the success of this strategy

is evident from the performance of the company for the last few years. Hence KS&DL

are not only able to adopt strategies but also are able to achieve them through their

performance.

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ORGANIZATION STRUCTURE

Organizational structure refers to the different hierarchies or levels in a company. An

organizational structure appears as a series of boxes, vertical and horizontal lines. The

boxes represent various titles within the organization, and the vertical lines represent to

whom that position reports. Horizontal lines show which employees are on the same

level. The organization structure gives a brief idea about the various departments and

their interconnections.

Karnataka Soaps and Detergents Limited Is Following a Functional Organizational

Structure.

Employees within the functional divisions of an organization tend to perform a

specialized set of task, for instance the Marketing department would be staffed only

with people who have good communication skills and finance department would be

staffed with people who have good arithmetical and financial skills. This leads to

operational efficiencies within the group. However it could also lead to a lack of

communication between the functional group within the organization, making the

organization slow and inflexible.

As a whole, a functional organization is best suited as a producer of standardized goods

and services at large volume at low cost. Coordination and specialization of tasks are

centralized in a functional structure, which makes producing a limited amount of

products or services and predictable. For instance, a small business could make

components used production of its products instead of buying them. This benefits the

organization and employees faith.

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ORGANIZATION CHART

Figure 8:

Organizational Structure

Source: Company Manual

DGM Dy,General manager

AGM Asst.General Manager

MGR Manager

J.O Junior Officer

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Observations from the Organization Chart. The organization of KS&DL consists of

4 levels, they are

Top Level consist of Board of Chairperson and Managing Director

Second Level consist of Department Heads

Third Level consist of Managers, Asst. Managers and Junior Officers.

Fourth Level consist of clerks, Assistants and Attendees.

Hence we can see that KS&DL is following a Tall Organizational Structure in

their organisation.

Also the Departmentation is done on the basis of different Functions performed

in the organisation.

FUNCTIONAL ANALYSIS

The Functional structure involves arrangement of activities and assignment of activities

for the achievement of organizational goals. It is a way by which similar parts of an

organization are tied together in a coordinated manner. It also illustrates the various

relationships among various levels of hierarchy within the organization .A well-defined

functional structure results in better use of resources.

The importance of departmentation is to facilitate successful operation and to create an

environment for effective performance. Grouping of activities and employees into

departments makes it possible to expand an organization to a large extent. It enables

the organization to recapture some of the advantages of the small functional

organization while minimizing the disadvantages of that which comes with increasing

size, diversity and dispersion. The need for departmentation arises because of

specialization of work and the limitation on the number of subordinates that can be

directly controlled by a superior.

There are 6 functional departments In Karnataka Soaps And Detergents Limited. The

span of management is narrow since the company is following a tall organizational

structure. In the company, centralized decision making is common. The information

flows from top to bottom through the well-defined channel of communication. The

structure of the company also describes the roles and duties of each position. It also

defines the functional authority as well as responsibility of each employees of the

company.

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Functional Departments of KS&DL. The functional departments of Karnataka

Soaps and Detergents Limited are.

Production Department

Marketing Department

Finance Department

Human Resources Department

Materials Department

Research & Development Department

PRODUCTION DEPARTMENT

Figure 9: Production Department structure

Deputy General Manager (P&M)

Asst G Mngr

(P&M)

Asst G Mngr

(Maintenance)

Asst G Mngr

(Safety)

Asst Mngr

Officers

Jr. Officers

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Production Department Structure. Under this structure, Deputy General Manager

heads the Production Department. He is assisted by Asst General Manager, Managers,

Officers, junior officers and Employees. This department is the back bone of the

company and 80% of employees work in this department. Production is the process by

which raw materials and other inputs are converted into goods. Production management

refers to the application of management principles of the production function in a

factory. In other words, production management involves application of planning,

organizing, directing and controlling of production process. The proper implementation

of these management functions in production process will result in continuous flow of

production. Karnataka Soaps and Detergents Limited’s production unit produce high

quality products, which undergo various quality control test. The company uses

advanced technology for producing their products.

Objectives. Production is organized in a manufacturing organization’ Karnataka

Soaps and Detergents Limited’s production department sets certain important

objectives as follows.

Maximum production with high quality and quality.

Ensure timely delivery of products.

To strive for continual improvement

Ensure proper implementation of manufacturing Process.

Responsibilities of Production Manager. Coordination with other department for

sales forecast which helps in planning the requirement of materials for production in

advance. Practice cost effective production by control raw material consumption and

stock at store. He is also responsible for maintaining the consistency of quality and

planning the production process for smooth production.

Production Manager has a huge role in training and development of subordinates and

resolving grievances of employees. He is responsible for maintaining work discipline

and ensures optimum manpower and efficient usage of manpower.

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Product Range. The various products produced by KS&DL are Toilet Soaps,

Detergents, Agarbathies, Talcum Powder, Sandal Wood Oil and Liquid Soap

In these the products produced in Bangalore Plant are Mysore Sandal Soap and its

varieties, then talcum powder and Detergents. In this Mysore Sandal Soap is their main

product and the most profitable product for KS&DL.

