PIRAMAL GLASS MOVING UP THE GLASS VALUE CHAIN

A Written Report on Strategic Management

SUBMITTED BY
Anirban Deb
Uttam Gaurav
Harshdeep Singh Brar

LOVELY PROFESSIONAL UNIVERSITY

SCENARIO OF THE GLASS INDUSTRY

The Glass Industry is divided into two segments. Segment 1 constitutes the Glass Packaging
Division (it holds one-third of the market). Segment 2 constitutes manufacturing of Float
Glass, Architectural Glass, Automotive Glass, Tableware, Glass Bricks, Scientific Glass and
Mirrors.
The Glass Packaging Industry, in 2011, was a US$ 30 Billion Industry. It constitutes Moulded
Glass Packaging (capturing 93.33% market share of the Glass Packaging Industry at US$ 28
Billion) and Tubular Glass Packaging (capturing 6.67% market share of the Glass Packaging
Industry at US$ 2 Billion). The Moulded Glass Packaging Industry is further segmented into
Packaging for Cosmetics and Perfumeries (capturing 8.21% market share of the Moulded
Glass Packaging Industry), Packaging for Pharmaceuticals (capturing 7.14% market share of
the Moulded Glass Packaging Industry at US$ 2 Billion), and Packaging for Food and
Beverages (capturing 85.71% market share at US$ 24 Billion) of which Speciality Food
comprised of US$ 0.05 Billion.
Packaging for Cosmetics and Perfumeries involves manufacturing of glass bottles for
Fragrances, Nail Polish, and Jars for Skin Care, Foundations, Aroma Oils, and Miniatures. It
was a growing market and the demand was driven mainly by the emerging economies such as
Brazil, Russia, India, and China. The post-economic recession witnessed de-growth of the
sector. Moreover the availability of the major international brands in India was another
growth driver. The market is divided into four segment,
1. Select Perfume It is a premium segment with a market size of US$ 1016 Billion and
having a market potential in France and United States of America. Per 1000 bottle for
this segment costs about US$ 330 to 4000.
2. MNC Mass Perfume and Skin Care Like the first one, it is also a premium segment
with a market size of US$ 616 Billion and having a market potential in Western
Europe, North America, and Latin America. Per 1000 bottle for this segment costs
about US$ 160 to 330.
3. Low Mass Perfume It is a mass segment category with a market size of US$ 500
Billion and having a market potential in Middle East, Turkey, South-East Asia, and
India. Per 1000 bottle for this segment costs about US$ 85 to 160.
4. Colour Cosmetics It is also a mass segment category with a market size of US$ 155
Billion and having a market potential across the globe. Per 1000 bottle for this
segment costs about US$ 20 to 40.

The Glass Packaging Industry for Select Perfume Segment has a high entry barrier and
concentrated customer base (20 customers constituting 80% of the market). The cost of
decoration of the bottle was high at 40% and hence labour intensive. It has a Product
Development Cycle 12 to 18 months. The MNC Mass Perfume and Skin Care has a Product
Development Cycle of 6 to 8 months. The Low Mass Perfume was fragmented with several
regional players and hence required frequent new product development and shorter product
run. The Colour Cosmetics was driven by the emerging economies and was very much
fragmented. It required several new designs and integrated packaging including caps and
closures.
The top ten players in the Packaging for Cosmetics and Perfumeries (as on 2011) are SaintGobain-Desjonqueres (having a market share of 16%), Gerresheimer (having a market share
of 8%), Bormiolli Rocco (having a market share of 6%), Heinz (having a market share of
16%), Bormiolli Luigi (having a market share of 6%), Zignago Brosse (having a market share
of 11%), Vitro (having a market share of 8%), Pochet (having a market share of 10%),
Piramal Glass (having a market share of 6%), and Other Un-Branded Players (constituting a
market share of 13%).
Packaging for Pharmaceuticals comprised manufacturing of moulded vials, injectable, and
bottles for the pharmaceuticals industry. The market comprised of Amber, Flint Type 1, Flint
Type 2, and Flint Type 3 glass. The demand was rising due to growth for tablets, capsules,
and medication in the form of liquid dosage.
Packaging for Food and Beverages was growing at 7% per annum. It was characterized by
the short production run, lower quantities per batch, high value added opportunities, and
flexible opportunities. This segment was facing a problem of high substitution with other
container product.

