PRESENTED BY:

GROUP 2
SDM 1

Intra Distribution
Case

Q1) Please review the

background on the retail trade in
India and the situation in which
Amit Kumar has taken over his
territory.

Indian Retail Trade Market

Estimated revenue of US $470 billion in 2011 to US
$675 billion by 2016 at a CAGR of 7.5%
6 million retail outlets with at least 4-5 level of
intermediaries
Multitude of retail formats such as small-family
managed shops, grocers, paan shops and hawkers,
which co-existed with supermarkets and
teleshopping
Increased focus on expansion in rural sectors of the
country.
To reach deeper within the country and ensure
product availability.

Intermediaries in FMCG Distribution in

India

Wholesaler
Wholesaler
Retailer
Retailer (Urban
(Urban and
and
Rural)
Rural)

Situation in which Kumar has taken over territory

Amit kumar had taken over from Rahul Ray last quarter
Turnover of INR 631.1 million in 2011 at CAGR of 32%
against the rest of India at 21%
Identifying the territory with most potential and making
changes keeping the risk exposure to manageable
levels.
Jalgaon market to operate on thin margins and high
volumes.
Convince Sachin Mandore, the distributor for the Jalgoan
district to increase his investment with NutriPack India
and justify reasons for increased investments as well as
distributor profitability.

Nutripack India Ltd. with turnover of INR 7.5 billion

Two brands- Nutri Power and Nutri Jams contributed to 71% of
total revenue
In HFD, NutriPower had a volume market share of 15.6% and
value market share of 18.6%
In HFD, NutriJams had a volume market share of 34.00% and
value market share of 42.00%
Sales Data by Brand (central
Maharashtra) - Jams
45.00%
40.00%
35.00%

40.40%

40.80%

Sales Data by Brand (central

Maharashtra) - HFD

41.20%

42.00%

32.00%

32.50%

33.10%

34.00%

2008

2009

2010

2011

30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%

Volume Market Share

Value Market Share

18.60%
20.00%
17.30%
16.10%
18.00%
15.60%
15.20%
14.50%
16.00%
13.40%
14.00% 12.50%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2008
2009
2010
2011
Volume Market Share

Value Market Share

Q2) Please comment on the choice of

Jalgaon district for the expansion plan in
his territory.

Jalgaon ranks 2nd in the

terms of population
While on the other hand
when compared to their
contribution that they add
to company is ranked at
4th level
The penetration level is
low and its a opportunity
for them to enter into
deeper market and create
value for company
Percapita

income

is

16210 which is ranked at

3rd in these 10 districts

Jalgaon has got a single distributor (Sachin Agency) which

has got the potential to cater the whole area which will
reduce the expense and channel conflicts.

The market share of Nutripower is increasing in central

Maharashtra but on the other hand the market share in
Jalgoan in decreasing from the past 4 years.

Nutripower is ranked 3rd in terms of volume and value

market share in central Magarashtra and Jalgaon

 Nutri jam is the market leader in central

maharastra in jams category for the past 4 yerars
But when it comes to jalgoan the product is
lagging behind Mazaa
There is a decline in the volume and value market
share of the product.
In the year 2008 the value market share is equal
in top 2 brands but it had declined in the last 4
years

 The Distribution of HFD in central Mah. the

penetration in up to 70%(1st ).
The WD is highest
But when we talk about the distribution in
jalagoan the penetration is less then 50% in HFD
It shows the opportunity in the market to get
more outlets connected
Potential is high and untapped market is huge.

 The Distribution of JAMS in central

Mah. the penetration in up to 60%
But when we talk about the
distribution in jalgoan the
penetration is les then 30%
Which is half of the central
Maharashtra
Untapped market is huge accounting
for almost 74% in the year 2011.

Problem that the distributer faces

Worried bout claims

Covers 750 outlets only
Operating exp. 1lakh/month
Credit cycle
Inefficient supply of products
Not fixed discounts

Q3.
Please
analyse
the
different
perspectives of Kumar (company) and
Mandore (distributor) regarding their
approaches of going to market.

Perspective of Kumar
Kumar felt that the Jalgaon
territory was performing
below its potential and
could effectively contribute
more.

For this Kumar wanted the

master distributor to invest
more on infrastructure to
appoint more dealers and
increase presence in
existing ones to generate
volume.

The data supporting

Kumars view is presented
in next 2 slides. The data
show that whereas the
market share of Nutris
HFD and Jams has
increased overall, it has
fallen in Jalgaon.

The retailer percentage for

Nutri have increased
overall, while in Jalgon
they have reduced Year-onYear.