Production System. The production system followed in KS&DL is Continuous

production system where the production volumes are high and the products are

homogenous or less variation are there in the products produced. Under continuous

production system the company follows a combination of Line and Synthetic Process

production system. In the plant there are different line for different products of Mysore

sandal like Mysore sandal gold soap in line Mysore sandal baby Soap in Line 2, Mysore

Sandal Premium Soap in line 3 Etc. In total there are 9 different lines in the soap plant.

Whereas in each line synthetic process happens where each of the raw materials goes

different transformation process and all are assimilated to form the final product that is

the Soap.

Table 5: Production Capacity (of Bangalore Plants):

Source: Audit report

Sr.no

Class of Goods

Units of

Measurement

Installed

Capacity

Actual

Production

1

Soaps (Mysore Sandal)

MT’s

26000

10,434.008

2

Detergents

MT’s

3000

2,692.269

3

Talcum Powder

MT’s

325

144.751

Here we can observe that KS&DL are not fully utilizing their Production capacity

which they have at Bangalore.

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KS&DL as 3 main production plants at Bangalore: Fatty Acid Plant, Soap Plant and

Detergent Plant

Fatty Acid Plant. The basic raw materials, Oil & fats undergo the splitting &

refining process including hydrogenation at the fatty acid plant. It is also obtained &

used for soap making. The plant has a capacity to process 10,000mt of oils fat.

Soap Plant. The soap plant is one of the largest production plants in the country

with an installed capacity of 26,000 tons per annum.KS&DL’s soap plant has its

uniqueness been in a position to process as many as ten different varieties of soap

simultaneously.

The sophisticated plant from Italy has a wholly integrated straight line facility that links

up process sequence for higher productivity. It is a stream line flow through right from

raw material preparation to end or the line collation with the built in facility for

continuous fat bleaching & saponification. The finishing touches are given or high tech

universal wrapping machine. This high speed auto wrapper has the capability to handle

soaps of virtually & size or shape.

Detergent Plant. It has installed capacity of 3000 tons per annum. To produce

spray dried powder & a syntax plant for detergent cakes & bars. It produces industrial

detergent which is used in the formulation of wet table pesticide powders for crop

protection.

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Soap Manufacturing Process.

Figure 10:

Soap Manufacturing process of Karnataka Soaps and Detergents limited

Final Packing (Manualy)

Let out through the Conveyor Belt

Wrapping Machine

Cakes are fed into Stamping Machine

Cutting Machine

Duplex Plodder

Becomes Soap Ribbons

Milling

It Becomes NOODLES

Simplex Plodder

Container Mixer

Soaps Noodles

SILOS (Silos are closed chambers)

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Production Process. The production process of soaps are called saponification. The

raw materials used for the production of Mysore sandal soap are: Palm Fatty Acid,

Caustic soda, Salt water, Sandal Wood Oil (for Aroma)

These raw materials are boiled for 3-4 hours at a temperature of 100-130 degree Celsius,

where the fats and dust particles are separated. After this process a Knead soap is

formed with a moisture of 35% the moisture is then removed from it by the drying plant.

After that sandalwood oil is added to it for fragrance.

MARKETING DEPARTMENT

Figure 11: Marketing Department structure

Marketing Department Structure. Under this structure, Deputy General Manager

heads the Marketing Department. He is assisted by Asst General Manager, Managers,

Officers, junior officers and Salesman

Deputy General Manager (Marketing)

Asst General Manager (Adv)

Asst General Manager (MKT)

Manager

Officer

Junior Officer

Salesman

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Marketing is a sum total of physical activities that are involved in the transfer of goods

and services and which provide for their physical distribution. The marketing

department must act as a guide and lead the company's other departments in developing,

producing, fulfilling, and servicing products or services for their customers.

Communication is vital. The marketing department typically has a better understanding

of the market and customer needs, but should not act independently of product

development or customer service.

Marketing has been defined as all the activities involved in the creation of place, time,

possession and knowledge utilities. Place utility is created by transporting the goods

from the place of production to the place of where they are needed. Time utility is

created by making goods available to consumers at a time when they are needed

possession utility is created by transferring the ownership and possession of goods from

the product to the consumer. Knowledge utility is created by bringing to the notice of

the customer the utility of buying the goods and services. Thus marketing is concerned

with all activities which are involved in the process of transferring goods from the point

of production to the point consumption.

Currently the company is having a market share of 8% all over India and 18% market

share in South India. Also it has a regular supply of soaps to government institutions

like Government Hotels, Guest houses etc. in Karnataka. As Mysore Sandal soaps is

having its own customer base and high loyalty in south India, the marketing efforts to

be put are slightly easy. Currently it is ranked the as 3rd most preferred bathing soap in

India. Hence Mysore Sandal is having a satisfactory demand in both domestic and

international market.

Marketing Strategy. As the company is a government owned company its main

strategy is Sales maximization rather than profit Maximization. The Company prepares

sales budget of different depots in different places to know the product movement in

each depots. Also the company can’t spend a lot of money in advertising like other

MNC’s. So the product is not very popular in the northern parts of India.

But now the company has a great improvement in the sales, especially Mysore sandal

soaps. Also the company has acquired shelf spaces in the major retail stores like; Big

Bazar, Lulu, Spar Stores etc. As a result the company is slowly entering even in to the

north Indian market.

