Distribution Channel

HOT ROLLED STEEL

Distribution Business Classification…..
HR RETAIL BUSINESS HR DISTRIBUTOR BUSINESS
1 Customer Volume – 20 Mt Min. Customer Volume – 1000 Mt Min

2 Customer Approaches Supplier Distributors Approach End Customer

3 Cash & Carry Offers Credit

4 Off The Shelf Sales Gives Customised Sizes & Deliveries

5 Stocking And Selling at Consumption Centre Selling In Wider Territory

6 100 percent CTL Coils, CTL, Slits, Customised sizes

7 Large Customer Base - Actual Users Actual Users As Well As Intermediaries

8 Less dependency on one customer Higher dependency on one customer

Distributor Margin not available to
9 Distributor Margin available to Manufacturer
Manufacturer
2
Indian Steel Manufacturers…..
PARTICULARS JSW AMNS TATA SAIL JSPL
Customer Volume - 20 MT min
Retail Customer approaches Suppliers – 100%
Inbound
Off the Shelf Sales through Retail network
Stocking and selling at consumption centers- RETAILER
Retail Outlets
TRAITS
100 percent CTL Sales through Trade Channel

Manufacturers have very Large customer base

Trade Margins available to Manufacturers

Avg Trade Channel Volume > 1000 MT

Trade Channel offers Credit to End Customer

Gives Customised Sizes and Deliveries DISTRIBUTOR

Trade Selling in wider Territories TRAITS
Sales to intermediaries (Dealers, Agents) by
distributors
Solution Provider to SME/ OEM
Inferences…..

Hypermarts was
started in a large
AMNS has hybrid scale by AMNS,
All Domestic Steel TATA extensively
model of Direct however was
Manufacturers are uses Distributors to JSW is purely into
retailing through subsequently cut
extensively using serve dual purpose Distribution Channel
Hypermarts and also down in many
Distributors network of servicing SME through distributor
through using territories as it was
to serve the smaller requirements in network
Distributors for not self sustaining
customers. addition to Retailing.
Retailing. due to high fixed
costs and capital
investments.
Share of HR Sales to Distributor Vs Total Domestic Sales:

TATA &
  JSW AMNS BSL JSPL SAIL
fig's in Mn mt p.a. MT MT MT MT MT
INSTALLED CAPACITY 12 7 15 1 7.73
DOMESTIC SALES 4.98 2.33 6.49 0.85 3.8
SALES TO DISTRIBUTORS 1.07 0.59 1.96 0.28 1.58
% RETAIL/DOM SALES 21% 25% 30% 33% 42%
 Market Share - Steel Producers : Distribution Channel

IMPORTS/
REGION JSW AMNS TATA JSPL SAIL OTHERS TOTAL
% % % % % %
  MT/Month Share MT/Month Share MT/Month Share MT/Month Share MT/Month Share MT/Month Share MT/Month
NORTH 21,250 13% 5,000 3% 80,995 49% 6,000 4% 50,755 31%   0% 164,000
SOUTH 37,650 40% 7,450 8% 16,500 18% 4,100 4% 20,350 22% 7,000 8% 93,050
WEST &
CEN 29,550 20% 36,500 24% 40,250 27% 10,500 7% 16,500 11% 17,500 12% 150,800
EAST 300 0% 0 0% 25,300 34% 3,000 4% 43,800 58% 3,000 4% 75,400
Grand Total 88,750 18% 48,950 10% 163,045 34% 23,600 5% 131,405 27% 27,500 6% 483,250

Inspite of Highest HRC Production capacity, JSW ranks 3rd with 18% SOB after TATA &
SAIL
TATA Steel has highest market share - 34%

List of Distributors
Distributor Strength Comparison: (No. of Distributors)

REGION JSW AMNS TATA JSPL SAIL OTHERS TOTAL

% % % % % %
  No. Share No. Share No. Share No. Share No. Share No. Share No.
NORTH 8 (2) 13% 4 (4) 3% 29 (29) 49% 2 (0) 4% 22 (18) 31% 0 (0) 0% 59
SOUTH 35 (20) 40% 13 (4) 8% 17 (11) 18% 4 (1) 4% 32 (15) 22% 1 (1) 8% 74
WEST & CEN 21 (2) 20% 31 (11) 24% 10 (9) 27% 8 (0) 7% 23 (7) 11% 13 (0) 12% 59
EAST 2 (0) 0% 0 (0) 0% 12 (9) 34% 5 (0) 4% 29 (21) 58% 4 (2) 4% 40
Grand Total 66 (24) 18% 48(19) 10% 68 (58) 34% 19 (1) 5% 106 (61) 27% 18 (3) 6% 232

Numbers in Brackets ( ) Indicate number of Exclusive Distributors

Total column represents number of Total distributors in a Region irrespective of multiple buying source

TATA Steel has highest exclusive Distributors as a percentage of Total Distributors

JSW has very limited exclusive Distributors leading to lack of control in market

Exclusive
Distributor List
Key Differentiators - …..

