himalaya sip report

Study of Distribution Model

EXECUTIVE SUMMARY

Company transfers their goods to distributors who further transfer it to the retailers. In Short, distributors are link between company and retailers. They are responsible for making Goods available at the retail outlet. This complete channel is known as distribution channel.

The number of distributors of a company depends on company's product and their coverage. Distributors are given a particular area by the company compan y where they do their business. Certain big companies have few distributors who handle big areas. They are known as large/super distributors.

Large/super distributor do their business in the same manner like normal distributor but what sets them apart is that they cover larger area and hence have greater investments, margins, number of salesmen, support staff etc.

Himalaya Drugs Distribution Company don’t follow the large/super distributor model. They have 16 distributors who handle the Gwalior division. Some of the distributors are mega in size whereas others are small in size.

Indira Global Business School

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The project aims to understand the feasibility of applying such a model for Himalaya drug distribution companies. With increasing popularity of large/super distributor model, a study is conducted to understand and analyze the different aspect of large/super la rge/super distributor and also benchmark the Himalaya drug distribution company's performance. The different aspect include

An alternative model has been prepared where a thorough comparison between old model and new model has been undertaken to understand which one is more appropriate. The process of reducing the distributors from 16 to 6 is shown step by step. Also cost benefit analysis of new model is done to better understand the advantages and disadvantages of adopting large/super distribution model.


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THE PROJECT OBJECTIVE

The project was essentially centered on understanding the feasibility of large/ super Distributor model for Himalaya Drug Distribution Company. The prime objective of the project can be summarized as follows:

Study the large/ super distributor model

Business structures of distributors •

Business

•

Structure

•

Processes

•

Information

•

Customer satisfaction

•

Benchmarking

and recommend a model •

Comparison of models

•

Cost benefit analysis


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Introduction to Project

1.1 Industry Overview

Fast Moving Consumer Goods (FMCG) goods are popularly named as consumer packaged goods. Items in this category include all consumables (other than groceries/pulses) people buy at regular intervals. The most common in the list are toilet soaps, detergents, shampoos, toothpaste, shaving products, shoe polish, packaged foodstuff, and household accessories and extends to certain electronic goods. These items are meant for daily of frequent consumption and have a high return. A major portion of the monthly budget of each household is reserved for FMCG products. The volume of money circulated in the economy against FMCG products is very high, as the number of products the consumer use is very high. Competition in the FMCG sector is very high resulting in high pressure on margins. FMCG companies maintain intense distribution network. Companies spend a large portion of their budget on maintaining distribution networks. New entrants who wish to bring their products in the national level need to invest huge sums of money on promoting brands. Manufacturing can be outsourced. A recent phenomenon in the sector was entry of multinationals and cheaper imports. Also the market is more pressurized with presence of local players in rural areas and state brands.

1.1.2 Scope of the Sector

The Indian FMCG sector with a market size of US$13.1 billion is the fourth largest sector in the economy. A well-established distribution network, intense competition between the organized and unorganized segments characterizes the sector. FMCG Sector is expected to grow by over 60% by 2010. That will translate into an annual growth of 10% over a 5-year period. It has been estimated that FMCG sector will rise from around Rs 56,500 5 6,500 crores in 2005 to Rs 92,100 crores in 2010. Hair care, household care, male grooming, female hygiene, and the chocolates and confectionery categories are estimated to be the fastest growing segments, Indira Global Business School

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says an HSBC report. Though the sector witnessed a slower growth in 2002-2004, it has been able to make a fine recovery since then.

1.1.3 Growth Prospects

With the presence of 12.2% of the world population in the villages of India, the Indian rural FMCG market is something no one can overlook. Increased focus on farm sector will boost rural incomes, hence providing better growth prospects to the FMCG companies. Better infrastructure facilities will improve their supply chain. FMCG sector is also likely to benefit from growing demand in the market. Because of the low per capita consumption for almost all the products in the country, FMCG companies have immense possibilities for growth. And if the companies are able to change the mindset of the consumers, i.e. if they are able to take the consumers to branded products and offer new generation products, they would be able to generate higher growth in the near future. It is expected that the rural income will rise in 2007, boosting purchasing power p ower in the countryside. However, the demand in urban areas would be the key growth driver over the long term. Also, increase in the urban population, along with increase in income levels and the availability of new categories, would help the urban areas maintain their position in terms of consumption. At present, urban India accounts for 66% of total FMCG consumption, with rural India accounting for the remaining 34%. However, Ho wever, rural India accounts for more than 40% consumption in major FMCG categories such as personal care, fabric care, and hot beverages. In urban areas, home and personal care category, including skin care, household care and feminine hygiene, will keep growing at relatively attractive rates. Within the foods segment, it is estimated that processed foods, bakery, and dairy are long-term growth categories in both rural and urban areas.