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Advertisements and Sales Promotion Activities

The sales promotion strategy adopted by KS&DL are Direct Promotion rather than

depending on intermediary or a third party. Some of the methods are

Exhibitions (National Level and State Level)

Free Samples

Festival Based Promotion (Providing Gifts Boxes)

Print Media (Newspapers and Magazines)

As part of sales promotion activities, KS&DL is participating in INDIAN Trade

exhibition and fare (ITEF) every year on all India basis. ITEF conducts exhibition for

a period of 15 days. So it provides a good platform for the company to create awareness

about their product especially products other than Mysore sandal soap. The company

also uses print media on a limited basis for the promotion activities. They mainly

promotes through magazines and newspapers.

KS&DL also participates in Mysore Dasara Exhibition conducted for a period of two

months every year in Mysore.

They even set their stalls during festival seasons at different parts of our country. Hence

they can attract more people.

Exports

The products of KS&DL are exported to different parts of the world in larger quantity.

Currently the company has earned a revenue worth 9 crores from exports. The main

product which is being exported and which has more demand is MYSORE SANDAL

soap and its various categories. The different countries to which the products are being

exported are:

Australia Italy Sri Lanka

Berlin Kenya USA

Canada Malaysia Japan

Czechoslovakia Saudi Arabia UK

France Singapore Taiwan

Germany Africa Holland

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52

Main Product of KS&DL: Mysore Sandal Soap

It is said that Mysore sandal soap was born from the golden legacy that is from sandal

wood oil which is known as the liquid gold and also enriched in this pure sandalwood

oil. Mysore sandal soap is the only soap in the world made from 100% pure sandal

wood oil. As mentioned above Mysore Sandal soap has 11% Market share in the

premium soap category all over India. When comes to south India it has a market share

of 24%.It has been known as the best soap in the sandal soap category in the market.

Mysore sandal also has a strong customer base in Gulf, Singapore and Malaysian

market.

The Mysore sandal soap has been divided into two segments:

Premium Segment

Popular Segment

Under Premium Segment it includes:

Mysore sandal classic

Mysore sandal gold

Mysore sandal baby soap

Mysore sandal millennium

Specialties of Mysore Sandal soaps

Sandalwood is the premium ingredient of Mysore sandal soap, known as the queen of

perfumes. Sandalwood oil has the properties of being the excellent antiseptic and anti-

dandruff has been recommended in ancient texts for skincare. It soothes picky heat, it

removes skin rashes and internal ulcers.

Major Competitors for Mysore Sandal Soap Are:

Dove

Santoor

Pears

Lux

Medi mix

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53

In these brands Santoor soap of Wipro is considered to be the main competitor as it is

another soap which uses sandalwood oil. But still Mysore sandal holds comparatively

large market share compared to Santoor. While Dove is the most popular brand of soap

in the Indian market and hold the first position in the most popular soap brand in Indian

market. The second position goes to Pears and the 3rd most popular brand of soap in

India is Mysore Sandal.

Channel of Distribution

KS&DL manufactures their products i.e. soaps & detergents. After this sent to various

distribution points through agents. The stockiest sells to various retailers hence it

reaches to the consumer.

Figure 12:

Channel of Distribution of Karnataka soaps and detergents limited

Manufacture (KSDL) CFGS

C&FA (Godown)

RD's Stockiest (Wholesalers)

Retailer

Customer

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54

FINANCE / ACCOUNTS, DEPARTMENT

Figure 13: Finance Department structure

Finance Department Structure. Under this structure, Deputy General Manager

heads the Finance Department. He is assisted by Asst General Manager, Managers

(Accounts) and Manager (Costing), Officers, junior officers and Employees. Finance is

the life blood of the business. It is required for an organization for its functioning. It is

an important aspect of the business. The Finance Department deals with the

procurement and management of funds. This Department controls the overall financial

transactions of the company. It controls the receipt and payments of each and every

activity for all the divisions. In KS&DL, Finance Department plays a major role

because it is this department who calculates the final profit. The Finance Department

keeps a record of everything concerning any expense or income.

DGM

AGM (PF & PR)

MGR (ACCOUNTS)

SUPERVISOR

MGR (COSTING)

SUPERVISOR

J.O

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55

The areas under the purview of the Finance department include salary administration,

bill processing, statutory payments like taxes, central excise etc., financial

administration, costing, internal audits and balance sheet preparation, budgeting,

payments and receipts, bank negotiations etc.

Functions of Finance department. Budget and Budgetary control, Management of

receipts, Management of payments, Auditing, Costing, Profit determination, statutory

transaction.

Budget and budgetary control. The annual budgets of the company are prepared both

for the capital and revenue based on the requirements furnished by various units and

departments. The requests of the department are analyzed only after consulting with

various departmental heads and corporate divisional management group and finalized

only on the basis of disposition of funds. These budgets are presented before the

management for approval. The budget is reviewed half yearly. If some changes are

occurred they are submitted to management/board through a revised budget for

approval.

Management of receipts. Payment from dealers/customers is revised only through

marketing department. They accept proper receipts, customer wise and dealer wise.

