Ittehad Chemicals
Ittehad Chemicals
Ittehad Chemicals
ABRISH TAHIR
17-ARID-5366
Industry profile:
Chemical industry in Pakistan is widespread. The chemical imports constitute about 17%
of the total import bill. Pakistan has made considerable progress in basic inorganic
chemicals like Soda Ash, Caustic Soda, Sulphuric Acid and Chlorine and has acquired
sufficient production capacity of these chemicals to cater for the needs of the local
industry, while surplus is being exported.
Brighto Paints
Ittehad Chemicals
Escon
Engro Fertilizers
Engro Polymer
National Fertilizer Corporation
Company profile:
History:
Ittehad Chemicals Limited is a publicly listed chemical manufacturing company
in Pakistan and the company stock is publicly traded on the Pakistan Stock Exchange.
The company was commissioned in 1964 as United Chemicals and started production
with an initial installed capacity of 60 metric ton/day of caustic soda and 54 metric
tons/day of chlorine. Rising demand facilitated the first expansion, carried out in 1969,
which increased capacity to 90 metric tons/day of caustic soda and 81 metric tons/day of
chlorine. In 1972, Prime Minister Zulfiqar Ali Bhutto began Nationalization in
Pakistan plan to take over privately-run companies. United Chemicals
was nationalized by the Pakistani Government, renamed Ittehad Chemicals and put under
the control of the Federal Chemical and Ceramics Corporation Limited (FPCCL).
Another company, Insecticide Pakistan Limited., was nationalized and renamed Ittehad
Pesticides Limited in 1973. Later, the two companies were merged to form Ittehad
Chemicals Limited. In 1983, the production capacity of Ittehad Chemicals was further
increased to 150 metric tons/day of caustic soda and 135 metric tons/day of chlorine.
Later, through another expansion, capacity was enhanced to 250 metric tons/day. By the
year 2006, overall capacity had reached 380 metric tons/day. After encountering financial
difficulties and turbulence throughout the years of company nationalization, Ittehad
Chemicals was ultimately privatized in 1991, and taken over by the Chemi Group of
Companies which later on became Ittehad Group. This transition brought with it a new
set of challenges, a bold vision and a transformational proactive behavior that set a new
era of economic growth and economic stability in motion. The present product
line includes industrial caustic soda sodium hydroxide (solid, liquid and flakes), liquid
chlorine, hydrochloric acid, sodium hypochlorite (liquid bleach), zinc sulfate mono,
bleaching earth, and sulfuric acid.
Introduction:
Ittehad chemicals limited (ICL) is the pioneer. It is one of the largest manufacturers of
industrial chemicals in Pakistan. It produce Caustic Soda, Liquid Chlorine, Hydrochloric
acid, sodium Hydrochloride, Zinc Sulphate, Calcium Chloride, Linear Alkyl Benzene
Sulphonic Acid (LABSA). Ittehad chemical limited has strategically diversified its
product portfolio in order to cater for the demand of the market.
Mission
“Create an environment to attract and retain the best talent”
“Optimize cost and securitize energy through latest technology”
“Serving the customers to their satisfaction levels”
“Ensuring that we are environmental friendly and zero injury company CSR is our
forte”
Vision
An “Ittehad” of Pakistan’s best talent and technology that serves as catalysts to deliver
sustainable chemical products to its customer thus optimizing returns for investors
Core Values
Core values include these points’ like integrity, respect, teamwork, accountability which
are given below:
Integrity Integrity is regarded as the honesty and truthfulness or
accuracy of one action.
Hydrochloric acid
Hydrochloric acid is second only to Sulphuric Acid in its numerous and diverse uses in
manufacturing industry and synthetic chemistry. Hydrochloric acid is a solution of the
Gas Hydrogen Chloride (HCL) in water. The Hydrogen Chloride Gas is derived from the
burning of Chlorine and Hydrogen.
Liquid chlorine
Chlorine is the single material on which production of other chemicals mostly depends. It
is used in 60% of all Commercial Chemistry, 85% of all Pharmaceutical Chemistry and
95% of all yield enhancing or agrochemical chemistry.