Margin Monitor to check Distributor profitability

1

2 Strong SME/ End customer connect.

Highest SOB with

optimum number of Multi product sales through same distributors
Distributors. 3
Replenishment system established with key
Highest Exclusive 4 customers
Distributors

Highest Avg. Volume per Distributor Sales Training and incentive schemes
Distributor
5
Three Level New Distributor Screening & Selection
6 Model

Well Established Metrics and schedules for Distributor

7 performance monitoring
The Challenge:
Establishing JSW’s leadership in Distribution Business through processes and policies

Calculation of Desired Market share.

Gap analysis of Existing Distributor Network

Addressing Gap - Existing Distributor Network

• Existing Dealer analytics – Rating of Distributors
• Bridging the Gaps – Incremental Volumes from Existing Distributors

Bridging the Gap - New Distributor Appointment

• Distributor density computation
• Acquisition of market share through New Distributors

Designing Distributor appointment and performance monitoring Manual

JSW Desired Market Share in a Territory

Freight & Tax friendliness

Locations where we have natural advantage with respect to freight and Tax need to be targeted for higher share than
competition. The criterion to be followed is as follows

Criteria Min SOB Targeted

Freight Advantage area with respect to competition – Sole Producer Region 65%
Freight Advantage area with respect to competition – Multiple Producer Region 50%
Equal Freight Advantage with majority competition 25%
Lower Freight Advantage areas- Competitor Territory 20%

Future Growth Potential

Locations where growth is expected, like upcoming Auto cluster areas, Industrial hubs, etc. requires strengthening of
existing Distributor network, so that we grab this incremental volume over and above the natural growth.
Gap Analysis
CURRENT DESIRED GAP
Incremental
Total Volume
Potential Current SOB Current Qty Desired Desired Qty Required
Region State MT/Mth %JSW Mt/Mth Market Share MT/Mth MT/Mth
NORTH Hariyana 85000 16% 14000 25% 21250 7250
  Uttarpradesh 52250 11% 5750 25% 13063 7313
  Punjab 26750 6% 1500 25% 6688 5188
NORTH Total   164000 13% 21250 25% 41000 19750
SOUTH Tamilnadu 44550 39% 17250 65% 28958 11708
  Kerala 5200 38% 1950 65% 3380 1430
  AP 18700 28% 5300 25% 4675 -625
  Karnataka 23900 53% 12650 65% 15535 2885
  Goa 700 71% 500 65% 455 -45
SOUTH Total   93050 40% 37650 57% 53003 15353
WEST & CENTRAL Gujarat 36300 13% 4700 20% 7260 2560
Maharashtra 90350 23% 20600 50% 45175 24575
MP 9200 22% 2000 25% 2300 300
Rajasthan 14950 15% 2250 25% 3738 1488
W&C Total   150800 20% 29550 39% 58473 28923
EAST West Bengal 35200 1% 200 20% 7040 6840
Jharkand 14000 0% 0 20% 2800 2800
Bihar 5100 2% 100 20% 1020 920
Orissa 21100 0% 0 20% 4220 4220
EAST Total   75400 0% 300 20% 15080 14780
Grand Total   483250 18% 88750 35% 167555 78805
Current & Desired SOB

This Territory is Equidistant to almost all Should aim for

N 13% the Primary Producers & is also the
biggest Retail Market
equal share with
other players
25%

As we are the only Primary Producer in Should be having

S this Region with maximum freight monopolistic share 57%

40% in South.
advantages

Should attain
leadership Role in
JSW has the most freight advantage and this Region in light
W 20% is one of the major distribution market in
the country.
of additional HR
capacity Ramping
39%

up

Highly skewed SOB,

have space for
E
With Green field capacities expected, our 20%
0% presence requires to be increased. market
development
 Addressing the Gap
Desired Market Share Current Market Share

GAP
Existing Distributor - New Distributor
Incremental Volume Volumes

Gap Analysis – Addressing Gap with Existing Distributors

LEVERAGE EXISTING DISTRIBUTOR STRENGTHS

1) Using 20% of sale through

1) Improving Service JSW Yard to improve
Self improvement

availability and faster rotation

by Distributors

Addressable Gaps
center

with support from

of Distributor inventory.
2) Ability to serve SME
customers 2) Liquidity addition by way of

3) Sufficient funds to
extend credit facilities
4) Manpower to cover
lager territories.
JSW
increased Channel Finance
support and supplies against
BG.
3) SME Support – Allowing
fixed, PO based pricing for their
Back to Back orders. Distributor
Analyrics Matrix
 Existing Distributor Analytics – Identify Areas of Weakness & Strengths (Example
– West & Central)
 Weightage% 100 10 15 15 10 5 5 15 10 15
Dealer name BRANCH Rating Inventory to Financial Volume & Low Sales to Risk ability/ Sales Support Sales to - SME Own Intent to be
Sales Ratio Stability Market Share Sub dealer agility Staff Strengths processing - Exclusive
Table (1 Lines/ Stock
- 5) yards