There will be a debit outstanding and it must be informed to marketing development

once in a month. Insurance, Freight outward, bank negotiation etc. are accounted and

maintained to arrive at the cost of sales.

Management of payments. Due to the availability of funds, payment commitment is

honored on the due dates. All the payments are supported by approved vouchers.

Advance payments are settled within a time of 45 days to 50 days.

Non-receipts/delayed receipts extra are brought to the notice of stores for remedial

actions. Payments are usually done by cheque/demand draft.

Auditing. In KS&DL has its own audit wing is headed by internal auditors. Auditing

is vital for the company as it facilitates verifying of all the books of a/c by trial balance,

it also comply with requirements for central excise & income tax purposes. After the

Auditor’s monitor everything they give report to the company and publish it which is

helpful to the company and to the public.

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Costing. When a company does costing it ensures proper fixation of selling price of the

product, cost control it also help in taking decision. KS&DL use process costing as the

production mechanism is systematic it involves addition of a lot of ingredient in the

manufacturing.

Statutory transactions. Sales tax/Income tax/TDS certificates/C-format care issued.

They are properly accounted and proper time settlements are made. Salaries and other

payments, remittances and recovery etc. in the case of employees are done at a time.

Capital Structure of Karnataka Soaps And Detergents Ltd (as on 31st march

2014)

1. Equity

Authorized capital: 35, 00, 00,000

Subscribed capital: 31, 82, 21,000 (all shares held by Govt of

Karnataka)

2. Debt

Unsecured loans from Government of Karnataka: 3, 50, 00,000

The equity shares of KS&DL are divide into 3, 18,221 shares of Rs.1000 each. In

which all the shares are being held by Karnataka Government and its Nominees. Hence

it is a fully government owned company. During the period of 2013-2014 the board of

directors proposed a dividend of 15.712% on the paid up equity share capital of Rs.

31,82,21,000 to the government of Karnataka which amounted to be Rs.5,00,00,000.

Working Capital

For the smooth functioning of business the company has a good working capital

management. The company allows a credit period of more than 45 days for credit sales.

The company’s operating cycle involves cash, raw materials, work in progress, finished

goods, sales, bills receivables, debtor etc. For obtaining raw materials the company

purchase goods from venders who give more credit period.

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57

HUMAN RESOURCES DEPARTMENT

Figure 14. Human Resource Department Structure

Human Resource Department Structure. This chart shows the administrative setup

of Human Resource Department in KS&DL. Deputy General Manager heads the

department. He is responsible for the personnel and administrative functions of the

company. Under the DGM manager, there are AGM, HR. Manager, and Welfare

Manager. After that comes Assistant Managers, junior officers and Attenders. This

department is in relation with human resource personnel management and welfare

management. It is in the sense of getting things done through people. This department

aims at attaining maximum individual development, desirable work atmosphere, inter

personal relations and effective moldings of human resources. The main objective is to

meet the organizational needs of the company and the needs of the people working in

the company. HR. department provides expert advice and assistance concerning

personal matters. HR. department helps to maintain better relation between

management and employees. The main functions of HR. department is, Human

resource planning, Recruitment and Placement, Training, Performance appraisal,

Promotion Wages and Salary Administration, Health and Safety measures, Welfare

Measures, Workers participation, Employee grievance cell, Personal records and audit

DGM

AGM

Manager (HR)

AM (HRD) AM(RTI)

J.O

Manager (wefare)

AM (CANTEEN)

AM (FIRST AID)

OFFICER

J.O

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At KS&DL human relations are warm and cordial in nature. The employer and

employees share a good mix of both formal and informal relations. The company

implements various incentive schemes for the benefit of the employees, thereby

increasing their productivity manifold.

Table 4:

Manpower details of KS&DL

Source: Audit report

GROUP

BANGALORE

MARKETING

BRANCHES

SOD

MYSORE

SHIMOGA

TOTAL

EXECUTIVES

105

48

11

02

166

NON

EXECUTIVES

423

30

29

10

492

Total

528

78

40

12

658

In total there are 658 employees working in KS&DL including both Executives and

Non-Executives at various branches of Karnataka Soaps and Detergents Limited. In

that there are 423 workers working in the Bangalore Factory of KS&DL at 2 shifts,

whereas there are around 105 Executives working at the Bangalore Office of KS&DL.

So in total there are 528 employees at the Bangalore branch of KS&DL. The personnel

at various functional levels affecting the product quality are having adequate

competencies; these people have years of experience and skills. Main objective of HR.

department is procurement and proper utilization of workforce to achieve the overall

objective of the company.

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Working Timings for Employee at KS&DL

The company is working for 6 days in a week from Monday to Saturday. The office

hour is from 9.30am – 5.30pm every working day. For the workers in the factory the

working hours is designed on the basis of shifts. There are usually two shifts every day

for the workers in factory and in case of additional orders the factory will work for three

shifts. The details of shifts are given below:

The lunch time is from 12.00pm to 12.30pm.

Every Sunday is rest day for the employees.

Remuneration System.

1. Time rate system is followed to employees in the factories.

2. Government fixes the remuneration to executives

Functions of HR. Department.

