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Ceramic Good and Stuffs: Dankotuwa Porcelain Plc Review

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Table of Contents

  • Vision
  • Mission
  • SWOT Analysis – Internal Environment
  • Strengths
    Weaknesses
    Opportunities
    Threats
  • PESTEEL Analysis for DPL
  • Political
    Economic
    Social
    Technical
    Environmental
    Ethical
    Legal
    Structure of the organization
    Employee motivation
  • Types of Rewards
  • Financial Rewards
    Non-Financial Rewards
    Benefits description
    Succession Planning for Employee Development
    Providing for Training
  • Communication and decision making
  • Communication
    Decision Making
    Leadership and Management Style
    Organizational Culture and Organizational Change

Dankotuwa Porcelain PLC (DPPL) is the leading Porcelain tableware manufacturer and the market leader in Sri Lanka. DPPL is working towards achieving by having a vision to be globally known as one of the best life style products and service providers. DPPL offer superior quality products at competitive prices to their valued target customers, to enhance their lifestyle.

Dankotuwa has been constantly innovating products, processes, and marketing strategies. Quality, superior product features, consistency in servicing the buyers and committed work force have been the hallmark of Dankotuwa’s success. DANKOTUWA is a brand of Sri-Lanka.

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DPPL is a public quoted company with limited liability. It was incorporated under the provisions of Companies Act No. 17 of 1982 as a Private Limited Company in Sri Lanka on 06th January 1984 and converted to Public Quoted Company by special resolution on 08 July 1994. Pursuant to the requirements of new Companies Act No. 07 of 2007, the company was re-registered on 17 September 2007. Currently, Lanka Centuries Investment Company holds majority of issued shares of DPPL. The company is a world class manufacturer of quality porcelain tableware and ISO 9001/2008 certified, the first tableware manufacturer in Sri Lanka to obtain ISO 9000 certification.

The Company got its name from the town of Dankotuwa where it is famous for its clay based terra cotta products. With 1000 employees workforce company generated around 1.5 billion Sri Lankan Rupee revenue, with a white-ware production capacity of 700,000 pieces per month and other decorative product capacity being much more.

Currently the company is led by Mr. Ranjan Asirwatham as the Chairman and Mr. Wasaba Jayasekara as the Chief Executive Officer (CEO). DPPL recognises the necessity of increasing production capacity and innovativeness in competing globally, while constantly upgrading its plant and machinery. While 50% of the raw materials including Quartz, Dolomite and Feldspar are sourced from Sri Lanka, Kaolin, China clay, liquid and paste gold/platinum and pottery stones are imported from the world’s best sources, in order to ensure that the famed high quality tableware would maintain its leading edge. Over the years, using the best materials, the foremost production methods and incorporating the latest trends DPPL has been successful in winning many awards and accolades during past two decades.

Vision

To be globally known as one of the best lifestyle products and services providers.

Mission

To redefine the art of dining in distinctive designs and elegant shapes to enhance lifestyles while providing adequate returns to all stake holders.

Internal and external environment of the organization

SWOT Analysis – Internal Environment

The following SWOT analysis captures the key strengths and weakness of Dankotuwa and identifies the opportunities and threats facing it. Being a well-known Brand in the local market

Strengths

  • Relationships with customers, Agents / Experience in exporting to over 30 countries & 42 destinations
  • Branded as a reliable OEM manufacturer
  • Collaboration with world renowned designers – e.g.: Prof. Wolf Karnagell, Martin Hunt, Jonathan Smith
  • Compliance with social and ethical practices
  • Porcelain manufacturing expertise, Access to resources
  • Specialized in Decals, lining and Printing
  • Product quality – stability, high whiteness level, high translucency
  • Quality focused manufacturing team
  • Specialized in Gold & Platinum designs
  • Strong brand name in the local market

