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I N T E R N AT I O N A L M A N A G E M E N T I N S T I T U T E , N E W D E L H I E X E C U T I V E P O S T G R A D U AT E D I P L O M A I N MANAGEMENT
GROUP ANKUR TUNAK GAGANDEEP SINGH KAMAL MALIK MODAK PRIY R U PA N E S H A R M A SUDEEP KUMAR KUNDU VINEET DIXIT
SUBMITTED TO: P r o f . P. C . M E H R A
We hereby regard our sincere thanks to Prof .P C. Mehra, IMI Delhi under whose guidance this project was undertaken. We would like to thank Mr. Ranjender Goel (Distributor Kamdhanu Steels) and Mr.Anil Daga (Distributor Rathi Steels) for giving their valuable contribution throughout the production of this report. We gratefully acknowledge the immense help of our friends who have so generously helped us
TA B L E O F C O N T E N T S
Steel Industry – An Insight…………………………………………………………………….. Overview Global Steel Scenario Domestic Steel Scenario Kamdhenu Ispat Ltd………………………………………………………………………… Company detail Product Mix Details of Operation Organization Structure Rathi Udyog Ltd………………………………………………………………………………... Company overview Product Mix Details of Operation Clientele Organization Structure Delhi Market – an overview Distribution Structure – Kamdhenu Distribution Structure – Rathi
Comparison Chart – Sales and Distribution Structure Billing Procedure – Rathi & Kamdhenu……………………………………………………. Pricing & Logistics explained ( Delhi Market)……………………………………………... Microanalysis Market under study - Rathi (East Delhi Market)………………………………………….. Standard Operating Procedure (Rathi)……………………………………………………. East Delhi Market (Overview)………………………………………………………………… East Delhi Market – Sales & Distribution structure of Rathi……………………………….. Issues in East Delhi Market……………………………………………………………………. Suggestion for Improvement…………………………………………………………………… Appendix-1 (Questionnaire) Appendix-2 (List of Dealers in East Delhi)
STEEL INDUSTRY – AN INSIGHT
Steel, the recycled material is one of the top products in the manufacturing sector of the world.
Steel Industry is a booming industry in the whole world. The increasing demand for it was mainly generated by the development projects that have been going on along the world, especially the infrastructural works and real estate projects that has been on the boom around the developing countries. Steel Industry was recently dominated by the United Sates of America but this scenario is changing with a rapid pace with the Indian steel companies on an acquisition spree. In the last one year, the world has seen two big M&A deals to take place:• •
The Mittal Steel, listed in Holland, has acquired the world's largest steel company called Arcelor Steel to become the world's largest producer of Steel named Arcelor-Mittal. Tata Steel of India or TISCO (as listed in BSE) has acquired the world's fifth largest steel company, Corus, with the highest ever stock price.
It has been observed that Steel Industry has grown tremendously in the last one and a half decade with a strong financial condition. The increasing needs of steel by the developing countries for its infrastructural projects have pushed the companies in this industry near their operative capacity. Steel Industry is becoming more and more competitive with every passing day. During the period 1960s to late 1980s, the steel market used to be dominated by OECD (Organization for Economic Cooperation and Development) countries. But with the fast emergence of developing countries like China, India and South Korea in this sector has led to slipping market share of OECD countries. The balance of trade line
is also tilting towards these countries. The main demand creators for Steel Industry are Automobile industry, Construction Industry, Infrastructure Industry, Oil and Gas Industry, and Container Industry. New innovations are also taking place in Steel Industry for cost minimization and at the same time production maximization. Some of the cutting edge technologies that are being implemented in this industry are thin-slab casting, making of steel through the use of electric furnace, vacuum degassing, etc. The Steel Industry has enough potential to grow at a much accelerated pace in the coming future due to the continuity of the developmental projects around the world. This industry is at present working near its productive capacity which needs to be increased with increasing demand.
Global Steel Scenario The Industry is passing through a phase of optimism and considerable growth in the steel sector globally. This is mainly caused by a steady rise in steel demand due to the boom in construction business across the entire Asian region. Over the years, particularly after the adoption of the liberalization policies all over the world, the World steel industry is growing very fast. According to research studies, this global demand for steel will continue to rise in the coming decade with Asian countries and especially China leading the way. The emerging economies around the world are supposed to contribute a major chunk of more than 70 % of the total global steel demand by the year 2020. While this trend in reversing in developed countries, which have reached a stage of saturation. Hence their share in the global steel demand is expected to be around 40%. India along with China are seen as the major contributing factors in the growth of construction business and consequently resulting in the rise of steel consumption and demand in the world.