Sodium Hypochlorite:
Sodium Hypochlorite is used for a wide range of applications where its powerful
disinfection and oxidation properties are utilized to deliver technical and commercial
advantage. It is manufactured by passing gaseous chlorine through a well-cooled solution
of dilute Caustic Soda.
Zinc Sulphate:
Zinc Sulphate Monohydrate is free flowing white powdery material, which is highly
soluble in water.
Calcium chloride:
The Entire product is manufactured in accordance with international specifications
required for Food Grade Material.
Micro-Environment:
Ittehad Chemicals Limited management has maintained its strong commitment to a safe
environment in its operations throughout the year. They apply strict environmental
criteria in all our activities, thereby ensuring that projects are integrated into the
community with the least possible impact on the environment and the maximum social
consensus. Energy conservation is a key issue world-wide. Through successful Energy
Conservation Management, they can vastly reduce energy wastage, bring down the cost
of production, and ensure that they respect the limited resources of the planet.ICL has
taken important measures starting with the formation of an Energy Conservation Task
Team (ECTT) to identify various conservation measures and constraints. The team
constantly analyzes system design, process design, and re-engineering of various factory
operations in order to make the processes more efficient and minimize wastage of
resources. Through the implementation of powerful IT solutions (e.g. SAP), the company
is moving ever close towards a paperless environment. Through awareness we have
arisen to confront the challenges to ensure a sustainable future for generations to come
Bargaining Power of buyer is high in Ittehad chemical limited. Buyers have a power to
buy any chemical like caustic soda, liquid chlorine, and sodium chloride whatever they
want. Cost of switching from one company to other company is low. Hence, power of
buyers is high.
Threat of substitute of product:
When a new product or service meet a similar customer need in different ways, industry
profitability suffers. The threats of substitute product or service are high if the offering
product or services are uniquely different from the present. Ittehad Chemicals can
challenge the threats of substitute products by increasing the switching cost of customers
and by understanding the essential need of the customer rather than what the customer is
buying.
SWOT Analysis:
SWOT analysis is a strategic planning method used to evaluate the strength, weakness,
opportunities, threat involved in a project or business venture. It involves the objectives
of business venture. It involves external and internal factors that are favorable or
unfavorable. The SWOT analysis of Ittehad chemicals limited company is given bellow :
Ittehad Chemicals Limited SWOT Analysis:
In
Strength Weakness te
Large product length as Labor union that rn
compared to its consists of many top
competitors level supervisors al
re
Opportunities Threat E
There are no big The competitor of ICL xt
competitors of ICL in is Sitara Chemicals that er
the market expect Sitara is increasing its product
Chemicals Pvt. limited line towards the ICL. na
l
re
Strength:
Ittehad Chemicals Limited has large numbers of competent workers that are working
under good conditions these are near about 4000 employees 40 of them are
permanent and other are at daily basis or contract basis.
It has two chemicals plants in Lahore one is manufacturing chemicals and second is
manufacturing products from these chemicals.
It has large product length as compared to its competitors in Pakistan.
It uses modern technology to manufacture chemicals.
It is the king of chemicals manufacturing industry.
It also has its own carriage container to distribute the chemicals in all over the
Pakistan.
Weakness:
The company has labor union that consists of many top level supervisors to deal the
problems of the workers in the company but this union is very harmful for the
company that much time it happens the union leader black mail the top management
with the power of workers as strike.
Company has its own energy sources but it is not enough for the company to
maintain its power in this period as there is lack of electricity in Pakistan.
Opportunities:
There are no big competitors of Ittehad Chemicals Limited (ICL) in the market
expect Sitara Chemicals Pvt. Limited. But Sitara Chemicals Company does not
have a large product line that it can compete the Ittehad chemicals limited.
It is the big opportunity for Ittehad Chemicals Limited that it has competitive edge
over its competitors.
Threats:
In this modern period Ittehad Chemicals Limited also facing many problems from
the pressure groups.
The most growing competitor of Ittehad Chemicals Limited is Sitara Chemicals
that is increasing its product line towards the ICL.
Competitive Profile Matrix:
The competitive profile matrix of Ittehad Chemicals Limited Company is given below:
2011 market share:
After Engro Polymer & Chemicals Limited (EPCL) entry in this industry, the market
has become more competitive for the other players as witnessed in the declining trend
in capacity utilization of all caustic soda producers.