Weaknesses

  • Outdated Technology, inefficient manufacturing practices
  • Poor Product Market co-ordination, understanding and cohesiveness
  • Poor MIS & SOP’s
  • Higher Inventory Levels and Higher cost of production
  • Low levels of DIFOT & Lead times
  • Poor brand communication, web, e-commerce & less social media presence
  • Lack of market presence: distribution/agents network in developing markets such as Asia Pacific regions, Russia, Africa, India
  • Lack of market, competitor intelligence
  • High absenteeism at Manufacturing
  • Indian market approach
  • Poor service levels at showrooms / customer service
  • High cost per piece compared to competitors
  • Strong unionized labor

Opportunities

  • Availability of GSP, FTA’s, EU/USA rules and regulations and standards
  • Increase sales volumes in Emerging markets like (Asia, Eastern Europe, South America) and high Per capita income countries (such as Singapore, Australia and Malaysia)
  • Large manufacturers looking for decoration expertise / labour intensive designs; Demand for limited edition – designer tableware
  • Inconsistent quality in Chinese and Indian products in international Market
  • Increase in demand for high quality/ differentiated / casual ware products
  • Geo-political position of the country / Sri Lanka
  • Growing tableware industry (category)
  • Increasing trend towards stronger brand association, Brand marketing opportunities in SL, SAARC, ME in the medium term
  • Growing middle income in countries like India and Africa
  • Low cost energy and precious material
  • Growth potential in the local market, expansion in retail shopping networks .e.g: Arpico, Damro, Singer, Booming travel & tourism

Threats

  • High Competition from low cost, high tech, simplified manufacturers in Bangladesh, Vietnam, Thailand, India, Indonesia, China and Europe
  • Technological products and Fine / bone china products becoming more popular in the world
  • Instability in political & economic front in our established / existing strong markets / declining EU
  • Countries those who are having GSP+ status and other preferential FTAs (e.g. with China)
  • Lowering of entry barriers in the porcelain tableware industry / with incoming Chinese technology
  • Lower shipping cost and lead time by competitors / due to wider spreaded manufacturing
  • Cheap Chinese products flooding in the local market Consumers shifting from sit-down dining to fast food.

PESTEEL Analysis for DPL

Political

  • Government policies on imports, such as import control, taxes and tariffs, etc.
  • Government policies and international ties with potential markets such as GSP.
  • Tax policies in investments especially in machinery, technology and business expansions.
  • Decision related to environment and wild life, which effect for raw material extraction and factories.
  • Changes in labour laws and minimum wages, etc.
  • Direct political influence on strategic decisions

Economic

  • Tax imposed on profit
  • Interest rates in borrowings, and all other monetary policies.
  • Taxes on imports, especially for raw materials and machinery.
  • Subsidies and government promotions for export oriented organization
  • Especial promotions in industries outside Western province

Social

  • Sri Lankan culture of hospitality, serving foods and dining.
  • Change in new generation lifestyle: often eating at food outlets
  • Reduction in household functions and parties.
  • Many service providers for foods and crockery ware (There is a social acceptance in receiving a set of porcelain for a weddings.)

Technical

  • Advanced technologies such as Fast firing, Isotactic pressing etc. which are emerging in Porcelain industry through innovative solutions; Energy saving base stations reducing fuel and less human involvements.

Environmental

  • Regulations and interest of public regarding emission, effluent and environment effects.
  • Impact in raw material extraction.
  • Scarcity of earth resources such as mineral clay and other natural raw materials like quartz, feldspar, etc.

Ethical

  • Doing all business related activities in legal and ethical manner
  • Always respect intellectual property rights of employees as well as competitors.
  • Ensure human harm less product, by manufacturing well above the legal standards.

Legal

  • Implications of laws and regulations of the country and the guidelines set by BOI (Board of Investment)
  • Limits for property transfer under BOI (Board of Investment) contract.
  • Laws related to transport of minerals.
  • Labour related regulations and rules

Structure of the organization

Lanka Century Investment PLC (LCI) is the parent company of DPPL. Royal Fernwood Porcelain Limited (RFPL) and Taprobane Capital (Pvt) Ltd are subsidiaries. The chairman (Mr A.G Weerasinghe) and Board of Directors (Mr E. Wickramanayake, Mr D.S.K Amarasekera, Mr R.P Sugathadasa, Mr I.C Nanayakkara and Mr M. Boyagoda) are the members of top management who have ultimate authority to make strategic level decisions.

