Archroma Pakistan Limited (APL) acquired BASF Pakistan (Pvt) Ltd on 31 July, 2015.

Archroma Textiles Chemicals Pakistan Pvt Ltd (ATCPPL) amalgamated into APL with effect
from 1 January, 2016. APL is a subsidiary of Archroma which holds 75 percent of the share
capital of the company. APL is primarily engaged in the manufacture and sale of chemicals,
dyestuffs and emulsions. It also acts as an indenting agent. It has a production site at Jamshoro
which produces liquid indigo for the denim industry.

Now, Archroma’s channel distribution comprises of the following participants:

Primary Participants:

Primary participants are those intermediaries such as wholesalers, distributors, retailers, agents,
and brokers who are part of the proactive marketing design of the channel. They form a vital link
between the supplier and the final user of the products. Archroma as producers of chemicals and
dyes, their primary participants play a vital role in value creation for end users. Archroma targets
big manufacturers as well as small and medium businesses hence resellers of all types has played
a huge role in attaining the 75% of the market share for Archroma. The distributors or
wholesalers take inventory in bulk from Archroma and deliver a bundle of related product lines
to customers. Then they typically sell to other businesses and they sell products in larger
quantities that an individual consumer would usually buy.   For the customer, distributors of
Archroma fulfill the “Time and Place” function – they deliver products when and where the
customer wants them. The distributors for Archroma in South Karachi and Faisalabad are as
follows and they are independent businesses:

 AlAmin Cooperation in Karachi

 Halal Dyes in Faisalabad

These distributors cover the wide network for Archroma in Pakistan.

Ancillary Participants:

These are those businesses and service providers whose efforts have been traditionally viewed
somewhat generic but without which the channel could not work. Archroma has its Ancillary
participants play a vital role in providing a total offering:

 Transportation: They come in handy when Archroma has to supply its products to large
businesses and develop a direct channel with the end customer.
 Financing: The distributors and other channel intermediaries provide trade credit to end
customers as a way to finance their operations. These businesses share the credit risk of
Archroma. As Archroma is a chemical industry and many end customers use it as their
raw materials, credit risk is always there.
 Promotion: Archroma has it owns promotion house where product updates are regularly
updated on their Youtube channel in order to keep their customers intact.
  Insurance: Archroma takes its employees safety as a priority. Hence every employee in
the production house has an insurance for themselves and their families. Financial
insurance is not required by Archroma Pakistan as it’s a multinational and already has a
significant backing from the HQ.

Direct Channel:

A direct channel is also formed by Archroma where direct selling takes place with the end
consumer without the use of primary intermediaries. Archroma does direct selling in the region
of Lahore because they believe in personal selling based on relationships. These customers are
large businesses and they usually buy in bulk and also comprises of small businesses too. These
businesses have long term relationships with Archroma and personal selling takes place.
Ancillary participants i.e. independent transportation services are used for the commute of
supplies by Archroma. Large business customers for Archroma are as follows:

 Azgard Nine
 Nishat
 Sapphire
 US apparel
 Kohenoor

Small businesses buy products in small quantities but are frequent and loyal buyers.
Value Networks:

Archroma’s priority is not just to provide the core product i.e. chemicals and dyes but also to
provide a total offering that is providing the product in right quantity, at the right time and place,
and in a manner that fits in the routine of the customer. The economic utility provided in terms of
its form is providing the chemicals in eco-friendly packaging and to avoid spillovers. Archroma
has a 3 month inventory stock which is why it can provide the products to consumers in a timely
and efficient manner. Archroma as it has its distributor located in Karachi and Faisalabad and
itself is involved in the region of Lahore, the availability of the product then becomes quite
convenient for the customers. Archroma also provides possession to its customers on credit basis
but only those customers with which long term relationships have been established otherwise
there’s a risk of defaulting.

Archroma also provides before and after sale services for the efficient use of their chemicals in
the final products. Archroma has a significant market share due to its ecological chemicals and
dyes. But how did it managed to communicate its product to the other businesses? It is through
personal selling.
  Archroma has its own expos and exhibitions where its FMD meets the businesses
themselves and make them aware about the benefits of their products.
 They provide in detail product information which is an important distinction.
 Archroma furthermore allows the businesses to test their products in terms of reliability
which itself is an initiative towards building long term relationships.

Archroma has also trained their distributors about the knowledge required of the chemicals in
order for efficient market development in their respective regions. The R&D, technical experts
and product managers help companies to optimize production processes and enhance products.

Archroma also produces chemicals and dyes in accordance to the demand of customers and
supply them.

Industrial Distributors and Physical distribution Concept

As Archroma is dealing with the customers itself in the Lahore region with the large and small
business customers, Archroma has its distributor in the Southern region and in Faisalabad. These
distributors buy products in bulk from Archroma and supply them to the region’s small and large
customers.

This reduces the cost for Archroma and also ensures:

 Fast delivery
 Segment based product assortment
 Provide local credit
 Provide product information
 Assist in buying decisions
 Anticipating needs

The distributors of Archroma have their own warehouses to stock the inventory and ensure
timely supply of the products in the region. Whereas Archroma in the Lahore region has its own
warehouse located at Thokar Niaz. This implies low costs incurred by Archroma itself because it
only owns one warehouse while its distributors cater their own costs.

As Archroma and its distributors have their own warehouses and inventory systems and as stated
earlier it has 3 month inventory stock available, transportation costs are significantly reduced
too. As products are transported once in every 45 days to the distributors but if there’s an
increase in the derived demand, Archroma has developed channel designs that seamlessly match
the operation of the customers which are significantly large ones. Small businesses customers
usually involve the use of industrial distributors.

Channel Design:

Archroma has effectively design its channel in order to meet its customers: the distributors, the
large businesses, small businesses, and even individual customers. Archroma in its own region
deals with all the customers themselves by having a direct channel but in other regions their
distributors who solely have Archroma’s products supply the products efficiently. The intensity
of distribution is well-established and planned in order to reach their target audiences.

Archroma has one distributor in each region i.e. one in south, one in Faisalabad and Archroma
dealing in its own region. Each one caters the OEMs and small businesses and individual
customers. This requires a large warehouse which each of them possess.

Archroma has a vertical integration. It doesn’t own the distributors in the South and Faisalabad
regions but these distributors only have products of Archroma as it already has a market share of
75%. It acts as a monopoly in the Pakistani industry and continues to do so because of its
innovative products. The ancillary participants of transportation only caters the Archroma
chemicals and dyes and is responsible in their commute from on region to the other.