Domestic Steel Scenario Indian steel industry is passing through a period of boom since 2002 because of steady rise in steel prices caused by boom in construction business across the entire Asian region. The Asian countries have their respective dominance in the production of the steel all over the world. India being one among the fastest growing economies of the world has been considered as one of the potential global steel hub internationally. India has also made a marked progress in increasing its’ share in world steel production of Improving its ranking among global steel producers, India has gained its place from 9th to 7th. The domestic sector is also reflecting a stable trend with the steel industry’s operating margins going up in the financial year 2007-08 as compared to that of year 2006-07. This upward trend was also visible in a double-digit growth in demand for flatted steel products which was 11 Million tonnes last year to that of 21 Million tonnes in 2007-08. Similarly, the consumption demand for elongated steel products is also expected to grow by 7.6 percent to 19 Million tonne's during 2007-08.
KAMDHENU ISPAT LTD. Company Details Kamdhenu Ispat Group is one of the largest manufactures of international quality steel bars in India. Kamdhenu Ispat Limited (KIL), the flagship company of the Kamdhenu Group is the first company of its kind to receive the prestigious ISO-9001:2000 certification by ABS Quality Evaluation System USA. The production unit of KIL located at Bhiwadi (Rajasthan), 76 km from Delhi manufactures TMT bars based on the world's most advanced Tempcore technology. Where as the other manufacturing units of Kamdhenu Ispat Group spread all over India produce high quality reinforcement bars under the brand name of "Kamdhenu Saria". The company started in the year 1995, with enterprising young individuals had just started work in a production unit and began this journey into India's steel sector with a single reinforcement steel bars manufacturing company at Bhiwadi in Rajasthan. Within short span of time, the journey has gained huge momentum with Kamdhenu Ispat Ltd (KIL) positioned as a company of high repute in the Indian Steel market. What started as a small beginning has now attained very healthy proportions with KIL established as leading steel manufacturing company in India. Kamdhenu Ispat Ltd., India’s leading brand in steel, construction and housing sector has registered a growth of 86 percent in its total income of the first quarterly results for the year 2008-09 up from Rs.
5533.47 lakhs of the corresponding quarter in 2007-08 to Rs. 10296.20 lakhs this quarter. Profit after tax of the first quarter 2008-09 was registered to be Rs.354.11 lakhs up by 39 percent from the corresponding quarter of the last year.
Product Mix Today, KIL along with its franchisee bases, manufactures - Reinforcement Steel Bars (TMT/HSD), Structural Steels (Channels, Angles, Beams & Flats) Binding Wire, Housing, PVC Pipes, Plywood, Paints and many more construction products. All group plants manufacture quality reinforcement bars used in the construction of multistoried buildings, dams, bridges, flyovers and power plants as basic reinforcement material. • • • • • • • TMT / HSD bars Structural steel: angles, channels, beams, flats PVC pipes Wirebound Plywood Paint UPVC windows
Kamdhenu is strategically launching new products in the market with an objective to enhance its market presence and play as a single window brand for infrastructure related products. The Company has recently launched Kamdhenu Plywood in the market. The product that was launched six months back has registered encouraging response from the housing sector. The Company is in the final stage of launching Kamdhenu paint under the brand name (Colour Dreamz). The company has set up its state of the art paint project in Chopanki, Bhiwadi, and Rajasthan. The unit will be producing a whole range of paints such as Exterior & Interior Emulsions, Cement Paints; Water based Primers, Acrylic Distempers, Synthetic & GP Enamel, Solvent Based Primers, Wood Finishes, and Aluminum Paints along with Textured & Designer Finishes.