Mittal Agencies Pune 4.05 3 5 5 5 4 3 3 2 5

Bharat Iron Syndicate Pune 3.70 3 3 3 5 5 4 4 5 3
Bajaj Industrial Pune 3.70 4 4 2 4 4 5 2 5 5
Abhay Ispat (india) Pvt. Mumbai 4.20 4 4 5 4 5 5 3 5 4
K Amishkumar Trading Mumbai 4.10 4 5 4 4 4 5 3 3 5
Bavtawala Iron And Steel Mumbai 3.70 4 3 4 4 3 3 4 5 3
Bharatkumar Indrasen Mumbai 3.55 4 4 2 4 4 5 4 5 2
Krishna Steel Mumbai 2.70 4 4 3 2 4 3 1 1 3
Giriraj Iron Ltd. Mumbai 2.20 4 3 1 2 3 3 1 1 3
RK Steel Jaipur 3.25 3 4 5 3 4 2 2 4 2
Ratan Ispat Jaipur 3.40 3 4 4 3 4 2 1 4 5
Shub Away/ PS Ent Jaipur 2.65 3 4 3 3 3 2 1 3 2
Vinayak Enginnering Indore 3.50 3 3 4 4 5 3 2 3 5
Lucky Steel Indore 3.20 3 3 3 4 5 3 2 3 4
Bikaner Agrico Gujarat 3.35 5 4 3 4 4 4 3 4 1
Sanjay Sales Gujarat 3.20 3 3 3 3 5 3 2 4 4
Existing
Distributor Rating
Green Boxes are areas of Opportunity by Strengthening
Example of Incremental Volume from Existing Distributors (WEST & CENTRAL)
VOLUME INCREASE ATTRIBUTES
Yard Total
Liquidity Support Increme
Branch Name SME Exclusiv
addition/ (HSM-2 ntal
Support e Distr. Volume
BG CTL&Coi
l)
Ahmedabad BIKANER AGRICO 0 500 500 0 1000
  GIRIRAJ GROUP 0 0 500 0 500
SANJAY SALES PRIVATE
  LIMITED (BG) 500 0 0 0 500
Ahmedabad Total   500 500 1000 0 2000
Indore LUCKY STEEL 100 0 350 0 450

  VINAYAK ENGINEERING WORKS 100 0 350 0 450

LEVERAGE EXISTING Indore Total   200 0 700 0 900
DISTRIBUTOR Jaipur RATAN ISPAT INDUSTRIES 0 0 100 500 600
  RK STEEL 0 0 100 0 100
STRENGTHS TO   PS / SHUBH AVAY & COMPANY 0 0 100 0 100
BRIDGE THE SOB GAP Jaipur Total   0 0 300 500 800
Mumbai(HO) ABHAY ISPAT (INDIA) PVT LTD 0 1000 0 0 1000
  BAJAJ INDUSTRIAL 0 750 0 750 1500

  BAVTAWALA IRON & STEEL PVT 350 2000 0 0 2350

  BHARATKUMAR INDRASEN 0 500 0 0 500
  GIRIRAJ EXIM PVT LTD (BG) 500 0 0 0 500
  KRISHNA COIL CUTTER 0 1000 0 0 1000
  K.AMISHKUMAR TRADING PVT 0 2000 0 4000 6000
Mumbai(HO) Total   850 7250 0 4750 12850
Pune BHARAT IRON SYNDICATE 0 250 0 0 250
  MITTAL AGENCIES 0 500 0 1000 1500
Pune Total   0 750 0 1000 1750
    1,550 8,500 2,000 6,250 18,300
Gap Analysis- Bridging the Gap with New Distributors
E
Gap
Addressed Balance GAP
Current Desired Qty/ with to Addressed
 Region State  Current SOB Desired SOB GAP
Qty/Mth Mth strengthening by New
Existing Distributors
Distributor

Gujarat 4700 13% 20% 7260 2560 2000 560

WEST & Maharashtra 20600 23% 50% 45175 24575 14600 9975
CENTRAL MP 2000 22% 25% 2300 300 900 -600
Rajasthan 2250 15% 25% 3738 1488 800 688
TOTAL
  29550 20% 39% 58473 28923 18300 10623

A B D=A/B E D/E
Balance GAP to
Current No. of Existing Avg Vol/ Existing Approx. No of
 Region  State Addressed by
Qty/Mth Distributor Distributor New Distributor
New Distributors

Gujarat 4700 4 1175 560 1

Maharashtra 20600 9 2289 9975 5
WEST & CENTRAL
MP 2000 5 400 -600 0
Rajasthan 2250 3 750 688 1
TOTAL   29550 21 4614 10623 7
Designing Distributor Appointment And Performance
Monitoring Manual
 Risk Mitigation By Leveraging
1 Defining Process & Policy 2 Distributors Financial Strength
• Appointing Distributors
• Defining Roles and
Tapping SME Segments without
Responsibilities of Distributors
• NCO sales Protocol.
3 increasing fixed costs
• Training and Development of
Distributors
• Securitizing JSW's business in
Improving Retail services and most
OBJECTIVES trade segment. 4 importantly profitable market share
• IT support and responsibilities
• Measurable & time bound way
of taking distributor related
decisions. To create an MIS system under robust
• Policy regarding Discontinuing a 5 market governing network to emerge as
Distributor. market leaders in our area of business.