Employee motivation

It is also an important element in the organization’s HR management policy to remove barriers to work motivation. Non-removal of these barriers more often lead to demotivation, frustration, stress and ultimately these adversely affect individual performance, quality and productivity. Hence DPPL tries to create a performance based culture which link to the reward management system.

Dankotuwa Porcelain PLC is a company which follows a performance-driven culture to recognize and reward individuals. However the reward management system at DPL has influenced by the collective agreement. The individual rewards are based on the individual performances and the attendance. Because the employees’ absenteeism is major issue for the company. For a performance-driven culture to be successful, it’s important to gauge the attitude of your employees. However, creating the right performance architecture, making the organization work and reinforce results through rewards are the main challenges faced by Dankotuwa Porcelain PLC.

Types of Rewards

Financial Rewards

The total rewards system of Dankotuwa Porcelain PLC consists of both financial and non-financial rewards. With the impact of strong unionism, its salary scheme has restructured to match the industry average remuneration packages to its employees. The remuneration package such as salary increments and promotions of employees are dependent on the performance evaluation review, known as PAR, carried out at the end of the previous period and the attendance record. It helps to reduce the absenteeism rate. An employee who is having a good PAR score and no nopay days will receive an annual increment, allowances and bonus payment accordingly.

Non-Financial Rewards

Recognition of employees for their achievements is an important event held at Dankotuwa Porcelain PLC. Based on employee achievements, non-financial rewards are awarded to individuals or the group. The following are some of the recognitions and non-financial rewards offered by Dankotuwa Porcelain PLC to its employees:

Benefits description

Transport Average deduction per employee

Subsidies surgical & medical insurance 50% contribution for annual premium

Uniforms Two sets of free uniforms, half cost for one extra uniform, full cost for any other extras

Uniform sewing charges for frock, Saree Jacket and Trouser

Free medical consultation & drugs Doctor visited the medical center – average 15 days per month

Company loan scheme Non-executive – LKR. 50000.00

Executive – LKR. 75000.00

University grants for the employee’s children Medical students LKR. 5,000.00 per month

Engineering students LKR. 3,000.00 per month

Other degrees LKR. 1,000.00 per month

Porcelain gifts as a token of appreciation for long service retired employees More than 20 years 93 pcs dinner set

More than 10 years 35 pcs dinner set

Annual workers day Company monetary contribution is around 86%

Death donation scheme On employee death LKR. 75000.00 for employee death

Providing vehicle free of charge to the death donation society on funeral day

On employee family member’s death Providing goods valued LKR. 30,000.00 for the refreshments

Contribution from death donation society LKR. 35,000.00 from the society

Collection of one day salary from each society member

Free calendars & complimentary plates Providing at the beginning of each year

Book donation scheme for employee’s children Providing books for the employee’s schooling children at the end of the each year Average company contribution – 55%

Average contribution of welfare ass. – 45%

Sports & welfare events Annual sports meet All the prizes are sponsored by the company

Rewarding for the best attendance for the year Rewarding best attendance at the 1st working day of the year – two 45 pcs dinner set for factory & office area

Discount on porcelain quota 30% discount

Quarters & dometry facilities Free quarters for the staff

Free hostel facility for male employees

Free quota parcel gifts Two free quota parcel gifts per year

Succession Planning for Employee Development

Selected employees will be promoted to the next level followed by the performance evaluation process. To perform jobs at the next level effectively, employees are trained for these responsibilities in future positions. This will enhance employee satisfaction because they feel the company’s recognition towards its employees.

