UNDERSTANDING OF SESSION 16

SUBMITTED BY: Nitin Goyal

The case deals with a distribution issue between the profitability of a distributor and the demand for
increasing investment by the company. The problem identified is increasing the market share
equivalent to the Competitors in Jalgaon Market. There exist three alternatives which are as - Mr.
Kumar should leave the situation as it is, Mr. Kumar should disallow the distributorship of Sachin
Agency, Mr. Kumar should convince Mr. Sachin Mandore for further investments, and continue with
the agency. The decision is to go with the third alternative as it is mutually beneficial to both the
parties

Health food drinks product market

Company Brand Quality Price
Mondelez Tang 500g 360
International, Kraft Pineapple Flavoured
Foods Artificial drink Powder

Mondelez Tang 2.5kg 1500

International, Kraft Fruit Juice Mix -
Foods Lemon Flavour2.5 kg

GlaxoSmithKline Horlicks 400g 520

Protein+ Plus - Health
& Nutrition Drink,
Chocolate, Value Pack

Kottaram Agro Foods Millet Smoothix - 450g 325

Pvt Ltd Cocoa Lite

Nestle Milo Active group 400g 500

Jams product market

Manufacturer Brand Quality Price
HUL Kisaan Pineapple Jam 500g 150

Patanjali Jam-fixed fruit 500g 100

HUL Kissan 500g 150

Orange Marmalade
Jam

Dana Jam - Mixed Fruit, 340g 225

Preserve

Nestle Milo Active group 400g 500

Happy Chef Conserve 330g 99

CONCLUSION:
● Nashik has the highest population and the highest turnover with per person contributing to
27% of the turnover while Jalgaon has the second highest population and still 45% less percent
turnover per person .
● the volume market share for nutripower is declining continuously with 4% decrease in 2009
and 1% decline in 2011.While competitor healthy increased by 1% in 2011.
● The nutrijams market share is also decreasing every year with strong 6% decease in
2011.Also keswani product is showing continuous increase in its market share with 4% in 2011 and
has currently 26% less market share in 2011 but strong chance that it will take over looking at its 4%
increase in market share every year.
● The market coverage growth has been same for nutripower in 2010 and 2011 with 3.5% while
it has increased by 132% in case of big n strong and 61% in case of healthy.
● The increase in market coverage growth is 4% for mazaa while it is continously declining for
nutrijams with 12 % decline in 2011.

Problem statement-
Increasing the market share equivalent to the Competitors in Jalgaon Market.

Evaluation of Alternatives-
1. Mr. Kumar should leave the situation as it is
Pros – This would not hamper the relationship between Nutripack and Sachin Agency. As this
relation has been going on for long, it would allow the relationship to stay intact.
Cons – Nutripack could not tap the potential market share, also this would lead to decline in the
market share in the future.
2. Mr. Kumar should disallow the distributorship of Sachin Agency –
Pros – Disallowing the current distributor would give Mr. Kumar to look out for new distributors
who are willing to work extra and invest more.
Cons – Searching for new distributor would take time. Moreover, the relationship with Sachin
Agency has been long so breaking it might not be a suitable idea. Sachin Agency has been the
biggest distributor in the Central Maharashtra.
3. Mr. Kumar should convince Mr. Sachin Mandore for further investments, and continue
with the agency –
Pros – This alternative would allow Mr. Kumar to maintain relationship with the current distributor
as well as increase the investment of the same.
Cons – In future, Mr. Sachin Mandore can have similar issues with Nutripack.

Decision-
The third alternative that is “Mr. Kumar should convince Mr. Sachin Mandore for further
investments, and continue with the agency” is the most proffered alternative.
Reasons –
If we consider Mr. Kumar’s Perspective –
 Low Margins High Volumes
o Have a wide reach so as to cover as many villages as possible

