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Kanpur Confectioneries Private Limited (A) : Written Analysis and Communication
Kanpur Confectioneries Private Limited (A) : Written Analysis and Communication
Grade
Individual Assignment No 3
‘KANPUR CONFECTIONERIES
PRIVATE LIMITED (A)’
Submitted by:-
Name : Jayant Kushwaha
Roll No : 141119
Section : ‘A’
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SITUATIONAL ANALYSIS:
Kanpur Confectioneries Private Limited (KCPL), founded by Mohan Kumar Gupta is a biscuit
manufacturing company started in 1945 in Jaipur. Mohan Kumar was keen learner as earlier he
used to work in a candy unit and then started his own business with the dealership of candies
under the brand name ‘MKG’ at the age of 28 years only. After gaining some experience and
insight about the market, he set up his own production unit in Jaipur in 1946 (exhibit 1 shows the
timeline of the company). He was an excellent tactician also, as when competition grew and he
could not compete on costs he shifted his candy-making unit to Kanpur where he can
manufacture candies at a little low cost and target new market. He invested in advertisement
smartly, in vernacular newspaper and hoardings to connect with common people. Also with good
dealership network in Bihar and MP he was able to make KCPL the market leader in his region.
Mohan Kumar was a visionary too as he could see growth in biscuits demand (15% p.a.) and
attractive margins this product has. Also sugar is the common raw material for both candies and
biscuits (biscuit manufacturing process flowchart given in exhibit 2). So he decided to invest his
surplus from candy business to enter into biscuits’ business. Business grew fast but limited raw
materials didn’t allowed it to flourish. But still they managed to be the number 2 players in
biscuit market in northern region with extended range of Cream, Salt and Marie biscuits. Prince
Biscuits was the market leader with 130 tonnes sales followed by KCPL with 110 tonnes sales
followed by International Biscuits with 100 tonnes sales. In year 1980-81 there turnover was Rs.
2 crores (growth of 15% compared to last year) and in year 1983-84 it was Rs. 3 crores. The
installed production capacity was 240 tonnes per month and their average monthly production
was 120 tonnes.
In 1973-74 glucose biscuit was the growing segment of the biscuit industry and many
unorganized sector entered the market. A-One Confectionaries Private Limited (APL) and
International biscuits dominated the market and these new entrants made the market more
competitive. KCPL got stuck in middle as it could not increase the prices whereas raw materials
and labour cost rose and it did not have that big scale to reduce costs considerably. Between
1983-84 and 86-87 KCPL’s sales declined and it incurred heavy losses. By now APL had
become a leading player with monthly sales of 200 tonnes. KCPL was reduced to fourth position
with sales of 120 tonnes.
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In due course top management of KCPL was also changed. In 1982, Mohan Kumar, who has six
sons handed over the KCPL’s leadership to his eldest son, Alok Kumar. Their background,
joining year and responsibilities are given in exhibit 7.
KPCL then joined hands with Pearson and jointly launched ‘Good Health’ biscuits but the
response was not good and KCPL had to encore loss of Rs.141000 (exhibit 6). On September 8,
1987 APL came up with an offer of expanding its supplying capacity by contract manufacturing
units (CMU). KCPL can provide those units but this contract had its own pros and cons (exhibit
3). So, now Alok & his Brothers have to decide what to do with this opportunity before someone
else grabs this.
PROBLEM STATEMENT:
To regain its position as one of the biscuit market leader and extent its market share to premier
customers.
OBJECTIVES:
Objectives in accordance with their priority are:-
1. To eliminate losses and bring profits
2. To maintain the brand they have made over the years
3. To abide by the principles laid down by the family
4. To grow business and become no. 1 company of India.
OPTIONS:
i) Accept APL’s offer and become CMU
ii) Increase efficiency of laborers and decrease absenteeism
iii) Introduce new variant of biscuits for premier customers
iv) Optimum utilization of the increased capacity
v) Focus on canteens of institutions (Mass consumers)
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EVALUATION OF OPTIONS:
i) Accept APL’s offer and become CMU
a. Advantages: No expenses on advertisement, attracting customers or brand
building. Regular income, expertise in production and low risk
b. Disadvantages: No power in decision making and uncertainty of future relations
with APL. If ACL asked to change production process or equipments then capital
expenditure will have to be made by KCPL.
This option can bring profits for company but it may dilute the KCPL’s brand itself
or worse eliminate the brand from market.
As it is said a company is known by its workforce and an efficient loyal workforce can do
wonders for an organization even with limited resource. This option satisfies all the objectives
except for the principles. It’s not necessary that we have to be very strict or exploit them but this
sudden strictness may create a feeling of extra burden and exploitation in the minds of workers.
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This option is like a gamble. If the new product gets a positive response then it can fulfill all the
objectives and can make KCPL the king of market in no time. And if it’s a fail then the
company’s survival will be at stake.
This option can recover losses and is totally controlled by the company. But this may not be
sufficient if they want to become no. 1.
This option satisfies all the objectives except for making company no. 1.
RECOMMENDATION:
Option 4th and 5th both satisfy the same sets of objectives (Exhibit 4). But still I think option 5th
i.e. focus on canteens of institution will be the best option. It will provide regular income and we
will produce according to the order which will help us avoiding over production and inventory
storage cost. Also total demand from institutional canteens is around 2400 tons per month and
KCPL has only acquired only 1.25% (360 tons in a year i.e. 30 tons per month) of the total
demand. So there’s a huge scope of increasing the market share here.
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ACTION PLAN:
KCPL will have to make good relations with the institutes. Talk to premier institutes and take
them into confidence that we will provide good quality at lower price. Keep profit margin less
initially and as the customers increase and production increases, cost per unit of product will go
down automatically increasing the profit margin.
CONTINGENCY PLAN:
If this plan doesn’t works or is taking too long then we can consider 4 th option i.e. optimum
utilization of increased capacity.
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Report Exhibit 1: Company’s Timeline
Enter into biscuit market with glucose biscuits under the same
1970
brand MKG.
1982 Mohan Kumar handed over the leadership of KCPL to Alok Kumar.
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Report Exhibit 2: Biscuit Manufacturing Process
Maida
Vanaspati (Manually) Sugar Syrup
Cylinder Cylinder
Mixing
Unit
Moulding
Unit
Oven
Packing
Department
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Report Exhibit 3: APL’s Offer
ADVANTAGES DISADVANTAGES
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Report Exhibit 5: KCPL and its competitors’ statistics
Plant Dominant Sales in tons Capacity in tons
Company
Location Region (year 1973-74) (year 1973-74)
Kanpur Confectionaries Northern
Kanpur, UP 110 120
Private Limited (KCPL) India
A-one confectionaries Chennai, Southern
900
private limited (APL) Tamil Nadu India
Prince Biscuits Agra, UP 130 150
International biscuits Mumbai, Western &
100 800
limited Maharashtra Eastern India
Preservative = 1000
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Report Exhibit 7: Family Introduction
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UNDERTAKING:
I, Jayant Kushwaha, hereby declare that this assignment is my original work and is not copied
from anyone/anywhere. If found similar with sources, I take complete responsibility of action
Signature
SECTION: A
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