Human resource planning. The BOD, MD, General Manager, and HR. Manager will

decide the number of employees required, their qualification, method of recruitment,

remuneration etc. Qualification for lower level employees is plus two. For executives,

degree is compulsory. In the case of higher posts experience is also needed.

Recruitment and Placement. Head of each department has to report the work force

requirements if they are lacking manpower to the HR. department with details of

manpower specification. It is the HR. department that take action for filling up

vacancies that normally arises in the organization. Recruitment of workers is made

through newspaper advertisement followed by tests and interview.

First Shift 6.00am to 2.00pm

Second Shift 2.00pm to 10.00pm

Third Shift 10.00pm to 6.00am

General Shift 7.30am to 3.30pm

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Company publishes advertisements in leading newspaper with job details and

requirements of candidates. Company also makes recruitment through employment

exchanges. After recruitment, scrutiny and interview, eligible candidates will be

selected. The selected candidates will be placed at the right job. Whereas the top level

employees like DGM and MD are selected by the government from IAS cadre

Training. Training the employees is one of the main objective of HR.Dept. In KS&DL

six months is given for fresh candidates through KSBDE. Training is given according

to the training need of each employee. It is an evaluation of employee’s skill

competencies, abilities, attitudes, morale etc. The personnel are given adequate

training. Training needs of employees are discussed during management review

meeting; training is organized internally and externally depending on the nature of

training required. The personnel are made aware of their roles in achieving the quality

policy.

Performance appraisal. The HR. department makes performance appraisal of

employees. It is the evaluation of employee’s skills and capabilities and actual

performance with standard performance with stated standards. If there is any deviation,

corrective measures are taken. Criteria or attributes for performance appraisal are; job

knowledge, productivity, attendance, integrity, commitment, cooperation etc.

Promotion. In the company the Promotional Policy has twin objectives because the

career planning is also included.

Ensure high level of expertise and professionalism.

To create certain degree of mobility and job rotation.

The employees below the rank of officers i.e. unionized cadre of employees are eligible

for the promotion after satisfactory completion of seven and five years of service [Time

Bound Advancement Promotion].

The promotion is based on their grading obtained in the performance done by their

Supervisors.

The promotional policies for the officers divided into two categories. They are Career

Development Plan (CDP) and Vacancy Based Selection (VBS).

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61

Career development plan. Officers from Grade I to IV come under this plan. The

ingredients of this plan are given below:

Eligibility: Is a minimum of five years of service.

Selection: Is done through staff selection committee.

Mode of selection: Is done through interview conducted by Staff

Selection Committee once in a quarter.

Final selection: Of the maximum of 100 marks earmarked for selection

70 marks is allotted to the performance in the present

Grade and the remaining 30 marks are allotted to the performance in the VIVA during

the interview by the Staff Selection Committee. Out of the weight age, the individual

has to score a minimum of 35 from the 70 performance marks and 15 from the VIVA

marks to get the final selection. Hence we can see that KS&DL is following a good

career development plan for the betterment of the employees. Thus the employees are

well satisfied and motivated to work at KS&DL.

Wages/Salary Administration. One of the main function of HR. department is the

preparation of payroll/work sheet for calculating the amount of wages payable to the

workers. For factory workers the salary is given based on time rate. For executives

remuneration is given as salary and it is given as per the government regulation.

Everyone gets an increment in wages depending upon the profitability and their

experience every year.

Health and Safety measures. Management has provided necessary infrastructure to

carry out the activities. There is adequate work space, associated utilities, process

equipment, and supporting services. The infrastructure provided is adequate to ensure

safety of the employees. Appropriate work environment has been provided necessarily

to achieve product conformance and safe working conditions for the employees.

Employee state Insurance is also provided here.

Employee Grievance Cell. The important grievance faced by the company is that

workers are not getting better working environment and safety i.e. the air coming from

production plant is injurious to health, especially lungs. Weekly meetings within groups

and complaint cells are also functioning in the company.

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HR. personnel are responsible for handling the complaints, disputes within the top

management. Employees can directly complaint to the top management or put their

complaints in the complaint box. Every department has a complaint box placed at the

entrance.

Personnel Records and Audits. It includes:

Maintenance of personnel records

Seniority list of employees,

Wage and salary of employees

Attendance management and leave administration

Other related functions.

Fringe Benefits available to employees

Washing Allowance. The company provides two sets of uniform once in a year. For

this a washing allowance of Rs.50 per month is paid to every worker.

Leave. The company provides:

Earned Leave (EL): Workman who wishes to avail privilege leave shall apply at least

3 days in advance to General Managers. This leave can be accumulated and encased.

18 days EL is credited to an employee. It can be encased and for this purpose the basic+

DA to the employee is calculated for 26 days but paid for 15 days in a year.

Casual Leave (CL). The leave is to meet unforeseen circumstances and is granted for

3 days at a time and 7 days CL is given to an employee per year.

Sick Leave (SL). Workman who avails sick leave exceeding 3 days at a time should

produce medical certificate from Doctor. 15 days of sick leave is given for an employee

per year and it can be encashed.