Details of Operation
Spread across the vast geographical stretch of this huge country is our exhaustive network of dealers and distributors, to ensure network of dealers and distributors, to ensure regular availability of Kamdhenu reinforcement bars, the company has established a network of 2200 dealers and distributors in the various states of India. To ensure the availability of Kamdhenu Steel, Cement, POP & SS Pipes, the group has franchised 2200 dealers spread across various states of India. After studying the market trends and identifying the companies manufacturing steel products, Kamdhenu Ispat Ltd. offers them its’ brand name and assists in technology, quality consistency and marketing of Kamdhenu brand of products. Kamdhenu Ispat Ltd has set up its first plant in Nepal jointly with Maruti Nandan Rolling Mills as its local partner. According to an agreement, Kamdhenu would provide technology for manufacture of TMT steel bars to the Nepalese company, which would manufacture the bars, and the product would be marketed under Kamdhenu brand name. The Company is already present across the country with a huge network of dealers and distributors along with a robust marketing network. The company has also adopted the business mode of stockyard marketing through which the company is directly selling the products to bigger clients as per their needs. These stockyards are strategically place across the country and are efficiently cutting the transport and time cost and meeting the supply and delivery targets on time. Kamdhenu Ispat Ltd. has been pioneers in this revolutionary concept of Franchisee Model having achieved resounding success in the middle tier steel segment on regional front. From single manufacturing unit, it has spiraled into more than 40 manufacturing units, through franchisee arrangement, spread across the country. The franchisee units benefit a lot by availing Kamdhenu’s brand premium and strong marketing network. While Kamdhenu Ispat Ltd. benefits from the royalty that gets from these franchisees for using its brand name, the model also gives a unique identity to the franchisee units and helps them in leveraging their level of operations and quality to sustain well amidst rising competition in the steel sector. And ultimately it also benefits the customer, who gains the most by getting top quality products at the most effective prices.
The new Franchisee Model adopted by Kamdhenu Ispat Ltd. is really changing the way its’ partners do business regionally. The trusted name of Kamdhenu Ispat Ltd. is spelling a new tale of success by leveraging their facilities to perform on a far improved level and thus bringing in more productivity in their day-to-day operations. It is a 3 tier approach towards looking at the way we franchise for the good of our franchisees. It is truly a unique model which revolves basically around three things: By Kamdhenu With Kamdhenu For Kamdhenu “By Kamdhenu” refers to products made at Kamdhenu Ispat Ltd. own manufacturing facilities under the brand name Kamdhenu, which are sold through our wide marketing network of dealers and distributors. “With Kamdhenu” refers to the products made at franchisee’s end under Kamdhenu Ispat Ltd. norms and specifications, technical know-how and support. These manufacturers pay a royalty amount to KIL for using its’ brand name "Kamdhenu" and sell their products directly using the marketing network of KIL. “For Kamdhenu” refers to the products that franchisees manufacture for us and send them to our regional stock yards located in different regions of the country.
ORGANISATIONAL STRUCTURE (KAMDHENU) ORGANISATIONAL STRUCTURE (EXPLAINED) • Marketing division is further divided into two segments – – • • Marketing retail Marketing Institutional
GM Marketing reports to VP Marketing GM Marketing is reported by – – Manager Dealer Sale Manager Institutional
Manager Dealer Sale is reported by 10 Sales Officers. Manager Institutional is reported by 2 technical officer
Each officer handles 30 dealers (approx).
HEAD FRENCISE RELATIONS
VP MARKETING & COMMERCIAL HEAD (ACCOUNTS AND LOGISTICS)
HEAD PLANT OPERATION
PLANT HEAD (CO. OWNED)
HEAD (STOCKYARDS) MANAGER DEALER SALE
GM MARKETING MANAGER INSTITUTIONAL
10 SALES OFFICERS DISTRIBUTER STAFF
2 TECHNICAL OFFICER
RATHI UDYOG LTD.
Company Overview The Group owes its presence in the steel industry to the farsightedness of late Seth Gordhan Das Rathi. He setup a small re-rolling mill in Delhi in the early 40’s. Since then the Group has grown continuously. Shri Gordhan Das Rathi’s commitment to quality, integrity, honesty, and growth is being followed till date. Headed by Shri Punam Chand it is a profit making, dividend paying and listed company. Rathi Group is engaged in manufacturing of Rebars and Wire Rods which are broadly categorized as the Long Products in the Steel Industry. The main application of our products currently being manufactured is in the Construction Industry. Wire rods, another product being currently manufactured by us are further drawn into wires, which has various industrial applications.
RATHI'S, pioneer in introducing speciality steel in 60's made the Indian Civil construction industry more confident by providing better quality steel which resulted in construction of much safer buildings in India. RATHI BARS LIMITED is promoted by Shree Kamlesh Kumar Rathi, who is amongst the pioneers to introduce High Strength Deformed Steel by using first time in India, technology taken from Germany. The Rathi Group was amongst the first to adopt the technology of Tor-Steel in the country from Tor Istag Steel Corporation, Luxemberg, through the Tor-Steel Research Foundation in India. The Company’s latest product Thermo-Mechanically Treated (TMT) Steel has gained popularity in short span of time in the construction Industry. The state-of-the-art patented “Thermex” water quenching process makes the Steel earthquake resistant. We are one of the exclusive licencees for the use of “Thermex” technology in Northern India.