PIRAMAL GLASS
Piramal Glass Limited (formerly known as Gujarat Glass Private Limited) is an Indian glass
packaging company providing packaging for Pharmaceutical and Perfume Industry. Prior to
acquisition in 1984 by Piramal Group, the company located its manufacturing plant in
Kosamba, Gujarat. In 1990 Gujarat Glass Pvt Ltd merged with its parent company Nicholas
Piramal India Ltd to become one of its many divisions. Piramal Glass flogs glass packaging
for the Pharmaceuticals, Foods & Beverages (F&B) and Cosmetics & Perfumery (C&P)
industries, services, It is listed at both Bombay Stock Exchange (BSE: 532949) and National
Stock Exchange (NSE: PIRGLASS). Piramal Glass offers stuff like full bottle design
capabilities, in-house mould design, CNC machines for mould manufacturing, glass
manufacturing and dedicated ancillaries for decoration and accessories like caps, cartons and
brushes.
Piramal Glass is the 2nd largest manufacturer of flacconage glass for the Cosmetic and
Perfumery (C&P) businesses with a capacity of 545 Tonnes per Day. Although, being the
youngest player in this segment globally, it currently has 6% of the US$ 2.3 Billion global
market share. The segment caters to customers across 44 countries including LOreal, Yves
Rocher, LVMH, Coty, Bogart, Elizabeth Arden, Estee Lauder. C&P as a business segment
contributed 51% of the consolidated sales in 2012. C&P business is further segmented as
Color Cosmetics, Low Mass Perfumes, MNC Mass Perfumes, and Select Perfumes. Within
the Color cosmetics (Nail Polish) segment, Piramal Glass claims to be the world leader with a
50% market share. The Premium business of C&P, which includes the Select and MNC Mass
segment, is the prime focus of Piramal Glasss growth strategy. Piramal Glass claims to be
the fastest growing player in C&P business with a CAGR of 18.4% over the last 5 years.
Being one of the 5 global leaders in the Pharmaceutical container glass industry, Piramal
Glass has a 35% share of Indias US$ 111 Million market opportunity with a client roster that
includes Cipla, PHL, Abbott, Pfizer, GlaxoSmithKline, Alembic, Merck, Ranbaxy, Strides
Arcolab, Hospira amongst others. This segment contributed 23% of the consolidated sales in
FY2012. The Amber and Flint bottles and vials for liquid oral formulations, and injectable
produced conform to the US, Indian and European pharmacopeia in Type I, Type II and Type
III Glass.

The Specialty Food and Beverage segment provides bottles for wine, liquor and food
industry. This segment is primarily catered by the Sri Lanka and US operations serving global
industry bigwigs such as Cadbury Schweppes, Diageo, Pernod Ricard, and UB Group.
Piramal Glass has its manufacturing facilities in India (Kosamba and Jambusar), Sri Lanka
and USA. The Kosamba facility has six furnaces among which one is for Pharma and five is
for Cosmetics and Perfumeries with a combined capacity of 330 TPD. The Jambusar facility
is one of the world's largest installed capacities for pharmaceutical packaging in amber glass.
It has 3 furnaces with a combined capacity of 520 TPD. In 2005, Piramal Glass acquired the
Flint Glass plant and Decoration operations of the Glass Group Inc. in the US (formerly
Wheaton Glass). The US glass plant in Missouri has two furnaces with a combined capacity
of 195 TPD for F&B and C&P products. The Decoration unit is located in the state of New
Jersey. In Sri Lanka, Piramal Glass has 1 furnace in Horana with a capacity of 250 TPD for
producing both flint and amber bottles. Piramal Glass is a solutions player in the flacconage
business. The company has several trusted partnerships. These partnerships include,
1. An ancillary (ANSA), with facilities for printing, etching, colouring, coating and
stamp foiling.
2. A decoration facility in Williamstown in the US for PVC coating.
3. An ancillary for the supply of caps, cartons and brushes.
During the last year, Piramal Glass got recognition, with the Kosamba plant getting the Frost
& Sullivan Gold Certificate Award for Business Excellence and the Jambusar plant getting
the Golden Peacock Award for Quality. Now a part of Piramal Group, headed by Ajay
Piramal, Piramal Glass won the Award for the Best HR Strategy in Line with Business at
the 2nd Best Employer Brand Awards 2011. The awards were hosted by Employer Branding
Institute-India and World HRD Congress held in Singapore. In its quarterly report in Q4 FY
2008, Piramal Glass recorded Consolidated Revenues growth by 21.8% to INR 2.3 Billion,
Operating Profit growth of 41.6% to INR 399.5 Million, and Net Loss was recorded down by
54.6% to INR 71.9 Million. During June 2010, a sales turnover of INR 169.08 Crore and a
Net Profit of INR 9.09 crore was recorded. Following September, 2010, Piramal Glass
announced a sales turnover of INR 196.22 Crore and a Net Profit of INR 18.00 Crore. In
February 2011, Piramal Glass stated that they would be investing INR 100 Crore on capacity
expansion at its Jambusar unit in Gujarat through a Greenfield project. The project was
deemed to be completed by 2012. Furthermore, the company had already transferred 75
tonnes of its current capacity in the pharmaceutical segment to the C&P business. It also