Conveyance Allowance. The conveyance allowance of Rs.680 per month per workman

is extended. Special Allowance. Paid to Typists, Stenographers, Asst.Cashiers, and

Store Keepers from Rs.55 to Rs.75.

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63

Family Travel Allowance. This allowance is paid at the rate of Rs.500 per employee

per year who has put a minimum three years of service.

Canteen Facilities. All employees are provided with canteen facility at highly subsided

rate. Annual Bonus. It is agreed to pay the profit sharing bonus in terms of the

provisions payments of Bonus Act 1965. Attendance Bonus. It is paid equivalent to

one day’s basic pay subject to minimum of Rs.75 per month. House Building Advance

(HBA). House Repair Advance, House Purchase Advance: KS&DL has agreed to

provide subsidy on the loan amount secured by the employee from HDFC or any

recognized financial institutions viz., co-operative banks, scheduled banks etc., If the

interest payable by the employee exceeds 7% then he shall be eligible for interest

subsidy to be borne by the company not exceeding 5%. Festival and National

Holidays. Number of paid holidays in the company is festival holidays and 3 national

holidays per calendar year. 2 holidays will be treated as restricted festival holidays to

be selected by the employees from the list of holidays to be notified by the company

for this purpose. Death Relief Fund. Rs.30,000 will be paid to the nominee in case of

death of an employee. Memento to retiring employee. Rs.2,500 will be paid as

memento to retiring employees. Medical Reimbursement. Benefit to non-ESI

employees a sum of Rs.500 per month will be paid per employee towards domiciliary

treatment. With regards to hospitalization treatment, the company has taken medi claim

policy from Insurance Company for a sum of Rs.1,50,000 per employee, which includes

spouse and two children.

Welfare Department:

The welfare department functions under the human resource department in KS&DL.

This department takes care of the welfare activities of the employees in KS&DL. Some

of the activities performed by this department are given below.

KS&DL welfare department can be classified into 3 sections namely,

1. Statutory

2. Voluntary

3. Non statutory

a) Statutory. KS&DL welfare association is based on employees contributions,

interest carved. Its statutory facilities are Canteen facility, First aid and

Provident Fund

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64

b) Voluntary benefit. The voluntary benefits are workers education class

conducted by the central board, Inspection of fittings, Dust nuisance, Toxic gas

nuisance checking

c) Mutual. The mutual benefits provided are Employees get 3 pair of uniform at

every 2 years & a Pair of shoes for every year, Cultural Recreations, Leave

facilities, Employees Co-operative society which give loan on credit,

Employees house building society.

MATERIALS DEPARTMENT

Figure 15: Materials Department structure

Materials Department Structure. Under this structure, Deputy General Manager

heads the Materials Department. He is assisted by Asst General Manager, Managers

(Materials) and Manager (Stores), Officers, junior officers and Employees.

DGM (MATERIALS)

AGM (MTRLS)

MGR (MTRLS)

ASSISTANTS

AGM (STORES)

MGR (STORES)

ASSISTANTS

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The materials department plays a very important role in an organization because

purchasing has its effects on every vital factor concerning the manufacture, quality,

cost, efficiency and prompt delivery of goods to customer.Materials department is the

other name for purchase department. Its function is to procure materials, supplies,

services, machines and tools at the most favorable terms consistent with maintaining

the desired standard of quality.

Objective of purchasing department:

To make continuous availability of materials so that there may be uninterrupted

flow of materials for production. To make purchase competitively and wisely at

the most economical prices. To make purchase in reasonable qualities to keep

investment in materials at minimum. To purchase proper quality of materials to

have minimum possible wastage of materials and loss in production. To develop

good suppliers relationship which will ensure the best terms of supply of

materials. To develop alternate sources of supply so that materials may be

purchased from those alternate sources if a particular supplier fails to supply the

materials etc.

The Raw Materials Used for Production. Palm acid Oil, Perfumery materials, Linear

alkyl Benzene, Sandal wood oil.

Stores Department:

In KS&DL the stores department also comes under the control materials head ie.DGM

materials. Although it comes under the materials department, it is kept as a separate

functioning unit.

Objectives. Assuring the availability of raw material at right quantity. Maintenance of

economical and uninterrupted flow of production activities and finally to ensure

minimum blockage. Achieving maximum efficiency in production and sales with least

investment in inventory.

There are about 8 stores in KS&DL namely:

1. Packing Materials

2. Engineering Goods

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66

3. Perfumery Stores

4. Oil & Fats Stores

5. Detergent finished goods stores

6. Fuel & Serviceable stores

These stores play a great role in maintaining of required stock. It also facilitates

maintenance of suitable store organization structure. It monitors the procedures of the

receipt. Materials are issued on the basis of FIFO.

Inventory Control System

ABC analysis for stock control.

FIFO method for issuing materials.

RESEARCH DEVELOPMENT & QUALITY CONTROL

DEPARTMENT

Figure 16: R&D Department structure

Research Development and Quality control Department Structure. Under this

structure, Deputy General Manager heads the Research Development and Quality

control Department. He is assisted by Asst General Manager (R&D and Asst.general

Manager (Quality Control), ManagersOfficers, junior officers and Employees.