Discourage Imports which impacts the

6 entire steel and have cascading price
impact on entire steel Industry.
 Existing & Proposed SOP
EXISTING SOP
Bottom up decision on No of Distributor
New distributor based on saturation level of
market
Best of 3 Potential Distributor
Strength & weaknesses of existing and new
distributors not assessed
Lack of Performance Monitoring and Risk
assessment of Distributors
No specific focus on NCO sales
No monitoring of SME sales
Current SOP New
Roles and responsibilities of Distributors not
Distributor
defined
SOP for Termination of Distributor not
mentioned
PROPOSED SOP - MANUAL
Top down based on desired market share &
Gap analysis
New Distributor decision based on Target
market share basis
Based on analytical ratings of individual
Distributor
Importance given to leveraging strengths of
existing Distributor
Periodic performance and risk assessment &
mitigation
NCO sales monitoring and enhancements
Monitoring of SME Sales
Roles and responsibilities clearly defined
Termination SOP mentioned by mitigating
any legal/ financial risk
Contents:

4 Roles & Responsibilities of 7

1 Key Benefits NCO Liquidation & Pricing 10
Category Of Distributors &
Distributor Benefits
 Adherence to Agreed Takeoff
  NCO Liquidation  Classification of NCO
Expected results from
Engaging Distributors
New Distributors  Process of Distributors
 Territorial Jurisdiction  NCO Pricing
 Avoid Time & Opportunity Loss approaching JSW
 Investments
 Risk Mitigation  Searching out for Distributors in a
 Sales Promotion
 Uniform operations Pan India  Adherence to JSW Distributor Territory
 To help take informed decisions Policies & Policy for Securitization

5 Obligation of JSW towards 8 11 Category Of Distributors &

2 Engaging New Distributor MSME Servicing
Distributors Benefits

 Supply of Material to Distributors  Objective to be achieved in MSME

 Process of Distributors  MOU Incentives  Classification of MSME  Process of Distributors
approaching JSW  Explicit knowledge acquisition -  Role of Distributor in MSME Orders approaching JSW
 Searching out for Distributors in a Distributor Training & support  MSME Order Management  Searching out for Distributors in a
Territory Territory

Distributor Shortlisting Monitoring Distributor 9 Exclusive Distributorship

3 6 Performance 12 Replacement of Distributor
Process

 Initial Assessment and Ranking
 Final Interview and Induction
 Operational performance
 Business Performance
 Need for Exclusive Distributor  Clauses Leading to Termination
 Requirements from Exclusive of Distributor
Distributor  Timeline for Termination
 Margin Monitor - ROCE
 Intangible Benefits of Exclusive
Distributors
Key Benefits:
To Get Expected Results by selecting
Strengthening the Distributor channel only the right Distributor
will help to increase SOB without
increasing fixed cost
To avoid loss of Time and
opportunities due to unfit
Distributor
Scaling up volumes across the regions
is faster by Distributor channel 360 DEGREE
INCREASE IN SCIENTIFIC, Timely Risk Mitigation by identifying
NO OF STANDARDIZED financial and structural weakness in
DISTRIBUTORS SELECTION Distributor
Penetration in MSME segments PROCESS

To have uniform operations Pan India

Effective channel to mitigate financial

risk and reaching smaller customers
To help take informed decisions
Engaging New Distributors
Prospecting

Potentials
Approach JSW JSW search out
for for Distributors
Distributorship
SCENARIO -1: DISTRIBUTOR APPROACHING JSW
Distributors will share all the required assessment information as per the attached format. (Distributor Profiling Tool)

Final selection of distributor will be subject to requirement of JSW to add distributor based on distributor density
analysis or to replace ineffective distributor.
Distributor
Profiling Tool

SCENARIO -2: JSW APPROACHING NEW DISTRIBUTOR

JSW may approach distributors in following ways. Some ways are more preferred to others based on company’s
existing territorial presence.

Existing
Existing
Territory with
Territory with
Particulars New Territory no well
Well Established
established
Distributors
Distributors
Trade Associations

Talk to retailers

Ask for References – End customers

Meet existing other distributors & importers

Look at competition Distributors

Trade Events, Shows & Advertising in
websites and media
Distributor Shortlisting Process
Distributor Assessment & Screening Process:
A methodical assessment would result in following benefits:
 To find the best fit
 To discover Distributor potentials which would result in synergies with JSW strengths and weaknesses.
 Avoid damaging effect on existing network by actions of unfit Distributor

The process will involve the following steps:

A) Initial assessment and rating of Potential Distributors.

B) Potential Distributor screening & selection process.

A) INITIAL ASSESSMENT & RATING:

Initial assessment will be done using following tools:

1) Distributor Profiling Tool (Annexure-I) – In-depth insights into his business covering areas like Financial Strength,
Experience, Infrastructure, Technology, Future/ Succession Planning etc. The recordings are quantitative in nature which
would help in making judgement about the Distributor.