Product Mix "RUL is in the manufacture of long products including bars, wire rods, angles and channels which form the skeleton of all kinds of construction. With the huge amount of investments initiated and awaited in the construction industry, the demand for these products which are to the tune of 20-25% of the total investment seems to be a no look back at least for the next five years."
• • •
CTD Bars TMT Steel High Strength Reinforcement Bars Wire Rods
The Company’s group Company viz. Rathi Iron And Steel Industries Limited has also commissioned a Steel Rolling Mill plant at Pithampur, Distt. Dhar (M.P.) having installed capacity together with that of the Group Company is about 175000 TPA of rolled products and 40,000 TPA of melting facilities. Starting from a re-rolling mill with a production capacity of 369 kilograms per day, today RATHI® has Production capacity of over 1 million tones annually, being produced at multi-locational, modern plants. RATHI® Family produces high strength steel bars for the secondary steel sector of India. The family takes pride in being the exclusive licencee for Thermex steel bars for entire Northern India.
Details of Operation Rathi Groups retail network includes nearly 800 outlets spread all over Northern India. The Company has a highly experienced and committed team of sales executives who cater directly to the needs of our Corporate and Government clients. Such a broad dealer network enables us to ensure quantitative as well as qualitative up-gradation.
Highlights of the Rathi Group
• • • • • •
9 modern manufacturing plants in India. Installed capacity of over 1 million tonnes per annum. An integrated network of 900 dealers. Global associations with Hennigsdorfer stahl Engineering, GmbH, Germany. Two global technologies –Thermex & Tempcore . Global Quality Certifications for its products and manufacturing process such as IS:1786/1985, Grade Fe-415, Fe-500, ISO 14000 and ISO 9001.
Clientele its main customers are Government and Semi Government Authorities, Group Housing Societies and Private House builders. » NBCC » NTPC » Jyoti Sarup mittal » NDMC » IROW » Ambience Projects » NHPC » Airports Authority of India » » MES » Gammon India Ltd » UNITECH » LIC of India » DLF Group » PARSAVNATH » CPWD » OMAXE » IFFCO » IMCC » ANSALS » NTPC » EIL » American Embassy » Ranbaxy » EPIL » Larsen & Turbo Ltd » Delhi Metro Rail Corp » Hindustan Times » SAHARA INDIA » MGF Developers Pvt. Ltd
ORGANISATIONAL STRUCTURE- RATHI
VP FINANCIAL LOGISTICS
VP MARKETING GM RETAIL RM (DELHI & HARYANA) SALES OFFICER & 2 TECH. OFFICER RM (UP) RM (RAJASTHAN & GUJRAT) RM (MP)
ADMIN & HR
GM COMMERCIA L
3 RM (REGIONWISE/INSTITITNI OL)
3 AM TECH. OFFICER RM (GOVT. PROJECTS) 2 TECH. OFFICER
RM KEY ACCOUNTS
2 TECH. OFFICER
ORGANISATIONAL STRUCTURE- EXPLAINED(RATHI) SALES SUPPORT STAFF/RATHI • Marketing division is further divided into two segements – – • • Marketing retail Marketing commercial
GM retail and gm commercial reports to vp marketing GM retails is reported by five regional managers – – – – – Delhi/Haryana Up Orrisa Rajasthan/Gujrat MP
• • • •
Each RM is reported by 10-12 sales officer and two technical officers. Each officer handles 40-50 dealers, 2 distributors, 70-80 retailers. RM Key Accounts reports to VP-Marketing (DLF/DMRC/etc) GM commercial is reported by – – RM institutional RM govt projects 1, Delhi/Haryana/UP 2 Rajasthan /MP 3.Orrisa
There are 3 RM institutional – – –
• • •
Each RM is reported by 3 asst managers and two technical sale officer There are only 2 RM govt projects (no one in orrisa) – Only 1 asst manager in each state with two technical sales officer direct VP mktng. One asst manager and Recently a new RM key accounts appointed only for Delhi and NCR for prestigious clients reporting to technical office to assist him.
Only one main office and one state head office for RM in small space. Rest all sit in distributors office.
DELHI MARKET – A BRIEF OVERVIEW
Major players include- Rathi tor steel, Kamdehnu ispat ltd, jaibaharat saria,Barnala,TATA Tiscon.
Product categories in construction steel are- reinforcement bars, structural steel (graders etc) and welding steel.
On basis of sales market is divided into two segments – – Retail sales-dealers/retailers. Institutional sales-private/government.