Providing for Training

The organization is required to provide training or take other actions to satisfy the needs identified i.e., having identified the competence needs, it is required to addresses the competence gap. Meeting these needs requires satisfying:

I. Competence assessment and

II. Competence development.

  • Once the results of the competence assessment are known, the gap may be bridged by any / several of the following methods:
  • Training courses where an individual undertakes an internal or external course
  • Mentoring where an appropriate senior person acts as a point of contact to give guidance and support
  • Coaching where a more experienced person transfers knowledge and skills.
  • Job rotation where a person is moved into a complementary job to gain experience or relieve boredom
  • Special assignments where a person is given a project that provides new experience
  • Action learning where a group of individuals work on their own but share advice with others and assist in solving each other’s problems
  • On the job training where the individual explores new theories and matches these with organizational experience

Communication and decision making

Communication

At the annual event on first working date of each year, at which Dankotuwa Porcelain PLC communicates the performance of the Company over the past year and goals for the current year to all its employees. This is the start of the annual goal setting process in the organization. Annually and Bi Annually performance Appraisals Review Meeting are conducted for all executives. The reviewing officer (Chief Executive Officer) and particular immediate supervisor collectively and transparently review the performance of each employee in executive category during the scheduled interviews. Any party can express their ideas without any influence. During the Performance Review Meeting CEO communicates departmental and individual Key Performance Indicators (KPI) to the executive staff. This is a top-down communication process where the top management of the company shares direction to all managers of the organization.

Decision Making

Dankotuwa has three employee trade unions (Inter Company Employees Union, Sri Lanka Nidahas Sewaka Sagmaya, Jathika Sewaka Sangamaya) which are empowered by the Sri Lankan main political parties. According to the current status of the company, Inter Company Employees Union which represents the 40% of the employees could influence to the management decisions or demand for their rights. The leaders of trade unions involve to the decision making and they represent the employees’ ideas.

The management always try to create the workplace harmony through corporate social dialog. When issues are arisen at the operational level departmental quality cycles give suggestions to the management. After evaluating their suggestions, the management implement the selected best suggestion to solve the problem. Still they are practicing collective bargaining to avoid the industrial disputes and build mutual understanding. The decisions related to the strategic level are taken by top management and senior management of the company. All tactical decisions are taken by the managers through remuneration committee and management committee. Otherwise managers arrange discussion forum like production meeting weekly or monthly based on the situvations. The All types of decisions are taken by following below mention process.

Leadership and Management Style

In this leadership style, subordinates are involved in making decisions. Unlike autocratic, this headship is centered on subordinates’ contributions. The democratic leader holds final responsibility, but he or she is known to delegate authority to other people, who determine work projects. The most unique feature of this leadership is that communication is active upward and downward. With respect to statistics, democratic leadership is one of the most preferred leadership, and it entails the following: fairness, competence, creativity, courage, intelligence and honesty.

Organizational Culture and Organizational Change

Dankotuwa Porcelain PLC believes that emotional attachment is important to attach employees to the organization and to retain them for a longer period of time. Dankotuwa Porcelain PLC has a friendly working environment where anyone can express their ideas and suggestions and most importantly all are treated as “Dankotuwa Porcelain PLC family” members. The Dankotuwa Porcelain PLC “Sports & welfare” association was formed under the supervision of the HR division and focuses mainly on employee engagement activities throughout the year. Programs such as Employees’ Day, The New Year Festival, Dinner Dance and Donations will emotionally bond the employees with the company. Majority of the employees are in their middle ages and belong to the generation X. They are very rigid to change. Other than that Inter Company Employee Union takes the advantage of that to create issues and reach to their goals.

The role of management relative to culture is to set a good example and ensure that personnel are likely to fit in with the existing culture before being offered employment. Corporate culture herein means the pattern of shared beliefs, attitudes, assumptions and values in the organization. For culture to take root it would be the policy of the organization to create an environment which is conducive to performance improvement and the management of change. To be more precise it is relevant for the management to be conscious at times the basic elements that generally go into corporate culture viz., vision – mission – values and commitment – patterns of communication – leadership – decision making – rites and ceremonies – socializing patterns – freedom – respect for the individual – customer focus –patterns and processes – grievance handling systems – patterns of teamwork – acceptance of innovativeness and creativity – supporting processes and systems including education, training, performance management/ evaluation and reward systems.

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