Distributor
Profiling Tool
2) Distributor Rating tool - Based on the data captured using the profiling tool, the potential Distributor shall be rated.
The initial assessment shall be based on following criteria

Rating Example:
 
Weightage Rating  
Particulars

1. Experience: Experience in doing Trade Business 10% 2  

2. Loyalty Score –Exhibits loyalty to source of supply 10% 2  
3. Financial Stability – Usage and availability of funds 15% 3  
4. Volume & Market share 15% 5  
Distributor Rating
5. Infra & Facilities Service centers and ware houses 10% 2   Tool
6. Sales to SME 10% 5  
7. Sales to Sub Dealers 5% 4  
8. Strength of Support Staff – Sales and support staff availability 5% 3  
9. Lineage & Risk Ability – Presence of active next generation involvement 5% 2  
10. Credit Cycle – Average outstanding periods 10% 1  
11. Technology adaptation & Quality systems 5% 2  
     
New Distributor
Rating Form

TOTAL AVG WEIGHTED SCORE 2.87

[(10x2)+(10x2)+(15x3)+(15x5)+(10x2)+(10x5)+(5x4)+(5x3)+(5x2)+(10x1)+(5x2)]/100=2.87

CANDIDATE IS NOT QUALIFIED FOR INTERVIEW DUE TO SCORE < 3

B) Distributor Screening Process:

The potential Distributor Ranking would provide areas of strengths and weaknesses. Further, it would provide the areas
of opportunity, which can be strengthened with support from JSW.
The Shortlisted candidate shall be interviewed by Team consisting of RSM/RM, Audit/Finance, Cross Product
Head, Marketing/Pricing

{ Interview Evaluation Form attached }

Interview
Evaluation Form

C) Giving LOI to Selected Distributor or Regret Letter to disqualified ones

LOI & Regret

Letter format
Timeline for New Distributor Selection
PARTICULARS DAYS

Prospecting 0

Initial Assessment & Rating 7

Screening/ Interview 5

Finalisation & LOI 3

Agreement , SD & Cheques 3

Code Creation & Business 3

TOTAL DAYS 21
Roles & Responsibilities of the Distributors
Roles & Responsibilities:
Adherence to Agreed Takeoff
• Monthly Lifting as per MOU terms
• Timely Orders
NCO Liquidation
• Capability building for onward selling of NCO
• 10%-20% of Primary Sales as NCO
NCO Sales
Monitor
Territorial Jurisdiction
Investments
• Capital Investments
• Maintain Stock
• Providing Credit to end customer
• Manpower
• Sales Promotion
To Participate & support JSW CSR activities.

Participating in promotion and investment in selling New Products/ offerings of JSW through the channel.

Adherence to JSW Distributor Policies & Policy for Securitization

• Shoppe Agreement
• Securitizing requirements – Blank Cheques, Signature authorization & Bank verification. Roles and
Responsibilities
• Above documents to he held by a central Team consisting of Sales Accounts, Pricing & Legal.
Obligation of JSW towards Distributors
Obligation of JSW towards Distributors
1) General Obligations
 Material to be delivered on Pre-paid basis at the monthly notified prices against payment in advance/ Channel Finance/ LC/
BG or any other terms at the option of JSW.
 JSW will provide policies and guidelines to help Distributor do effective transactions.

 JSW will project the Distributor as their authorized sales partner in market.

 Assist Distributors to develop customers and provide sales support when required.

 Give Distributors correct and transparent inputs to enable them take measured business decisions.

 Ensure orders placed with lead time is serviced within Week 1 to Week 3 of the month.

 Timely refilling of stock to avoid Distributors lose any opportunity to sell.

 JSW will provide online platform for SME Sales (under development with Isales)

 Will provide training to Distributors for NCO selection to enable them complete NCO obligations

 JSW will timely solve quality problems if any arising from our material.

 Will ensure that policies and processes are made so that Distributors remain interested doing business with JSW.

 Timely account reconciliation to avoid any blockage of funds necessary to do purchases

2) Explicit knowledge acquisition – Distributor Training & support:
2) Regular visits of JSW's staff to the distributors' units and vice versa for the purpose of knowledge-sharing activities:

a) Commercial & Technical field assistance will be provided for potential key accounts of Distributors.

b) JSW will also help Distributor hire right Sales persons by leveraging on the recruiting strength of JSW company’s HR.
c) JSW will impart product training to Distributor field sales people including Plant visits.
d) Special training in the field of Finance, Leadership skills and General Management shall be arranged by JSW on annual basis.
e) JSW will also support Distributors and his end customer’s product knowledge by supplementing updated product literatures.

3) MOU Incentives
:
MOU incentive will be paid on actual quantity lifted subject to successful completion of yearly committed quantity but limited to
120% of their original/enhanced committed quantity for each individual main product, irrespective of total commitment.