DGM

AGM (R&D)

Manager

J.O

AGM (Quality Control)

Manager

J.O

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67

KS&DL its full-fledged quality control & R&D single mended pursue quality

enhancement. Both departments are headed by highly qualified professionals,

committed to developing products that keep place with customers changing needs &

perceptive. When doing Research they have a target which they get benefits & it enables

the company to forecast the future.

AIMS:

Product process development.

Product process improvement.

Cost reduction

Alternative raw materials

Slow moving & non-moving inventory reduction

Technical advice to the management.

Quality plays a very important role in KS&DL majority of the products are consumer

goods. So it must satisfy the consumer expectation.

KS&DL as 2 Quality Control division

Raw material QC division

Production QC division

Objectives of R&D:

To improve the existing production

To adopt new methods of product development

To provide technical support for marketing department

To make improvement in the process of production

Recent Developments Made by Research and Development Department

The company was able to revise the fragrance of Mysore Sandal soap, which

was developed by the research and development house during the year. This

was resulted in avoiding the monopolized perfumery items in the formulation.

Modification of composition of fatty acids of premium soaps keeping in mind

the Lauric acid content in the end product to be on par with the competitors

premium soaps, which would not only leads to significant cost reduction in the

end product but also to conserve the natural resources.

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The development of formulation of Mysore sandal Magic spray (Body Spray)

is under progress

Development of Mysore Sandal Body Wash formulation is completed, efforts

are in progress to place Mysore Sandal Body wash in retail market with new

attractive seamless tube packing in 200ml variant. The shelf life study of the

product in seamless tube has been completed and the outer packing design with

loofa is under development.

As a part of continuous development and improvement, Mysore Sandal

Detergent cake formulation is Re-Engineered to the customer expectation

coupled with modification in packing has been finalized and the product was

placed in the market and is getting a good response from the customers. Further

due to the introduction of new wrapping machine the productivity has increased.

Also modification of construction of flow of wrap film of Mysore Sandal Soap

and related products resulted in cost reduction and environmental friendly

packing.

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69

ORGANIZATIONAL ANALYSIS

Organizational analysis is the analysis done on the basis of the company’s strength,

weakness, opportunity, threat etc. And the tool used for the analysis is SWOT

SWOT Analysis. SWOT analysis is an important aid for the management when it

comes to making critical decision. SWOT is an acronym for Strengths, Weakness,

Opportunities and Threats. The strengths and opportunities represent the positive

aspects whereas the weakness and threats represents the negative aspects that the

company should try to overcome. Strength and Weaknesses are internal to the

organization. It is related to the strategies implemented by the Organization, its position

in relation to competitors etc. Generally these parts are controllable whereas

Opportunities and Threats are external to the organization, which are caused by the

external environment.

The aim of conducting a SWOT analysis is to isolate the key issues which would be

important in the future for the organization. Every successful firm’s success comes up

when they implement the outcomes of the SWOT analysis in the best possible manner.

Strengths. The factory is located in the heart of the city & has all infrastructure

facilities. They require quick movement of raw materials & finished products. Due to

its proximity, habitation movement of men and material are easy. Also the organization

has devoted and hardworking employees who contribute to the organization’s well-

being. This is because the company provides both monetary and non-monetary benefits

to employees. This is the main reason why a company like Karnataka soaps and

detergents limited has reached such heights irrespective of being a government owned

company. The company also maintains a very good dealership network, which ensures

that the products reach every loop and corner. And their main strength is that there is

very little competition for its major products sandal soap, only other brand which has a

sandal flavor is santoor soap of Wipro.

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70

Weakness. There is a lack of effective use of media for promotional activities,

especially the use of mass media for the promotional activities of its products. The

company is not utilizing media like television for promotion. Although modern

technology has been utilized for the production process, still packing is done manually.

This can delay the production process. No fuller utilization of land available within the

premises of the company. Large parts of the land are left underutilized.

Opportunities. The company should try to develop and expand its exports, as Mysore

Sandal has a greater demand in the foreign markets. As there is a positive swing in the

economy towards development, the company should try to make maximum utilization

of this situation. The toilet soap and the detergents market is an over expanding industry

and a major company likes KS& DL with its manufacturing expertise can call the shots

if it.

Threats. One of the main threat is Intense Competition from other global leaders like

Hindustan Unilever Limited because KS&DL is a government owned company and

they have certain restriction in adoption of new technology and promotional activities.

Too much Government interference may reduce growth potential. Growth of Private

enterprises in this sector with huge investment and great service potentiality is a great

threat to public enterprises like KS&DL.

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CHAPTER-FOUR

OBSERVATIONS AND

CONCLUSION

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72

Observations

Karnataka Soaps and Detergents Limited is wholly owned by government, so it has to

work according to the instruction of the government and there is less freedom. The

company conducts weekly meetings on every Saturdays discussing about the weekly

performance of the company. The medium of language used for communication is

Kanada for all meetings and internal reports. It has been mandatory that the language

used should be Kanda. But for external meetings and reports English is used. Consumer

awareness of its products is very less except for Mysore Sandal soap. Since the

company is ISO certified, the raw materials used have the required quality. All the

records are well maintained which helps the finance department in taking decisions

relating to finance. Inventory control and warehousing are the major functions of the

purchase department.