EPCL has increased its market share to around 34%, whereas, Sitara Chemicals
remained around the previous year’s level 41% while market share of Ittehad
Chemicals dropped to about 25%.
2013 market share:
Share price has increased 28.8% in the last three months as opposed to the
benchmark KSE 100-Share Index that inched up merely 2.9% over the same period.
While the company's top line has crossed Rs 4billion, there is still no price discovery
in its stock.
ICL’s average daily volume for the last three months has been only 30,769 shares.
EFE Matrix:
The EFE matrix is the strategic tool used to evaluate firm existing strategies, EFE matrix
can be defined as the strategic tool to evaluate external environment or macro
environment of the firm include economic, social, technological, government, political,
legal and competitive information.
It consists of two attributes which are given below:
Opportunity
Threat
Opportunities:
There are no big competitors of Ittehad Chemicals Limited (ICL) in the market expect Sitara
Chemicals Pvt. Limited. But Sitara Chemicals company does not have a large product line
that it can compete the Ittehad chemicals limited.
It is the big opportunity for Ittehad Chemicals Limited that it has competitive edge over its
competitors.
Threat:
In this modern period Ittehad Chemicals Limited also facing many problems from the
pressure groups.
The most growing competitor of Ittehad Chemicals Limited is Sitara Chemicals that is
increasing its product line towards the ICL.
IFE Matrix:
IFE Matrix is a strategy tool used to evaluate firm’s internal environment and to reveal its
strengths as well as weaknesses.
It consists of two attributes which are given below:
Strength
Weakness
Strength:
Ittehad Chemicals Limited has large numbers of competent workers that are working under
good conditions these are near about 4000 employees 40 of them are permanent and other
are at daily basis or contract basis.
It has two chemicals plants in Lahore one is manufacturing chemicals and second is
manufacturing products from these chemicals.
It has large product length as compared to its competitors in Pakistan.
It uses modern technology to manufacture chemicals.
It is the king of chemicals manufacturing industry.
It also has its own carriage container to distribute the chemicals in all over the Pakistan.
Weakness:
The company has labor union that consists of many top level supervisors to deal the
problems of the workers in the company but this union is very harmful for the company that
many time it happens the union leader black mail the top management with the power of
workers as strike.
Company has its own energy sources but it is not enough for the company to maintain its
power in this period as there is lack of electricity in Pakistan.
Corporate strategy:
Porter’s generic strategies:
Porter suggested four "generic" business strategies that could be adopted in order to gain
competitive advantage. The strategies relate to the extent to which the scope of a
business' activities are narrow versus broad and the extent to which a business seeks to
differentiate its products. The key strategic challenge for most businesses is to find a way
of achieving a sustainable competitive advantage over the other competing products and
firms in a market. A competitive advantage is an advantage over competitors gained by
offering consumers greater value, either by means of lower prices or by providing greater
benefits and service that justifies higher prices.
The four strategies are summarizing in the figure below:
Cost Leadership:
With this strategy, the objective is to become the lowest-cost producer in the industry.
Many market segments in the industry are supplied with the emphasis placed on
minimizing costs. If the achieved selling price can at least equal or near the average for
the market, then the lowest-cost producer will enjoy the best profits. This strategy is
usually associated with large-scale businesses offering "standard" products with relatively
little differentiation that are readily acceptable to the majority of customers. Occasionally,
a low-cost leader will also discount its product to maximize sales, particularly if it has a
significant cost advantage over the competition and, in doing so, it can further increase its
market share.
Differentiation Focus
In the differentiation focus strategy, a business aims to differentiate within just one or a
small number of target market segments. The special customer needs of the segment
mean that there are opportunities to provide products that are clearly different from
competitors who may be targeting a broader group of customers. Differentiation focus is
the classic niche marketing strategy. Many small businesses are able to establish
themselves in a niche market segment using this strategy, achieving higher prices than un
-differentiated products through specialist expertise or other ways to add value for
customers.
Differentiation Leadership:
With differentiation leadership, the business targets much larger markets and aims to
achieve competitive advantage through differentiation across the whole of an industry.