MOU incentives will be driven by the MOU guidelines signed by the customer.
Monitoring Distributor Performance
  
2) MOU Incentives:

Monitoring Operational Performance of Distributor:

A. Sales Target Compliance: (Weightage: 40%)

Compliance to Sales Target Score

Average of Score to be given by ASM every Monthly
>=100% 5
& quarterly
>=90%-<100% 4
>=80%-<90% 3
>=70%-<80% 2
<70% 1

B. Market Understanding: (Weightage: 15%)

Level Score
Understand the dynamics of market, demand and supply and gauge future effects
and adapts to take opportunities and shares the same with JSW 5 Average of Score to be given by ASM, RSM & RM on
Understands competition offerings & opportunities for future, has update on half yearly basis.
various segments and shares the same with JSW 4
Interacts with customer on regular basis on their Plans and is able to provide
feedback on growth of customer industry to JSW 3
Has Plan of regular customer, understand product and service requirement 2
Limited understanding of market and various segments, No proper customer wise
Plans 1
C. Distributor Hygiene: (Weightage: 20%)

Indicative Level Score

Excellent 5 Will be carried out on Half yearly basis by respective
Good 4 regional AE or by external agencies.
Average 3
Poor 2
On following parameters like, Quality of service center, Safety and Health of Laborers, Technology
Adaptation, etc. The feedback will be carried out

D. Service Capability: (Weightage: 25%)

Level Score Average of Score to be given by ASM, RSM & RM on

Servicing of Special Projects/New SKUs 5 yearly basis.
Visible Movement towards increasing SKUs 3
Visible Movement towards Improvement of service 2
Poor Quality of Service 1
BUSINESS PERFORMANCE MEASUREMENT
1) Profitability
2) Market-share
3) Market Receivables
4) Inventory Management
5) Customer Base/ Segment improvement
The Distributor shall be required to submit a monthly report on the performance to the concerned Branch as per the format given
below to derive Market Share, Receivables & Inventory: -

Sales Market
Stock at O/s
the month
end Monthly Report Format
For the month
S.No. Mfgr Category month Cumulative end (Will be carried out by ASM/KAM on monthly basis)
1    HR        
2    HR CTL        
3            
Level % Increase Score
Substantial Increase in SME/OEM customers in a growing
segment which would have significant immediate impact >25% 5
on Distributors volume stability in longer term
Customer Base/Segment Improvement Visible increase in SME/OEM customers which would
(Will be carried out by ASM/KAM on half yearly basis) have sufficient impact on Distributors’ business stability >15% 4
over period of time.
Visible Movement and efforts made towards increasing
>10% 3
SME/OEM customers. Marginal impact in current term.
No effort by Distributor towards SME/OEM Businesses <10% 1
NCO Liquidation & Pricing
Classification of NCO

Based on Functionality to Distributor & End

Customer

Std NCO <2 mm Std NCO ≥2 mm Non Std NCO Defective NCO

Aging of material is generally not a criteria considered by Distributors while selecting NCO
Price Impact of NCO Sales to different Segments

CR  
Particulars Rs/mt
Odd Thk Impact 300
Odd Width Impact (7-15mm) 400
Inventory Cost 100
Total 800 RETAIL  
Particulars Rs/mt
Odd Size/segment Impact 1000
Inventory Cost (30 days Avg) 500
Credit Cost Addln over Prime -15 days) 250
P&T  
Margin 500
Particulars Rs/mt
Total 2250
Odd Thk Impact 1250
Inventory Cost 100
Total 1350
 STABLE
Factors Affecting NCO Pricing MARKET
CONDITIONS

INCREASING
Inventory holding Discounts over
Credit Period MARKET
period Prime Retail Price
CONDITIONS

NCO is sold mostly to

unorganized sector like
Is higher as compared to low end Pipes, agricultural
Prime and even higher for
parts and for other lower
Non Standard NCO and applications.
Defective NCO.
These end customers buy
material on credit period.
Non Std and Defective
NCOs cannot be sold at DOWNWARD
Prime Prices in market.
Therefore Distributors offer
MARKET
CONDITIONS
discount to sell this stock.
The following three Market conditions should be taken into consideration while arriving at NCO prices

 1) Stable Market Scenario

The Markets in this scenario are defined by stable prices.

  Avg Inventory Holding Credit Period
Std Disc Distributors *Total Discount
Monetary Monetary offer in Mkt. (Rounded) (Rs/MT)
Classification NCO Days Days
Impact (Rs/MT) Impact (Rs/MT)
Std NCO <2 mm 7 92 7 92 0 0
Std NCO >2 mm 15 197 15 197 0 300
Non Std NCO 15 197 30 395 500 500-1000
Defective NCO 15 197 30 395 1000 1000-1250

2) Northward Price Direction

The Distributor is able to liquidate the NCO stock much earlier (Low inventory & credit offered). Price increase would cover the
additional discounts given on Non Std and Defective stock.
  Avg Inventory Holding Credit Period
Std Disc Distributors *Total Discount
Monetary Monetary offer in Mkt. (Rounded) (Rs/MT)
Classification NCO Days Days
Impact (Rs/MT) Impact (Rs/MT)
Std NCO <2 mm 7 92 7 92 0 0
Std NCO >2 mm 7 92 7 92 0 0
Non Std NCO 15 197 30 395 300 300-500
Defective NCO 15 197 30 395 500 750-1000
 

3) Southward Price Direction

 
The distributor is forced to offer higher credit period in addition to slower NCO sales/additional inventory holding. Discount has
to cover the price corrections in order to enable NCO sales in this scenario.