 2nd most populous district in Central Maharashtra

o 16% volume share but 8% contribution

 Interior markets need to be serviced well in terms of-

o Extending the credit
o Uniform discounts and schemes
o Regular market visits

Considering Mr. Sachin Mandore’s Perspective –

 Largest distributor in Central Maharashtra

 Veteran in the FMCG distribution business

 Content to meet company’s targets

 Maintains good relationship with major retailers

 Would like certain issues to be addressed before making further investments-

o Pending secondary claims
o Low distributor margin

Convincing Mr. Mandore can be done by the below table –

Monthly Expenses
Unit
Particulars Nos Price Total
Motor Vehicle 2 18000 36000
Salesman Salary 3 4000 12000
Salesman Bonus 3 1000 3000
Driver 2 3000 6000
Delivery boy 2 3000 6000
Godown Keeper 1 3000 3000
Helper 1 3000 3000
Operator 1 7000 7000
Computer 1 500 500
Printer 2 1000 1000
Internet 1 450 450
Telephone 1 500 500
Admin Exp 1 500 500
Godown rental 3000 7 21000
TOTAL 99950
Annual Expense 1199400
 Monthly Income
Particulars Gross Net
Turnover 54000000 CP 51570000
Margin 4.50% 141287.7
Net Margin 2430000 3390904
Security Deposit 1000000 4216024
Return 8%
Net return 80000
Total Return 2510000

6415424
return 39.12%

 Hence, the return he gets by staying with nutripack is 39.12% as compared to 10.5% from
people’s bank.

 Increased reputation.

 To reduce the problems between Sachin Agency and Retailers, following steps could be followed
–
o Uniform schemes and cash discounts across all outlets of similar value.
o Increase personal visits to retailers.

AN IRATE DISTRIBUTOR: THE QUESTION OF PROBABILITY

Exhibit 4: Districtwise distribution of population density and decadel growth rate of population in Maharashtra

Sr. No. District Persons Males Females Sex Density/sq. Population ANNUAL
ratio km. Growth Per
Rate capita
income