stated its plans to streamline its global operations in the countries like USA and Sri Lanka. In
October 2013, PGC won its fourth consecutive Gold award in the Large Industry segment in
the Ceramic sector at the 21st Annual NCE awards ceremony.
STRATEGY ANALYSIS OF THE CASE
According to the case analysis done by the group, Value chain, Expansion, and
Diversification was found to be the most important of worth mentioning of all. Firstly, Glass
Packaging Industry have high industry barrier and requires a lot of expertise. The way
Piramal Glass have moved up the ladder from acquiring Gujrat Glass Group to establishing a
global presence in countries like USA and UK, there expansion and diversification lays upon
the basic foundation that a strategic value creation is the utmost important factor of all.
Moreover, a segment which requires a tendency to develop one type of product from one
source due to the complexity involved, consistency in quality is required and the secrecy to
be maintained till the launch of the product, where, the vendors with proven and consistent
track record as packaging form an integral part of the product positioning, where, high level
of human skills are required, high gestation period of 3 to 5 years are required and moreover
other considerable factors are paid attention to such as high product development cycle,
copyright issues, innovation and robust product pipeline, Piramal Glass have done
considerably well in successfully operating in this market over the years and catering to
clients and brands of international standards where high end competitors like Saint-Gobain,
Zignago, and Pochet are already involved.
A whole lot of strategic factors are involved in such positioning maintaining. First, they have
established plants at some strategic locations of Western Europe and USA which constitute
close to 80% of the business for Cosmetics and Perfumeries. Moreover, they catered only to
the leading customers of India since the business was freight intensive. The global strategy of
Piramal Glass was specific to markets. Thirdly, Piramal was aware of the low cost and
therefore shifted from pharmaceuticals to Cosmetic and Perfumeries. For an instance,
discussing the strategic intent with the investors, Chunduru Srinivas, Vice President, Strategic
Planning, highlighted the revised strategic plan of the company which is to focus on 24% of
the growth over the next two years for the Packaging Industry for Cosmetics and
Perfumeries. This includes 26% in the Premium segment and 22% in the Mass Market
Segment. The strategy that they have chalked out is to shift 75 tonnes of Pharma capacity
to Cosmetics and Perfumeries at the Kosamba Site and an addition of Greenfield Low

Capacity of 160 tonnes at an investment of INR 100 Crore at Jambusar. Moreover, they
want to shift from US to India by shutting down one furnace, concentrating on
Speciality Food and Beverage bottles. According to Vijay Shah, for slightly less
strategically markets, Piramal work with the concepts of agents who remain contacts with the
clients and pass on the order. This helps them to reduce the cost which they cater through a
back-end customer team. For the least important markets, they work with the distribution part
and distributor play a major role in this. They follow an extensive network.