CAPRO Group: A Growth Story Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

CAPRO Group: A Growth Story Case Solution

Introduction

CAPRO, an electrical engineering based firm in India, outside of New Delhi. December 2011 marked the downfall of Indian economy due to rising market competitions and disturbing economic conditions. R.K. Agarwal joined as a junior engineer in CAPRO and was later promote to chief engineer and then consultant. In 1987, R. K. launched CAPRO System. (Biswal, 2012)

Engineers as a design, engineering and consultancy providing service, which worked in the niche area of electrical distribution systems. With an aim to expand into custom fabrication and manufacturing of low voltage (LV) panels, R.K. launched CAPRO Switchgears in 1990. By 1992, CAPRO Group had grown enough to handle projects involving full LV electrification of industries, including supply and turnkey projects. These projects taken up by CAPRO Project Electricals, which started in 1992. In 2011, he assigned the responsibility of business planning and development to his son, Varun Agarwal who used to work as a trader at an investment bank in Hong Kong and held degrees in business management and electrical engineering.

R.K. long-term insights sought to involve many small companies within CAPRO jurisdiction to handle different aspects of same project so that each business unit can grow independently. By December 2011,CAPRO’s clients were diversify all over India.Although it based on India is NCR and expand in foreign market started from Kenya, Sri-Lanka, and Nigeria.

CAPRO started with a small electrical equipment industry and later on to a broad-spectrum provider to low voltage electrical engineering projects.

Macroeconomic conditions in India were the result of increasing borrowing costs and labor issues, which hurdled the expansion of many firms effecting especially those firms, which provided infrastructure to other firms, one of them being CAPRO.

Problem statement

CAPRO, a small electrical engineering firm in operating outside New Delhi in India faced major issues in failing revenues and uprising competitions due to unhealthy economic competitions in India, which marked unfavorable macroeconomic conditions prevailing in India. Out of all these problems in India; the labor issues, increasing interest rates and uprising competitions, Varun who is the son of R.K Agarwal and recently being appointed as a director of the company must come up with a plan to pull the company out of these slums. (Biswal, 2012)

General Characteristics of the Business

Size

In the beginning, CAPRO had started from a small electrical equipment firm to a complete solution provider for a wide range of low voltage projects. R.K. Agarwal focused on a long-term strategy in managing small companies within CAPRO group, which can grow independently. In 2010-2011, CAPRO has been able to generate a beneficial revenue of 21% for its promoters, made sales of approximately $4.2 million, and gained a profit of $200000 after excluding taxes. By December 2011, the company has diversified its clients including every niche from auto ancillary industry to rice and flour industry, textile and garments industry to food and beverages thus covering major sectors all over India. They starting entering international market as well covering Sri-Lanka, Kenya and Nigeria.

In terms of size, it is not a big firm but rather a small firm but holding roots throughout India. Also entering international marketplace and focusing on expansion to a bigger firm.

Degree of specialization

In terms of specialization, the firm is mainly focus on providing LV i.e. low voltage electrical equipment. These held by small firms in India and was a starting point for CAPRO. It started from a small business firm to a wide range supplier of LV equipment to its clients all over India. By 1990, CAPRO group had started CAPRO switchgears and by 1992, full LV electrification of industries that included supply and turnkey projects. For industrial consumers having an LV-MV installation, the control panel manufacturer was mostly free to choose which components to use and installed the control panel at the client site

Entry into a LV category was not a big deal only a person needs to have a basic knowledge of electrical systems and unskilled work force.

Capital intensiveness

These terms describes the businesses that have to invest more on to produce goods and services and have high tendency to fixed assets. Since CAPRO started as a small firm and later on expanded its business to foreign countries as well so its capital intensiveness is less as compared to a big firm.(Ashworth, 2020)

Liquidity concerns

It refers to the financial risks that a firm cannot pay its debt because of inappropriate or insufficient marketing of its investment. As per statistics for CAPRO, current assets, advances and loans account for a total of $2,056,478. Out of these, the current liabilities account for $773,111 and provisions are $94,729. Therefore, the firm has capability and lesser liquidity risk. (Loutzenhiser, 2021)

Competitive environment

The firm is residing in LV section which requires small industry so the competition is quite tough as other small industries are also running and the competitions are rising but as they scale up to HV, they have to shift to a big firm and low market competition. However, the problem here only is that HV requires labors that are more skilled. Three in automated panel manufacturing and two in installation capabilities........................

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CAPRO Group: A Growth Story Harvard Case Solution & Analysis