By all means the organization is in a position to go ahead with the expansion plans.

Moreover, the company bears a good relationship with its employees, customers,

dealers and suppliers making them a good entity to deal with.

Suggestions

KS&DL has a wide variety of products but people are unaware of many products like

Agarbathies, Detergents, Baby soaps etc., as its marketing is very weak. So it should

spend both money and man power on advertising, especially advertising through mass

media. They should also improve in building up the strong marketing strategy in order

to improve the distribution channels and could be able to increase the sales other than

the Mysore Sandal soap. In order to meet the competition at the international level,

there should be sufficient production capacity. The company should introduce

automation in packing, thus reducing labour.Also the company should try to build a

strong customer base in north Indian markets through effective promotion techniques.

The management should design more Training and development programmes and

Career Development programs and identify the skills or knowledge. With some of these

small changes KS&DL the government company can capture even the market share of

multi-national companies.

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73

CONCLUSION

The organization study done on Karnataka Soaps And Detergents Ltd. helped me to get

clear picture of the organization and its management function. KS&DL is one of the

largest producers of sandalwood oil and sandalwood soaps in the world. The sandal

soaps of KS&DL are probably the only soaps in the world that uses pure, natural

sandalwood oil. KS&DL was established in the 1918 by the Maharaja of Mysore in the

name Government Soap Factory and later in the year the company was renamed as

Karnataka soaps and Detergents Ltd. KS&DL is an ISO 9001:2004 and ISO-14000

Certified Company. It has manufacturing units located at Bangalore, Mysore and

Shimoga. The main products of KS&DL are Mysore Sandal Soap and its varities,

Talcum powder, sandalwood oil and Agarbhathis.

The company has an effective human resource department where in the employees are

given good remuneration, incentives and extensive care is taken by providing facilities

such as canteen, medical facilities, and extracurricular activities. Since it is a

government owned company, one of the main objective is to provide maximum job

opportunity to the people of Karnataka and development of the society. The company

has an excellent financial position with a current net profit of 32 crores and a good

solvency rate. The company has a strong market and customer base all around the

world.

The study has accomplished several goals. The study has helped to familiarize with

working condition of the organization. The study has given a general idea about the

functioning of KS&DL. It helped to analyze and understand the administrative

functions. Since an organization is a human grouping in which work is done for the

accomplishment of some specific goals or mission, this organization is trying to remain

on top position by utilizing and maintaining its resources to maximum. Proper

management and quality assurance is a challenging job, and here in this organization in

order to attain is its objective.

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74

BIBLIOGRAPHY

A. BOOKS AND JOURNALS

Aswathappa, K. (2005).Resource and Personal management. New

Delhi: Tata McGraw-Hill Publishing Company Ltd. Fourth edition

Aswathappa, K., SridharaBhata, K. (2005). Production and Operations

management. Place of publishing: Himalaya Publishing House

Annual reports of KS&Dl

Flippo, Edward .B. (1984). Personal Management. New Delhi: Mc

Graw Hill.

Jain, P.k. Khan, M.Y. (2005). Financial management. Place of

publishing: Tata McGraw-Hill Publishing Company Ltd, Fourth

edition.

Kotler, Philip. (2009).Human Resource Management. New Delhi: New

age Publication.

MSIL – Company Brochure

B. WEB SITES

http://202.138.105.9/mysore sandal/rti.php

www.mysoresandal.com & www.msilonline.com

www.investopedia.com

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ANNEXURE

Balance Sheet of KS&DL

As on 31st March 2014

PARTICULARS

AMOUNT AS ON

31-3-2014

RS. RS.

1. SHARE HOLDERS FUNDS:

(a) Share capital

(b) Reserve & surplus

(c) Revaluation Reserve

Revaluation of Land

2. NON CURRENT LIABILITIES

(a) Long term borrowings

(b)Other noncurrent liabilities

(c)Long term provisions

3. CURRENT LIABILITIES

(a) Short term borrowings

(b)Trade payables

(c)Other current Liabilities

(d)Short term provisions

TOTAL

ASSETS:

1. NON-CURRENT ASSETS

(a)Fixed Assets

(i)Tangible Assets

(ii)Intangible Assets

(b)Non-current Investment

(c)Deferred Tax Assets

(d)Long term loans & advances

(e)Trade Receivables

2.CURRENT ASSETS:

(a)Inventories

(b)Trade Receivables

(c)Cash and cash equivalents

(d)Short term loans and

advances

(e)Other current Assets

TOTAL

31,82,21,000

95,49,62,316

7,75,85,91,370

903,17,74,686

33,77,20,917

63,34,42,659

3,50,00,000

4,58,98,686

25,68,22,474

NIL

4,92,47,570

31,49,79,855

26,92,15,234

7,85,27,71,403

-

1000,29,38,262

831,82,48,736

23,00,00,100

3,03,86,255

17,54,41,070

2,96,49,908

80,81,43,158

23,20,25,566

43,77,57,488

20,67,63,314

-

168,46,89,526

1000,29,38,262

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The products of KS&DL

Mysore Sandal Soap

Mysore Detergent Powder

Mysore Detergent Bar

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Agarbhathies

Talcum Powders