Marketing Strategy

SOLID PLASTICS INDIA LIMITED [SPIL]

Is There a Hope for Turnaround?

It was around ten in the night in January 2003, when Dr. Murthy received a call from Mr. Mahesh Prashad (MP), the Chairman and Managing Director (CMD) of SPIL. MP appeared to be both tired and frustrated. He had just returned to his hotel in Hyderabad after a long 15 hours review meeting with the senior executives of SPIL. By October 2002, SPIL had completed 10 years. What had appeared a gold mine to MP from day one, turned out to be a nightmare with no trace of gold. The continuous run of losses had accumulated to Rs.30 Mn. In spite of devoting maximum amount of his time on SPIL, MP was unable to redeem the situation and come out of the muddle.

Dr. Murthy was an old friend. He was a professor in marketing and strategic management in a leading business school based in Hyderabad. MP seemingly was keen to get some suggestions. A sustained poor performance had clouded MP’s thinking. He confessed loss of objectivity. Beyond the financial losses, the strain of managing SPIL with highly de-motivated team, was taxing MP a great deal. In his business house, (a combined sale of MP’s business house in 2002 was around Rs.600 millions.

SPIL: THE COMPANY BACKGROUND AND PRODUCTS

SPIL came into being in India in 1993. It was a collaborative venture between MP and Solid Plastics Limited (Germany). Before the merger, SPL Germany with SPL–USA was an independent company with 30 years of existence.

Ever since its inception, SPIL had not made any profits in any financial year. The span of 10 years saw an exit of six CEOs (Chief Executives Officers) and may be more than 50 managers belonging to different levels. Based in Kolkata, the Hyderabad venture was to be a dream unit for MP. He was yearning to set up a unit far away which would be insulated from the culture and work discipline of the east i.e. Kolkata. MP was keen to make the Hyderabad...