There are total of around 750-800 dealers including non exclusive dealers. Rathi tor steel have 127 dealers and 6 distributors/ c&f anents while kamdehnu ispat have 108 dealers and 2 distributers/c&f agents.
Total retail sales in Delhi of reinforcement bars is around 115000MT of which 23000 MT is of rathi for steel , 13000MT is of kamdehnu ispat and rest is others players.
Total institutional sales in Delhi is about 4.5 lakh tons of 85000MT is of rathi tor, 30000 is kamdehnu ispat and rest of sales comes from other players.
DISTRIBUTION STRUCTURE- KAMDHENU(DELHI MARKET)
DISTRIBUTION STRUCTURE –KAMDHENUEXPLAINED 1. In Kamdhenu, there is 1 C & F agent in Delhi, he takes care for both Institutional and trade supplies 2. There are total 2 distributor who are taking care of whole of Delhi, one distributor is also dealing with institutional, whereas one catering to Easr & West Delhi is catering only to Trade Sale. 3. There is no Teritory conflict between two distributor. 4. C & F agent have allowed Dealer and Distributors to use their own trucks for transportation from plant for having efficient supply chain system, all such vehicles will have to pay Rs.200 as Builty charges to the C & F, and in all these cases billing will only be done at the registered shop/godown address. DISTRIBUTION NETWORK – STRUCTURE (RATHI)
C&F AGENT/DISTRIBUTO R
GOVT SUPPLY (ON SITE/GODOWN)
RET AILE R
DISTRIBUTION NETWORK – EXPLAINED (RATHI)
1. There is one c & F agent in Delhi, the same C&F Agent is also distributor for East Delhi. 2. There are five other distributors in Delhi with well defined territory 3. C&F Agent gets additional brokerage for Key accounts and Institutional supplies due to timely service factor involved. 4. Distributors have their direct retailer also but they don’t interfere with retailers of their authorized dealers.
COMPARISON CHART –S&D STRUCTURE RATHI & KAMDHENU DELHI MARKET
FACTOR C& F AGENT DISTRIBUTOR DEALERS PAYMENT TERMS SUPPLY PLANTS ANNUAL RETAIL SALE INSTITUTIONAL SALE
RATHI 1 6 127 Advance Gaziabaad/Bhiwadi 23000 MT 85000 MT
KAMDHENU 1 2 108 Advance Bhiwadi 13000 MT 30000 MT
BILLING PROCEDURES RATHI & KAMDHENU • Sales are of basic two kinds -With Bills -Without Bills • Ratio of Sales (With Bills: Without Bills) Rathi(80:20) & Kamdhenu(60:40) • • • Mode of payments – Advance by Distributor in both cases 80 Lac deposition to Rathi by Distributor 75 Lac deposition to Kamdhenu by Distributor and 1.5 crore by stockyards owner. • • • • Distributor received payments by check/Draft by Dealers. 99% sales is on cash and carry basis. Giving credit is sole discretion of the distributor. Accounts statements are maintained and distributed by Distributor but printed on companies stationary. • Kamdhenu and Rathi follows same system of monthly statement but Dealers of Kamdhenu complains of not receiving statements for long intervals. PRICICING AND LOGISTICS EXPLAINED (DELHI MARKET) • • • • Pricing in steel industry is on daily basis Basic price per Ton is declared and all the shipments for the given day is done on that price. Rathi usually have higher basic price then Kamdhenu in Dehli market. Rathi supplies its material from Gaziabad plant wheras Kamdhenu supplies from Bhiwadi plants.
In Rathi Freight from Gaziabad Plant is lower and as billing is FOR company prefers Gaziabad plant whereas for institutional/Key Accounts urgent orders material can also be supplied from Bhiwadi plants COMPANY & MARKET UNDER STUDY- RATHI (EAST DELHI MARKET) Before studying the sales and distribution structure of Rathi in East Delhi Market , we must be aware of standard operating procedures used for management of Sales and Distribution system and standard policies of the company with regards to the same.
STANDARD OPERATING PROCEDURES (RATHI) APPOINTMENT OF NEW C&F: Any appointment for new C&f to be made after inviting application from prospective candidate based on advertisement in the local newspaper. They go for Market survey for collection of information. Comparative analysis of all prospective C&F to be done basis completed appraisal form. Agreement of C&F to be made as per standard format clearly indicating security from C&F, commission and clauses on reimbursement of expenses.
Documents to be required: Service tax registration Depot excise registration Sales tax C&F registration with PF, ESI Create SAP vendor code in SAP.