This strategy involves selecting one or more criteria used by buyers in a market and then
positioning the business uniquely to meet those criteria. There are several ways in which
this can be achieved, though it is not easy and it requires substantial and sustained
marketing investment. The methods include:
Superior product quality (features, benefits, durability, reliability)
Branding (strong customer recognition & desire; brand loyalty)
Industry-wide distribution across all major channels (i.e. the product or brand is an
essential item to be stocked by retailers)
Result:
Ittehad chemical’s competitor has not strong position in the competition of Ittehad
chemicals. Ittehad chemicals providing their products to their customers at low cost and
different from their competitor. It is a competitive edge for Ittehad chemicals because
they have strong market position and high market share.
Space matrix:
The SPACE matrix is a management tool used to analyze a company. The Strategic
Position & Action Evaluation matrix or short a SPACE matrix is a strategic management
tool that focuses on strategy formulation especially as related to the competitive position
of an organization.
The Ittehad chemical company ltd. Is lie in aggressive stage. As a result, market
development, market penetration, product development, forward, backward and
horizontal integration, concentric, conglomerate and horizontal diversification or a mix of
strategies can be employed, depending on the particular environment that the firm is
practicing at the time.
Result:
Grand Matrix shows the strategies options in which Ittehad Chemical Limited Company can
follow concerning its current industrial scenario through the comparison of market
growth and competitive position. According to analysis, Ittehad Chemical Limited
company lie in quadrant 2 according to its strong competitive position and rapid market
growth of the industry as encircled in the above figure.
BCG Matrix:
Companies that are large enough to be organized into strategic business units face the
challenge of allocating resources among those units. In the early 1970's the Boston
Consulting Group developed a model for managing a portfolio of different business units.
The BCG growth-share matrix displays the various business units on a graph of the
market growth rate vs. market share relative to competitors.
On the vertical axis, market growth rate provides a measure of market attractiveness. On
the horizontal axis, relative market share serves as a measure of company strength in the
market.
The growth-share matrix defines four types of SBUs which are given below:
1. Cash cow
2. Star
3. Question mark
4. Dog
A business unit that has a large market shares in a mature, slow growing industry. Cash cows
Require little investment and generate cash that can be used to invest in other business units.
A business unit that has a large market shares in a fast growing industry. Stars may generate
Cash, but because the market is growing rapidly they require investment to maintain their lead. If
successful, a star will become a cash cow when its industry matures.
A business unit that has a small market shares in a high growth market. These business units
Require resources to grow market share, but whether they will succeed and become stars is
unknown.
A business unit that has a small market shares in a mature industry. A dog may not
require
Substantial cash, but it ties up capital that could better be deployed elsewhere. Unless a
dog has some other strategic purpose, it should be liquidated if there is little prospect for
it to gain market share.
Result:
The BCG matrix of Ittehad chemical limited is lie on cash cow because they have
invested what they had to and now they are enjoying profits as well as expanding their
products into different cities of Pakistan.
TOWS Matrix:
The TOWS Matrix is a tool that can be used to compare and contrast different strategies to
select the best one for the organization. The matrix breaks down the strategies according to
internal (Strengths and Weaknesses) and external (Opportunities and Threats) factors.
There are four combinations of criteria in the TOWS Matrix that are used to compare
strategies. The organization should be looking for one that offers the greatest chance for
success.
Strengths-Opportunities (SO):
The first strategy includes using the organization’s strengths to make the best use of any
existing opportunities. So the strength of Ittehad Chemicals Limited has large numbers
of competent workers that are working under good conditions these are near about 4000
employees 40 of them are permanent and other are at daily basis or contract basis. It has
two chemicals plants in Lahore one is manufacturing chemicals and second is
manufacturing products from these chemicals. It has large product length as compared to
its competitors in Pakistan. It uses modern technology to manufacture chemicals. It is the
king of chemicals manufacturing industry. It also has its own carriage container to
distribute the chemicals in all over the Pakistan. Opportunity of Ittehad Chemicals
Limited is that there are no big competitors of Ittehad Chemicals Limited (ICL) in the
market expect Sitara Chemicals Pvt. Limited. But Sitara Chemicals Company does not
have a large product line that it can compete the Ittehad chemicals limited. It is the big
opportunity for Ittehad Chemicals Limited that it has competitive edge over its
competitors.