  Avg Inventory Holding Credit Period

*Total NCO
Std Disc Avg Price
Monetary Monetary Discount
Distributors Reduction (Rounded)
Classification NCO Days Impact Days Impact offer in Mkt. Impact**
(Rs/MT) (Rs/MT) (Rs/MT)

Std NCO <2 mm 7 92 10 132 0 250 300-500

Std NCO >2 mm 15 197 15 197 0 500 750-1000
Non Std NCO 20 263 30 395 500 500 1000-1500
Defective NCO 25 329 30 395 1000 500 1500-2000
**Based on expected Price correction of Rs.1000 pmt next month

* Higher Range for >90 days stock

Above NCO Discounts will be calculated on the latest Steelmint (DSR) HRC prices
MSME Order Servicing
 DISTRIBUTOR BUSINESS ANALYSIS:

 The average volume serviced by Distributor is ranging from 11 MT to 32 MT per customer.

 This would also include multiple SKUs
 Also 60 -70 % End customers need credit which are offered between 30 – 45 days by the Distributor.

Total Customers served by Avg Sale/Customer (MT per Sales Value per customer (Rs
Region Distributor Volume (MT per annum) Distributor (Nos) annum) lacs per annum)

SME/End SME/End SME/End

Dealers/ Customer Dealers/ Customer Dealers/ Customer
    JSW others Traders Retail Traders Retail Traders Retail
  Name MT MT Nos Nos MT MT Rs. Lacs Rs.Lacs
SOUTH Bangalore Steel Distributor 27500 0 30 40 458 344 222 170
SOUTH Steel House 18000 0 10 50 360 288 180 140
SOUTH International Trading Corp-Chennai 41000 19000 25 50 500 950 250 470
SOUTH Rajam Steel Traders-Chennai 17500 1500 25 75 265 165 130 82
WEST Abhay Ispat 42000 120000 50 225 2106 252 842 101
WEST Mittal Agency 18000 15000 0 250 0 132 0 53
NORTH S.K. Aggarwal : Faridabad 40000 71132 34 382 1705 136 737 59
NORTH S.K. Aggarwal : Ghaziabad 20000 39842 16 49 2562 387 1131 171
NORTH Metal Trading Co. / Ajay Metalloys 115000 2000 12 30 1800 1010 720 34

DISTRIBUTOR IS PREDOMINANTLY SERVING MSME SEGMENTS

 Smaller Volumes

Credit Facility

Customised Sizes & Packet

weights

Smaller Truck Loads

Common Buying Characteristics of Mixed Sizes & Grades in

MSMEs Delivery

JIT Delivery

Unloading Limitations

Special Packaging/ Testing

Prefers Strong Relationship

with supply sources
 Value Maximization for JSW SOB Maximization method
in SME for JSW in SME

Is Serviceable standalone
or by clubbing with other
MOQ
orders. Has strategic
importance

SME Can be addressed by JSW Using Distributor Services

Customer CREDIT –Ex Channel finance, as Finance Provider &/ or
Requirement against security Service Provider

Can be done In house/

SERVICING
JSW SC/ Engaging job
REQUIREMENTS
worker
 Financer Model :Consignee Based Delivery by Distributor from Plant/Yard

Net
Less
Price Delivered
Finance Less
Negotiated Price (Coil/
Cost of Margin
with SME CTL/ Slits
Distributor
etc)

Total Service Provider Model

Material will be taken by Distributor to his Service center and will be supplied Post servicing operations like CTL,
Blanking etc., including delivery, inventory & credit requirements of SME.

Less Less
Price Less Local Net Del
Finance Operations Less
negotiated Freight to Price (Coil)
Cost of Cost to Margin
with SME SME JSW
Distributor Distributor

Total Service Cost to Distributor

 Total Service Cost – HR/ HRPO

  TATA Distributor AMNS Distributor PROPOSED

  CTL SLIT CTS CTL SLIT CTS CTL SLIT CTS
Processing Cost                  
Processing & Strapping 750 750 1500 500 750 1500 500 750 1250
Yield Loss 300 450 700 250 450 700 200 200 350
Total Processing Cost 1050 1200 2200 750 1200 2200 750 1100 2200
Finance Cost                  
Inventory Cost (Days)
378 378 378 378 378 378 340 340 340
30
Cost of Credit (Days)
378 378 378 378 378 378 358 358 358
30
Total Finance Cost 756 756 756 756 756 756 756 756 756
Establishment Cost                  
Establishment Cost 350 350 350 250 250 250 250 250 250
Margin                  
Margin** 500 500 500 500 500 500 200 200 200

Total Cost to Distributor 2656 2806 3806 2256 2706 3706 1956 2356 3406

• Price considered Rs.39000 +18%GST: Rs 46020 pmt

• Cost of Inventory & Credit is calculated at 9% pa interest cost
• Packaging cost will be Rs.700 pmt for metal pellet & Rs.200 pmt for normal strapping with wooden logs
• Freight Cost not considered
Exclusive Distributorship

NEED FOR EXCLUSIVE DISTRIBUTOR:

Exclusive distributors are required due to following reasons:

1) To have control over retail pricing
2) To have trust worthy channel for servicing SME/OEM segments through Isales portal.
3) Volume predictability and better supply chain controls
4) End customer visibility and predictability.
5) To keep High potential dealers interested and invested with JSW
6) To have better brand visibility.
REQUIREMENTS FROM EXCLUSIVE DISTRIBUTOR:

The desirous existing Distributors will apply for selection as ‘Exclusive Distributors’ to the Branch. The application
from the Distributor shall be processes based on following criteria:
1) Distributor Rating has to be ≥ 3.50
2) Distributor volume should be more than 25% of average buying volume of the location.
3) Sales Staff should be min 1 person per 500 MT
4) Should have covered shed with 12K-18K sqft with open area for movement of vehicles, guard room, parking
5) Shed should have concrete flooring and crane of sufficient capacity to handle full coil weight.
6) Shed colour and space for Explore studio should be as per JSW Explore guidelines.
7) Title of land should be clear.
8) Will provide full transparency and access to books and service centers.
9) An undertaking that they shall be the exclusive Distributors of JSW materials for a period of 3 years.
10) An undertaking that they are willing to follow JSW Branding guidelines of Exclusive Distributorship.
BENEFITS FOR EXCLUSIVE DISTRIBUTORS:

1. JSW will ensure that Exclusive Distributor gets pricing is in line with largest competitor of the Region.
2. Preference will be given to Exclusive Distributor when allocating SME/OEM customers leads obtained by JSW. Leads
generated by JSW in-house sales Team and through various platforms like Call centers, Trade meet, Exhibitions, Media
advertisements etc., will be turned over to appropriate Exclusive Distributors on priority basis.
3. Preference will be given to Exclusive distributor for other JSW Product and other distributorship of state and territories.
4. Yard charges waiver and FOR delivery from nearest Yard for upto 30% prorate monthly MOU quantity – Keeping all other
conditions unchanged.
5. These Distributors will enjoy priority in getting JSW’s plant-rolled materials including special sizes (Thinner gauge) and
grades. Min. 20% of their total quarterly volume.
6. Quarterly meeting by JSW Team including AE Team and Senior marketing will be done with such distributors to improve
operational and business efficiency of Distributor.
7. Isales Platform will be provided without any cost to Distributor which can be used to enable SME sales and order monitoring.
8. JSW will give 7 days training to their sales staff.
9. Family visit of Exclusive Distributor to Plant to have sense of pride from association with JSW.
10. Distributor shall be provided with separate space to put banners/ media during Customer meets of JSW.
Category Of Distributors & Benefits

Platinum – Distributors in this category will be having following attributes:

Min MOU of 84,000 MTPA

OR

Exclusivity with JSW

Gold - Distributors in this category will be having following attributes:

Min MOU of 60,000 MTPA

OR

24000 MTPA SME/OEM Business with JSW reflected through Isales SME Module

OR

18000 MTPA NCO Sales

 Silver - Distributors in this category will be having following attributes:

Min MOU of 36,000 MTPA

OR

12000 MTPA SME/OEM Business with JSW reflected through Isales SME Module

OR

12000 MTPA NCO Sales

Category Reward scheme

Category Benefits other than MOU (Rs/MT)

Platinum  150
Gold  125

Silver  100

Incentives will be paid annually on completion of respective criterion and will be over and above MOU
Replacement of Distributor
Repeated failures (more than four out of six consequent quarters) in lifting the agreed quantity by the JSW Distributor, for reasons not
attributable to JSW, shall render him liable for termination of his Distributorship.

JSW can also terminate the arrangement at any time, by serving written/show-cause notice in line with the Shoppe Agreement on the
JSW Distributor after taking into account the following:

S.No. Criteria for Termination Reasons

1 Evaluated performance No Growth Repeated failures (more than four out of
six consecutive quarters)
2 Non-compliance of common Pricing Underselling with respect to Market Prices
3 Lack of sufficient Finances to run business Based on operational rating
4 Multi supplier Highly Opportunistic buying behavior
5 Adverse SME/End customer feedbacks 4 negative remarks per year from same customer or 6
negative remarks from different set of customers
6 No Retail/ SME base High dependent on sub Dealers
7 No Lineage Reduced Business Interest (tapering down business)
Malpractices/ Unsatisfactory performance in any
8 other respect Detrimental to the interest of JSW
[TENURE, TERMINATION CLAUSE & LEGAL DISPUTES will be proceeded per the Distributor Agreement
Clauses]
Timeline for Replacement/Termination
DAY
• ACTIVITIES
START

• Assessment of performance and internal approval

0
• Account reconciliation - security document validity verification
15
• Getting account balance confirmation
30
• Supply trimming / informal meeting on performance - RM/
RSM/ASM
45
• Legal audit scrutiny (confidential)
60
• Formal meeting on performance – Finance, Pricing and PH
75
• Winding up Business
90
• Issuance of termination notice and notice period
90
• Formal intimation to Distributor i.e. Termination Letter
X
 Recommended Launch Time

DAY START • Formal Launch of Manual

• Sensitizing & Training sales team

1 Mth
st

• Base data collection

2 Mth
nd

• Formal launch to entire distributor and collection of Potential Distributor

6th Mth
data

• Completion Feb’21 for existing dealership and new distributor mapping

8th Mth-
Feb’21
**************END OF THE DOCUMENT***************