APPOINTMENT OF THE NEW DISTRIBUTOR
For the selection of distributor, RM/SO/ conducts a survey a market and obtains references, meet up the prospective candidates and process a candidates for appointment. RM/SO fill up the distributor form for proposed candidate and submit the same to finance for checking. Following documents are needs to be submitted: Mandatory: Identity proof Signature verification from bank Blank cheques VAT registration Trade license Legal documents Audited balance sheet
Recommendatory: Vehicle title deeds PAN no. Godown title deeds Residence proof Bank statement of last six months
approval form. Conduct (CoC). form.
GM to approves the appointment of distributor by signing the Annually all distributor are required to sign on Code of Appointment of the new distributor to be made after f&f of the
existing distributor is completed. Copy of F&F should be a part of appraisal
TERMINATION OF THE DISTRIBUTOR Once the RM concludes the decision of termination of distributor, he should be prepare a note citing the reasons for termination and propose the same to GM with copy to AVP On receipt of note from RM, and on concurrence of the GM, the AVP will prepare a notice of termination and send same to distributor. On communication of notice of termination, Acoounts E xecutiveshould reconcile accounts of the distributor and send a statement of balance due to/from the distributor to RM. The Administratin Executive shall verify and reconcile the details of any company property which exists in the market of the distributor who is proposed to be terminated and send the same to RM marketing for confirmation Account Executive to take no due certificate from Administration Executive that all the asset have been pulled back from distributor Godown. AE to make out the various rates of biliing and determines the credit notes. After preparing final statement of accounts for the distributor, approval is got from RM and if any amount is due to distributor, the same is proposed for payment The AE sends a statement of F&F along with statement of No due certificate to the distributor and he hands over the cheque/DD to distributor after getting signature from distributor In case of any due, after F&F where recovery dose not happen, a notice is to be sent to distributor. Such a letter is to be sent by Registered post with AD.
APPOINTMENTOF THE DEALER For the selection of dealer,Distributor/SO/ conducts a survey a market and obtains references, meet up the prospective candidates and process a candidates for appointment. Distributor/SO fill up the distributor form for proposed candidate and submit the same to finance for checking. Following documents are needs to be submitted: Mandatory:
Identity proof Signature verification from bank Blank cheques VAT registration Trade license Legal documents Audited balance sheet
Recommendatory: Vehicle title deeds PAN no. Godown title deeds Residence proof Bank statement of last six months
approval form. (CoC).
RM to approves the appointment of distributor by signing the Annually all dealers r are required to sign on Code of Conduct SO to send a joint recommendation with distributor for
approval of POP and POD’s. Shop and wall painting and flex board for the newly appointed dealer. If the visibility of newly appointed dealer is high request for approval for hoarding to be sent along with photograph of the front of the shop.
ISSUE AND REFUND OF PAYMENTS
On receiving the deposit from a distributor/dealer/institutional customer the AE shall record such entries with following details: Customer no.-cheque/DD no.
Account- the customer a/c no. Correct option for rate of deposits has to be used. For accepting deposit at a lower rate, it must be approved as per authority matrix. Security deposits receipts should be made only on actual cheque/DD.
REFUND OF DEPOSITS On receiving request for refund of the deposit from consumer: AE shall verify whether actual glass has been received using SAP_TcodeYCAR Where deposits have been made at different rates, there refund of security have to be approved by AVP.. DD IN TRANSIT(institutional sale): Mode of receipt of DD in transmit, Physical DD Fax of DD Confirmation on mail/SMS A consumer who is on physical DD as mentioned above shall be put on normal DD in transit mode with approval of MU controller. Project and site details to be clearly specified such as name address on mail or fax Reversal of DD in transit DD can be reversal in following cases: DD is lost DD in transmit over number of days as agreed by RM COLLECTION AND BANKING No cash to be accepted from any distributor for supplies to be made to them
Banking of DD and cheque should be performed daily on a fixed time after confirmation of dispatch order from plant/warehouse. Before banking cheques and DD , the AE should check date, amount and bank whether the same is matched with what is entered as DD in transit. All distributors to be informed that cheques/DD must be taken out from only scheduled banks or as per list of banks specified by BU treasury All pre signed cheques with AE must be recorded in a cheque register and details regarding the order and invoice against which it the cheque is banked should be mentioned in the register The AE must remind the CE when he has balance of two cheques with him. No further orders to be accepted till distributor give another lot of cheques to AE
SCHEME APPROVALS PROCESS At the beginning of month, RM prepare a discount proposal and send it to GM for approval. GM to ensure approval to scheme proposal on basis the authority matrix. Post approval of scheme, same is communicated to RM who communicates to the distributor and SO for operating the same in market. At month end, if actual achievment is less than the forecasted number then RM to send detailed cause of change and ratify the same from GM & AVP. MARKET AUDIT Market audit is carried out through deployment of external resources/ internal resources. Market Audit must be done for the following claims: Institutional TPC Scheme Discounts
Spoke Commission Market Auditors to show the report to the RM and the GM for their comments on the market audit done and obtain their signature on the report. At the end of every quater, the market auditors must provide the report of each and every distributor audited against the plan given to AVP( mktng) &AVP(accounts & logistics) All market Audit Reports to be discussed in the meetings by the RM/GM/AVP.