Weaknesses-Opportunities (WO):
Another strategy the organization can implement is one that offers the company options
and plans to overcome its weaknesses so that it can benefit from any existing
opportunities. The company has labor union that consists of many top level supervisors to
deal the problems of the workers in the company but this union is very harmful for the
company that much time it happens the union leader black mail the top management with
the power of workers as strike. Company has its own energy sources but it is not enough
for the company to maintain its power in this period as there is lack of electricity in
Pakistan. Opportunity of Ittehad Chemicals Limited is that there are no big competitors of
Ittehad Chemicals Limited (ICL) in the market expect Sitara Chemicals Pvt. Limited. But
Sitara Chemicals Company does not have a large product line that it can compete the
Ittehad chemicals limited. It is the big opportunity for Ittehad Chemicals Limited that it
has competitive edge over its competitors.
Strengths-Threats (ST):
These strategies require the organization to use its strong points to bypass any hindrances
to its goals. Ittehad Chemical Limited Company has two chemicals plants in Lahore one
is manufacturing chemicals and second is manufacturing products from these chemicals.
It has large product length as compared to its competitors in Pakistan. It uses modern
technology to manufacture chemicals. It is the king of chemicals manufacturing industry.
It also has its own carriage container to distribute the chemicals in all over the Pakistan.
So this is its strong point. In this modern period Ittehad Chemicals Limited also facing
many problems from the pressure groups. The most growing competitor of Ittehad
Chemicals Limited is Sitara Chemicals that is increasing its product line towards the ICL.
Weaknesses-Threats (WT):
Strategies in this category are centered on minimizing an organization’s weaknesses so it
is less susceptible to external threats. So Ittehad Chemical limited company weakness is
the company has labor union that consists of many top level supervisors to deal the
problems of the workers in the company but this union is very harmful for the company
that many time it happens the union leader black mail the top management with the
power of workers as strike. and the threat is the most growing competitor of Ittehad
Chemicals Limited is Sitara Chemicals that is increasing its product line towards the ICL.
Strength-S Weakness-W
Opportunity-O SO
WO
It
has large product length as
compared to its Ittehad Chemical limited
competitors in Pakistan. It company weakness is the
uses modern technology to company has labor union &
manufacture chemicals. this union is very harmful
Ittehad Chemicals Limited for the company that many
is there are no big time it happens the union
competitors of ICL in the leader black mail the top
market expect Sitara management with the power
Chemicals. But Sitara of workers as strike.
Chemicals company does Ittehad Chemicals Limited
not have a large product is there are no big
line. competitors of ICL in the
market expect Sitara
Chemicals. But Sitara
Chemicals company does
not have a large product
line.
Threat-T ST
WT
It has large Ittehad Chemical
product length as limited company
compared to its competitors weakness is the company has
in Pakistan. It uses modern labor union & this union is
technology to manufacture very harmful for the company
chemicals. that many time it happens the
Threat is the most growing union leader black mail the
competitor of Ittehad top management with the
Chemicals Limited is power of workers as strike.
Sitara Chemicals that is Threat is the most growing
increasing its product line competitor of Ittehad
towards the ICL. Chemicals Limited is Sitara
Chemicals that is increasing
its product line towards the
ICL.
Implementation stage:
Ittehad Chemical Limited checks out the suitability and feasibility of its strategies
in the phase and ensures that it would be acceptable by its shareholders, Govt, and
other stakeholders.
Ittehad Chemical Limited provides guideline and standard operational procedures
to its employee to implementing the whole strategies through organizing,
structuring, enabling and managing changes.
Conclusion:
We conclude that:
It is a very informative and worth learning project.
Ittehad chemical is a competing company.
It is going towards progress but also facing some issues. They have no short term
plans, they only deal with big plans and therefore they don’t lease it.
They only predicting demand and forecasting they determine their capacity
requirements.
There is also a problem in their inventory that is they have excess of unnecessary
inventory which is not beneficial for them as they have to bear maintenance cost on
it.