Situation Analysis

As indicated by World Packaging Organization, the global packaging industry was estimated
to have made US$500 billion in revenues in 2010, with a 10-year compound annual growth
rate of 3.1 percent. Glass has always been a prominent material used in the packaging
industry. Ajanta Packaging was one of the major glass bottle suppliers by being quality-
focused, cost-effective, customized glass-packaging solutions and customer loyalty, which
was important as 90% of the revenue came from the same customers, which tells us about the
relationship between the customer and the company. But over the years, the industry has
witnessed changes in packaging trends. The conventional packaging solutions i.e., glass,
aluminium, were replaced by elective packaging solutions i.e., PET bottles, cans. The reason
behind the shift was due to added advantages by elective packaging such as cost-
effectiveness, durability, lightweight. 

The extension of the glass packaging industry in India grew from $14 billion in 2010 to $23
billion in 2012 but due to changing consumption patterns and increase in the availability of
substitutes like PET bottles and cans, it didn’t grow. In 2012, the glass packaging industry
had only an 11% market share of the total packaging market. In order to gain that share, all
the suppliers started price wars where they slashed their prices in order to retain the old
customers or to attract the new customers and the cost of raw materials also increased due to
inflation, which lead to the fall in the profitability of the company. Even the Ajanta had to
keep the profits constant or decline in order to achieve sales. 

The glass bottle industry was depended on major industries using glass bottles such as the
Indian alcohol industry, soft-drinks, and pharmaceuticals industry.
  The Indian alcohol industry was pegged at INR 507 billion in 2013 and was expected to but
it faced challenges such as restrictive policies of states with regards to movement, increase in
the price of raw materials. Moreover, different states had different policies with regard to the
use of glass or PET bottles for country-made liquor. Domestic consumers' preference towards
alternative packaging solutions such as PET bottles was increasing, which ultimately lead to a
negative impact on sales figures of the glass-bottle industry.

 The Soft Drinks industry was valued at Rs.60 billion. The growth was aided by the sudden
rise in industries such as glass, refrigeration, and transportation. About 85 percent of soft
drinks were sold in returnable bottles with a floating stock of about one billion bottles' valued
at 6 billion. Then many companies started shifting to PET bottles to reduce the cost and to
improve the durability of the products as there was a high probability of glass bottle getting
broke during transportation. This shift had a negative influence on the glass-bottle industry.

 The pharmaceutical industry was estimated to be worth $23 billion. Medicine packaging had
always had important information about medicine regarding price, contents usage, storage,
precautions, batch number, dates of manufacturing and expiry, unlike in other industries. For
these reasons, the packaging industry started shifting from glass-bottles to PET bottles to
benefit from low weight, small pack size, ease of storage, and transportation. This also leads
to a negative impact on the glass-bottle industry. 

SWOT analysis

 Strengths
 Ajanta Packaging was considered as one of the top suppliers of glass bottles in the country. It
had a strong distribution network and excelled in customizable and timely delivery of glass
packaging solutions. 

Weaknesses 
 Operating expenses were continuously increasing over the years and profitability was
decreasing.

Opportunity
 Buyers are searching for flexible and alternative packaging solutions for their products.

Threats
 There were various substitutes available for Ajanta’s glass bottle products like PET bottles.

Problem Statement 
Whether it is the right chance to take up diversification of product range with PET bottles?

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