EAST DELHI MARKET (OVERVIEW) 1, Key Players – Rathi, Kamdhenu, DSR, Tata Tiscon, Barnala 2 Total Market Size – Retail -40000mt Institutional - 1.5lakh mtT 3 4 Total No of Distributors -9 Total Nof Dealers -275
5.Brand Leader in Market Share-Rathi 6 Brand Leader in Brand Equity- Tata Tiscon 7Brand Leader in Price: Tata Tiscon
EAST DELHI MRKET – SALES & DISTRIBUTION STRUCTURE OF RATHI MARKET- EAST DELHI DISTRIBUTORS-2 DISTRIBUTORS TERRITORY- DEFINED 1. FROM LUXMI NAGAR –SHAHDARA (ALL AREA TO THE RIGHT SIDE OF GT ROAD)
2. FROM ROHTASH NAGAR- WAJIRABAD(LEFT SIDE OF THE GT ROAD) TOTAL NO OF DEALERS – 29 1. TERRITORY 1 – 14 2. TERRITORY 2- 15 ANNUAL SALE RETAIL-2000MT INTITUTIONAL-3000MT(Institutional is handeled by Distributor of Territory One Only) SUPPLY LOCATION: GHAZIABAD PLANT AVERAGE PRIMARY FRIEGHT TO DELHI – 400RS/MT AVERAGE INVETORY REQD FOR REORDER- 2DAYS SIZES AVIALBLE – ALL SIZES SALES STAFF COMPANY- ONE SALES OFFICER DISTRIBUTOR- 2 COLLECTION BOYS 3 OFFICE ASSITANT/ACCOUNTS 2 SALES & COLLECTION BOYS FOR RETAILERS & INSTITUTIONS
ORDER PLACEMENT BY DEALER- TO DISTRIBUTOR ONLY POP SUPPORT REQUEST- TO BE FORWARDED THROUGH DISTRIBUTOR ONLY
PAYMENT- 100% ADVANCE CHEQUE OR DD IN FAVOUR OF RATHI UDYOG ONLY CREDIT- SOLE DISCRETION LYBUTOR(COMPANY DISPATCHES ON CAH & CARRY BASIS ONLY) CHEQUE COLLECTION /DEPOSIT- BY DISTRIBUTORS STAFF TO BE DEPOSITED ON DAILY BASIS IN ICICI BANK CMS ACCOUNT COPY OF BANK SLIP TO BE FAXED/EMAILED TO PLANT AFTER DEPOSIT ADVANCE BOOKING- NO SYSTEM OF ADVANCE BOOKING O NCE PAYMENT DUE TO HUGE FLUCT UATION IN STEEL PRICES ACCOUNTS STATEMENT- SENT ON MONTHLY BASIS , REACHESBY 15TH OF EVERY MONTH AND IS COLLECTED WITHIN A WEEK BY STAFF OF DISTRIBUTOR WITH CONFIRMATION OF BALANCES
ISSUES IN EAST DELHI MARKET
They can be identified as: 1. Channel Conflict issues 2. Accounts Related Issues 3. Promotion related issues 4. Supply Issues 5. Institutional Sales issues 6. Corss Border Infiltration
ISSUES EXPLAINED CHANNEL CONFLICT ISSUES : 1. In spite of well defined territories Dealers complained of Cross coating of prices to Retailers , in both the territories. 2. There is huge dissatisfaction in dealers with regards to preference to some dealers for Institutional sales. 3. Few dealers also complained with specific examples about how their client was taken over by the Institutional sale team ACCOUNTS RELATED ISSUES Four common issues were highlighted by all the Dealers in terms of accounts 1. Delay in receipt of monthly accounts statements/Bills & credit notes. 2. The bill value and actual value on GR Note varies no. of times. 3. Holding over of credit notes for three to four months by the company. 4. Delay in banking of checks PROMOTION RELATED ISSUES
1. Low advertisement support 2. Non receipt of POP Material 3. No availability of technical material for the need of educated customers 4. Distributors biased in getting preference for wall and shop painting and placement of hording. SUPPLY ISSUES There are three major issues identified in terms of supply 1. Timely supply: Dealer complained that supplies never reached them within two days of placing the order and trucks comes at mid day when no. of customer are high and its not possible to unload the trucks 2. Order cancellation: When order is given to companies in advance but there is delay in dispatch from plants , the material is billed at new increased prices and old order are considered cancelled. 3. Weight difference: There is a regular complaint of difference in weight of unloaded material and the weight built by the company. INSTITUTIONAL SALES ISSUES There are two major issues highlighted by dealers. 1. Loss of important client and customers due to restriction on taking order for big construction projects. 2. Dealers have also complaint that even if company wants even then they will not be interested in institutional sales due to the risk of losing the site to the institutional sales team of the company. CROSS BRODER INFILTRATION There was a big complaint from all the dealers that prices in Ghaziabad and Noida are lower and those dealers disturb the retailers in the U.P bordering area of East Delhi by coating lower prices and supplying at lower rates.