MAHARASHTRA 101314

1 Nandurbar 1646177 834866 811311 977 276 25.5 96248

2 Dhule 2048781 1055669 993112 944 285 19.96 101314

3 Jalgaon 4224442 2197835 2026607 933 359 14.71 162102

4 Buldana 2588039 1342152 1245887 946 268 15.93 89156

5 Akola 1818617 936226 882391 938 321 11.6 79025

6 Washim 1196714 621228 575486 939 244 17.23 60788

7 Amravati 2887826 1482845 1404981 938 237 10.77 70920

8 Wardha 1296157 665925 630232 935 205 4.8 67880

9 Nagpur 4653171 2388558 2264613 932 470 14.39 172234

10 Bhandara 1198810 604371 594439 981 293 5.52 60788

11 Gondiya 1322331 662524 659807 1005 253 10.13 70920

12 Gadchiroli 1071795 542813 528982 976 74 10.46 30394

13 Chandrapur 2194262 1120316 1073946 948 192 5.95 70920

14 Yavatmal 2775457 1425593 1349864 942 204 12.9 40526

15 Nanded 3356566 1732567 1623999 942 319 16.7 60788

16 Hingoli 1178973 609386 569587 953 244 19.43 68894

17 Parbhani 1835982 946185 889797 958 295 20.18 56736

18 Jalna 1958483 1015116 943367 951 255 21.84 81051

19 Aurangabad 3695928 1928156 1767772 925 365 27.33 222890.8

20 Nashik 6109052 3164261 2944791 927 393 22.33 202628

21 Thane 11054131 5879387 5174744 858 1157 35.94 253285

22 Mumbai 9332481 5025165 4307316 822 20925 8.01 354599

(Suburban)
23 Mumbai 3145966 1711650 1434316 777 20038 -5.75 607884

24 Raigarh 2635394 1348089 1287305 976 368 19.36 30394.2

25 Pune 9426959 4936362 4490597 919 603 30.34 243153.6

26 Ahmadnagar 4543083 2348802 2194281 940 266 12.43 75985.5

27 Bid 2585962 1352468 1233494 936 242 19.65 30394

28 Latur 2455543 1276262 1179281 935 343 18.04 67880

29 Osmanabad 1660311 864674 795637 932 219 11.69 45591

30 Solapur 4315527 2233778 2081749 935 290 12.1 131708

31 Satara 3003922 1512524 1491398 995 287 6.94 70920

32 Ratnagiri 1612672 759703 852969 1136 196 -4.96 70920

33 Sindhudurg 848868 416695 432173 1079 163 -2.3 81051

34 Kolhapur 3874015 1983274 1890741 949 504 9.96 90169

35 Sangli 2820575 1435972 1384603 957 329 9.18 60788

Sr. DISTRIBUTOR NAME DISTRICT Turnover Turnover

No. (in INR (in INR
crores) crores)
1 SACHIN AGENCY Jalgaon 3.99 5.40
2 VRAJLAL AGENCIES Nashik 2.40 3.20
3 KESHAVLAL TRADERS Jalna 2.22 2.90
4 GOPAL KIRANA Nashik 2.18 2.90
5 SHIVAJI RATHORE AGENCIES Nashik 2.70 3.60
6 KAPIL TRADERS Aurangabad 3.05 4.10
7 SKML ENTERPRISES Nashik 1.88 2.50
8 AKSHAYA AGENCIES Akola 2.51 3.30
9 CHINTAMANI ENTERPRISES Nashik 3.61 4.80
10 BORDEKAR AGENCIES Aurangabad 0.89 1.20
11 GANESH ENTERPRISES Jalna 2.67 3.50
12 VIPUL ANAND AGENCIES Jalna 3.13 4.10
13 ANKIT AGENCIES Washim 2.22 3.20
14 G S RAJA ENTERPRISES Aurangabad 3.35 4.50
15 VILASRAO GANPATRAO TRADERS Parbhani 2.67 3.60
16 MAHESH TRADERS Dhule 2.97 3.90
17 R D CHINTALWAR AGENCIES Hingoli 2.32 3.30
18 GIRIRAJ KIRANA Buldhana 2.83 3.11
TOTAL 47.61 63.11

AKSHAYA AGENCIES Akola 2.51 3.30

KAPIL TRADERS Aurangabad 3.05 4.10
BORDEKAR AGENCIES Aurangabad 0.89 1.20

G S RAJA ENTERPRISES Aurangabad 3.35 4.50

Total 7.30 9.80
GIRIRAJ KIRANA Buldhana 2.83 3.11
MAHESH TRADERS Dhule 2.97 3.90
R D CHINTALWAR AGENCIES Hingoli 2.32 3.30
SACHIN AGENCY Jalgaon 3.99 5.40
KESHAVLAL TRADERS Jalna 2.22 2.90
GANESH ENTERPRISES Jalna 2.67 3.50
VIPUL ANAND AGENCIES Jalna 3.13 4.10
Total 8.02 10.50
VRAJLAL AGENCIES Nashik 2.40 3.20
GOPAL KIRANA Nashik 2.18 2.90
SHIVAJI RATHORE AGENCIES Nashik 2.70 3.60
SKML ENTERPRISES Nashik 1.88 2.50
CHINTAMANI ENTERPRISES Nashik 3.61 4.80
Total 12.77 17.00
VILASRAO GANPATRAO TRADERS Parbhani 2.67 3.60
ANKIT AGENCIES Washim 2.22 3.20

Turnover by population
District population % turnover(in population per person turnover
crores)

2011 2011
Akola 7.00 3.30 1818617 18.14566
Aurangabad 14 9.80 3695928 26.51567
Buldhana 7 3.11 1888039 16.47212
Dhule 8 3.90 2048781 19.03571
Hingoli 5 3.30 1178973 27.99046
 Jalgaon 16 5.40 4224442 12.78275
Jalna 8 10.50 1958483 53.61292
Nashik 24 17.00 6109052 27.82756
Parbhani 7 3.60 1835982 19.60804
Washim 5 3.20 1196714 26.73989

NOTE: Nashik has the highest population and the highest turnover with per person contributing to
27% of the turnover while jalgaon has the second highest population and still 45% less percent
turnover per person.

SALES DATA BY BRAND (JALGAON)- HEALTH FOOD DRINKS

ex 8A HFD sales data by brand jalgaon

2008 2009 2010 2011

healthy 42.5 43.2 44.5 45
big n strong 10 9.2 9.4 9.2
nutripower 15 14.4 14 13.8
bonny 24.5 25 24.1 24
junior health 5 4.8 5 4.8
kidenergy 3 3.4 3 3.2
healthy 1.647059 3.009259 1.123596
big n strong -8 2.173913 -2.12766
nutripower -4 -2.77778 -1.42857
bonny 2.040816 -3.6 -0.41494
junior health -4 4.166667 -4
kidenergy 13.33333 -11.7647 6.666667

NOTE: the volume market share for nutripower is declining continuously with 4% decrease in
2009 and 1% decline in 2011. While competitor healthy increased by 1% in 2011.
NOTE: The nutrijams is market share is also decreasing every yearwith strong 6% decease in
2011.Also keswani product is showing continuous increase in its market share with 4% in 2011
and has currently 26% less market share in 2011 but strong chance that it will take over
looking at its 4% increase in market share every year.