Data Supporting Kumars Perpective

Growth of market share of Nutris HFD and Jams in
overall Maharashtra and Jalgaon areas
Overall Market
HFD

2008

2009

2010

2011

12.5

13.4

14.5

15.6

7.20%

8.21%

7.59%

16.1

17.3

18.6

5.92%

7.45%

7.51%

Growth
JAMS

15.2

Growth

Jalgaon Market
HFD

15

Growth
JAMS
Growth

26

14.4

14

13.8

-4.00%

-2.78%

-1.43%

25.4

24.7

23

-2.31%

-2.76%

-6.88%

Data supporting Kumars Perpective

Growth in number of dealers of Nutris HFD
and JAMS
Overall HFD
Actual

Overall Jams
Weighte
Actual
d

Weighted

2010

21.09% 22.29%

2010

21.49% 22.77%

2011

22.56% 23.75%

2011

22.29% 24.12%

Jalgaon HFD

Jalgaon Jams

2010

17.31% 20.12%

2010

18.85% 11.46%

2011

16.26% 19.82%

2011

18.13% 10.67%

Perspective of Mandore
Low profitability due to which there is no incentive
to work
Believed in relationship market with large dealers
who could payback on time, order high volume
He thinks his investments in 2011 have not paid
back and he would not like to invest any further,
demanded explanation from Kumar on 2011
investments
Contemplating on exiting the relationship with
Nutripack

Data supporting Mandores perspective

He was operating on a margin of 4.5% whereas
the risk free rate of interest offered by bank is
10.5% - no incentive to work hard
While he extended credited for 15 days, the
company gave him 14 days of credit not
viable for him to extend large credit
His second discounts were delayed by long
reducing profitability and adding more dealers

Q4) What are the steps that

Kumar should take to
convince Mandore to put in
the required investment?

 From above table we can see that availability of Nutri Power has
decreased from 50.87% (i.e. available in only 680 outlets out of
total 1337 outlets) in 2009 to 45.90% (i.e. available in only 729
outlets out of total 1588 outlets) in 2011.
Nutripower covers 45.9% of total outlets whereas Healthy is
covering 89.3% of the outlets.
Increase in infrastructure and investment will lead to tapping of
almost 50% untapped market in the Nutri Power product line.

 From above table we can see that availability of Nutri Jam has
decreased from 34.51% (i.e. available in only 369 outlets out of
total 1069 outlets) in 2009 to 26.92% (i.e. available in only 342
outlets out of total 1270 outlets) in 2011.
Jams Nutrijam is covers 26.9% of total outlets whereas Mazaa
covers 73.8% of the outlets.
Due to small infrastructure and inefficiency in production to
cater large number of outlets to keep their product, the
company is losing its market share to others.

Revenues
Margin(4.5% of Investment)
Vans
18000*2*12
Salary
4000*3*12
Bonus
1000*3*12
Driver
3000*2*12
Delivery
3000*2*12
Godown Keeper
3000*12
Godown Helper
3000*12
Comp Operator
7000*12
Computer
500*12
Printer
1000*12
Stationery
450*12
Internet
500*12
Telephone
500*12
Rent
3000*7*12
Secondary Claims
0.04*4500000

54000000
2430000
432000
144000
36000
72000
72000
36000
36000
84000
6000
12000
5400
6000
6000
252000
180000

Total Expenses

1379400

PBIT

1050600

Tax@30
PAT
Return

315180
735420
1.32796671
7

Potential is high and

untapped market is
huge.
Increase in
infrastructure and
investment will lead
to tapping of almost
50% untapped
market in the Nutri
Power product line.

STEPS
By
presenti
ng the
above
facts,
Kumar
should
convinc
e
Mandon
e to do
the
followin
g:

Increase Sachin Agencys investment in

NutriPack India as its potential is very high

With a small investment, the considerable

benefits are much higher

The reach of the products should be reached to

make it comparable to the competitors

With an increase in reach and improvement in

infrastructure, NutriPack has the potential to
become the MARKET LEADER in many sectors in
which it is just a challenger

Q5. Based on the information

available in the case, what should
Kumars recommendations be for
strengthening Sachin Agency and for
tapping the potential of Jalgaon
district?

Problems Identified

Complaints by
dealers in large
number
regarding stock
outs and non
delivery in case
of failure to pay
on delivery.

Lack of reach of
Sachin agencies
and reduced
dealer intensity
in Jalgaon
district for Nutri
products.

Sachin agency
facing pressure
of credit cycle as
Nutri offers him
14 day cycle,
but he extends
15 day cycle,
hitting his
liquidity.

secondary
claims are not
getting cleared
timely further
impacting their
profitability.

Solution Proposed
There is dual problem of credit and increasing reach.
We propose a solution that Sachin agency appoints subdistributors or wholesellers who feed to retailers.
Big retailers can be appointed as wholesellers who feed
small retailers. This will increase reach , reduce stock
outs, reduce Sachin agencys operation cost increasing
profitability, reduce credit cycle.
Nutri Products -> Sachin Agency -> Wholesaler/Subdistributors -> Retailers.
This will also keep Sachin agency at top of hierarchy
thus respecting his seniority and loyalty.

Solution Proposed
Employing another van to focus on the neglected
dealers , in case Sachin is not willing to bear the
expense the company should be ready to bear the
expense for the same .
Executives of the company should also do regular
rounds to ensure that uniform credit policy is
being followed .
A negotiation on increasing his credit limit could
be sought if he is willing to pass on the benefit to
neglected dealers in jalgaon region .