SUGGESIONS FOR IMPROVEMENT 1. Sales officers of territories must become active and visit Dealers and retails regularly to ensure that no Negative activity percolates among channel partners. 2. Retailers must be properly assigned to a dealer in discussion with dealer retailer distributor and officer. 3. Regular violation of discipline by dealer/retailer must lead to a penal action like termination of supplies for short period to discipline the market. 4. Promotional material must be allocated to all the dealers on the basis of their share in the total sale so that no one can complaint of bias ( for a dealer who needs support for growth sales officer in best interest of the company can provide additional budget to him). 5. While handing over the statement the employee of the distributor must take the acknowledgement from the dealer so that they can not complaint of not receipt of documents. 6. Sales officer must regularly keep the accounts tem updated if any reconciliation issue or mismatch is there and must follow for corrective action. 7. Accounts executive must also visit market once in a month to ensure that there are no pending issues that they are not aware of. 8. After introduction of SAP the problems of order delay must reduce and the dispatch staff must keep concern distributor / dealer with regards to exact status of dispatch. Dealers can be advised to increase their reordering cushion from two to three days. 9. All dealers must ensure the weight of the truck before unloading and if there is any difference in bill value and actual weight the truck must not be unloaded and must be sent back to the plant. In this case company must take proper action against C&F / transporter.
10.All the material to be supplied to institutions in account of dealers must be build at address of actual destination in account of dealer so that if institutional team tries to break the client from system on basis of addresses the reality can be verified and there should be code of conduct for all the sales staff with well defined limits of territory and operations. 11.All the dealers and retailers found in indulging in cross border sale purchase must be cleverly identified by distributor and sales officer and a corrective action should be taken against them through warning or termination of supplies or if required even complaining to sales tax department.
APPENDIX – I Questionnaire SDM (Dealers)
1. For how long have you been the dealer of the company?
2. From which distributor do you get your supplies from?
3. Are you a retail-dealer or wholesale-dealer?
4. If wholesaler – number of dealers covered?
5. From which do u get your supplies From?
6. What is your average delivery time after placing the order?
7. What is the average inventory that you hold?
8. How frequently your sales officers visit you?
9. Do you face any problems in the supplies? If yes, list them?
10.How is the accounting system at your company? Are you satisfied? Any problems? 11.Do you get adequate promotional support?
12.What other issues do you face in dealing with the company?
13.Any suggestions that you want to give?
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APPENDIX-2 List of Dealer of Rathi steel for ‘East Delhi’ Market
SRNO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 DEALERS NAME SUPER BUIDING MATERIAL NIKITA BUILDERS KESHAV ENTERPRISES SAINI B/M AND SUPPLIER SHRI BALAJI ENT SANJAY ENTERPRISES RAMESH CHAND SUBHASH CHAND VINAIAK CEMENT MUKESH B MATERIAL SUPPLIER OM ENTERPRISES TUSHAR STEEL LAXMI TRADING CO DEEPAK TRADER VIJAY SINGH & CO RAO TRADING CO CHOUDHARY CEMENT TRADER ARYA CEMENT BALAJI BUILDER BANSAL STEEL
20 21 22
RAMA STEEL SHIVANI STEEL SH GANESH ENTERPRISES
23 24 25 26 27
MALIK SONS JAI BHARAT STEELS OM STEEL FABRICATORS SHIV SHAKTI STEEL SATNAM BUILDERS
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