Comprehensive SWOT Analysis of Kesoram Industries – One Of The Pioneer Companies In India

Quick Stats on Kesoram Industries

Founder	Manjushree Khaitan
Year Founded	1919
Origin	Kolkata, India
No. of Employees	1,600+
Company Type	Public
Market Cap	Rs 1,494 Crore 2022
Annual Revenue	Rs 4554.23 Crore 2021
Net Income/ Profit	Rs 166.94 Crore 2021

 

Products of Kesoram Industries

Kesoram industries have been in the manufacturing fields for ages and deals in the great products:

• Birla tyres
• Birla shakti cement
• Kesoram rayon

Competitors of Kesoram Industries

As the company is a well-known company. It has a great and competitive competitor:

• Apollo tyres ltd
• Continental corporation ltd
• Bridgestone
• CEAT ltd
• The Goodyear tire and rubber company

Now that we have got an understanding of the company’s core business let’s go through the SWOT Analysis of Kesoram Industries.

SWOT Analysis of Kesoram Industries 

Talking about Kesoram Industries, let’s understand how this corporation can cater to different individuals using SWOT analysis. The SWOT analysis of Kesoram Industries helps us to understand companies through the lens of internal and external factors. Strength and weakness are based on internal factors whereas opportunities and threats rely on external factors of the bank.

Below is a step-by-step detailed guide to help you with the SWOT analysis of Kesoram Industries.

Strengths of Kesoram Industries

Let us look at the strengths of Kesoram Industries – 

• Distribution & Reach: Kesoram Industries have a great distribution network which makes it easier for the customers to get access to their products. The company carries out the distribution of tyres, cement, rayon, transparent paper, and filament yarn.
• Dealer Community: Kesoram has a lot of dealers to whom they sell their products and then the products are further sold by the retailers. Kesoram shares a great and strong relationship with its dealers.
• Robust Production: The company has a large production of all their products that the supply is never diminished according to the demand. Kesoram Industries produces the capacity of 4,635 metric tons of rayon yarn per year.
• Increasing Capital: The company is effectively using its capital to generate profits and has improved in the last 2 years. And is also able to generate net cash. The annual net profit of the company is also increasing.
• Funds: the company effectively uses the shareholder’s fund – Return on equity (ROE). Promoter holding increased by more than 2% and FPI/FII increased their shareholding.
• Quality Products: Kesoram Industries believes in serving society with superior quality. There’s no doubt regarding the quality of Kesoram Industries and even customers never fail to admit it. Kesoram Industries never compensates with the high priority features like grip, fuel efficiency, durability, endurance, and noise control.
• CSR Activities: Kesoram Industries maintains its brand image through involvement in various CSR activities including initiatives in education, health, livelihoods and water conservation. Through these initiatives, Kesoram Industries is trying to bring empowerment to local communities and get them into the mainstream of development.
• Tyre Manufacturing: Kesoram Industries have grown in the market since its started the production of tires and cement under the brand name Birla Tyres and Birla Shakti Cement respectively. Since then, Kesoram Industries Limited has grown stronger.

Weaknesses of Kesoram Industries

Let’s have a look at the weaknesses of Kesoram Industries –

• Weak Performer: The company is seen as a weak performer as it lost its stock by more than 20% in 1 month.
• Pricing: Kesoram Industries has a good number of competitors in the Indian market, so it will need to keep its prices intact since that will be its main differentiator.
• High Competition: The presence of other major brands like MRF, Apollo Tyres, CEAT Tyres etc in the tyre manufacturing segment has led to limited market share. And in the cement industry brands like Ultratech cement, Ambuja, and Wonder cement are leading the market and the presence of Birla Shakti cement in front of these players is equal to zero.
• Dependence on One Nation: Kesoram Industries is heavily reliant on the Indian market. The company has never tried to expand overseas. If somehow the market gets unprofitable, it may affect its revenue stream and long term growth.
• The Lack of Flexibility: Kesoram Industries has built good recognition in the past but in recent years Kesoram Industries has been struggling to market its products at the same wavelength as before. Their quality of tyres and cement are still maintaining their standards but they’re not able to keep up with the recent trends which have led to their competitors seizing the market share.
• Low Margins: Kesoram Industries focuses mostly on rayon and the competition is very high in this domain, because of which sales volume is low.

Opportunities for Kesoram Industries

The following are the possible opportunities for Kesoram Industries – 

• Tie-Ups: As the company is mainly in the B2B Market it can focus on more tie-ups with automobile companies.
• Growth in the Two-wheeler Market: The demand for the two-wheeler market is expected to rise in the next decade, and the two-wheeler tyres market will potentially hold the highest market share in the Indian market. Thus it will be a good opportunity for Kesoram Industries to look into this market.
• Social Media: The number of internet users has substantially increased post covid, and thus Kesoram Industries can promote its products, interact with customers, and respond quickly to complaints through various social media sites like Facebook, Instagram, Twitter etc.

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• Global Expansion: Kesoram Industries can make use of India’s market supremacy to expand to other regions of the world.
• Improving Infrastructure: One of the most huge advantages of Kesoram Industries is that its brand Birla Shakti cement is a prominent brand in the cement industry, which is expanding in India owing to an increase in infrastructure demand. This need will not diminish any time soon, given the growing population and improving economic conditions.
• Increasing Demand: People are opting for more stable structures and intensive use of cement is taking place, even the government is spending heavily on infrastructure projects. Thus, this is the right time to fully tap these markets.
• Increasing Vehicle Sales: Emerging economies like India, China and Brazil are showing an increase in sales of vehicles. The growing disposable income of people in these nations is the reason for the surge in demand. This demand will create a proportional increase in demand for tyres by car manufacturers and automakers.

Threats to Kesoram Industries

Following are the threats of Kesoram Industries –

• Cheaper Product Availability: Many individuals look for a cheaper option for any product or service. Although the quality of the product is great the consumer is ready to compromise it if a cheaper option is available. If Kesoram Industries doesn’t go with value-based advertising they could lose the market share to cheap rip-offs.
• Cost of Raw Materials: Rubber is the key raw material in manufacturing tyres; if the cost of the raw material increases it could lead to great loss for the company. Mainly the production of tyres could come to a standstill leading to lack of sales.
• Evolving Technology: Technology is ever-changing, and if Kesoram Industries doesn’t manage to adapt to the new upcoming trends, then very soon it will be kicked out of the market by its competitors.
• Higher Input Costs: Cement makers like Orient, Birla, Ramco and Dalmia are facing difficulties to mitigate higher input costs due to labour shortages caused by the Holi holiday and elections in some regions. This has led to an increase in average cement price by a marginal 2% in March over February 2022 passing on some portion of the increase to consumers.
• Threat From Global Players: It faces stiff competition in Indian markets from global players. Due to India’s rapid expansion, many new multinational cement and tyre businesses are projected to emerge in the future years, ushering in a wave of change and potentially igniting a price war.
• Price Competition: When a business engages in price competition, its bottom line suffers. The threat to Kesoram Industries is just the same. Kesoram Industries is obliged to compete on price due to the enormous number of brands offered, which has a detrimental impact on its bottom line.

Well, we have come to an end with the SWOT analysis of Kesoram Industries. Let us conclude what we have seen.