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1.1.4 Indian Competitiveness and Comparison with the World Markets

The following factors make India a competitive player in FMCG sector:

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Availability of raw materials:

Because of the diverse agro-climatic a gro-climatic conditions in India, there is a large l arge raw material base suitable for food processing industries. India is the largest producer of livestock, milk, sugarcane, coconut, spices and cashew and is the second largest producer of rice, wheat and fruits &vegetables. India also produces caustic soda and soda ash, which are required for the production of soaps and detergents. The availability of these raw materials gives India the location advantage.

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Labor cost comparison:

Low cost labor gives India a competitive advantage. India's labor cost is amongst the lowest in the world, after China & Indonesia. Low labor costs give the advantage of low cost of production. Many MNC's have established their plants in India to outsource for domestic and export markets.

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Resence across value chain:

Indian companies have their presence across the value chain of FMCG sector, right from the supply of raw materials to packaged goods in the food-processing sector. This brings India a more cost competitive advantage. For example, Amul supplies milk as well as dairy products like cheese, butter, etc.


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2 .INTRODUCTIONS TO ORGANISATION 2.1.1 COMPANY PROFILE

The Himalaya Drug Company was founded in 1930 by Mr. M. Manal with a clear vision to bring Ayurveda to society in a contemporary form and to unravel the mystery behind the 5,000 year old system of medicine. medicine. This included referring referring to ancient ayurvedic texts, selecting indigenous herbs and subjecting the formulations to modern pharmacological, toxicological and safety tests to create new drugs and therapies. Eighty one years ago, on a visit to Burma, Mr. Manal saw restless elephants being fed with a root to pacify them. The plant from which this was taken is Rauwolfia serpentina. Fascinated by the plant’s effect on elephants, he had it scientifically evaluated. After extensive research, Serpinaâ, the world’s first anti -hypertensive drug, was launched in 1934. The legacy of researching nature forms the foundation of Himalaya’s operations. Himalaya has pioneered the use of modern science to rediscover and validate ayurveda’s secrets. Cutting

edge technology is employed to create pharmaceutical-grade ayurvedic products. As a confirmation that Himalaya is dedicated to providing the highest quality and consistency in herbal care, the Company was awarded an ISO 9001:2000 certification in 2003. Since its inception, the company has focused on developing safe, natural and innovative remedies that will help people lead richer, healthier lives. Today, Himalaya products have been endorsed by 300,000 doctors around the globe and consumers in 71 countries rely on Himalaya for their health and personal care needs.


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2.1.2 History

Eighty one years ago, on a visit to Burma, Himalaya’s founder, Mr. M. Manal, saw restless

elephants being fed with a root to pacify them. The plant from which this was taken is Rauwolfia serpentina. Fascinated by the plant’s effect on elephants, he had it scientifically scientifically evaluated. After extensive research, Serpina®, the world’s first anti -hypertensive drug, was

launched in 1934. This legacy of researching nature forms the foundation of Himalaya’s operations. Himalaya

uses the tools of modern science to create pharmaceutical-grade ayurvedic products. We have pioneered research that has converted Ayurveda’s herbal tradition into a complete range of

proprietary formulations dedicated to healthy living and longevity. Today, these products have found acceptance with medical fraternities and serve the health and personal care needs of consumers in 71 countries. Mr. M. Manal forms The Himalaya Drug Company. His vision: Put ayurveda on par with modern medicine. His elder brother, Mr. M. Misal, joined him a few years later and they set about building the company together. Launch of Serpina, the world’s first anti - hypertensive

drug, derived from Rauwolfia serpentina. Dr. Roshan M. Captain, Ph.D., joins the company and spearheads research and development. Liv.52, a hepatoprotective, is launched and goes on to become one of the world’s top-selling drugs. Mr. Meraj Manal, Manal, the founder’s son, joins the company. Mr. Karstein, Karstein, a German

pharmaceutical consultant, directs the company’s focus towards allopathic medical practitioners. An advanced manufacturing facility is set up in Bangalore. Bangalore. The facility grows grows to become the corporate headquarters.

The company’s R&D center moves to Bangalore. Research and development becomes a very important aspect of the company’s focus. The company opens its US office at Houston, Texas.

The Animal Health Product range for commercial livestock is launched. Himalaya Herbals launches its personal healthcare products in India Indira Global Business School

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The company launches a special range for pets called the Companion Care range. The company adopts a new unified brand identity Well-being Division formed. SO 9001: 2000 certification awarded for design, manufacture and marketing of herbal health care products. .Himalaya celebrates seventy-five years. 2.1.3 Purpose & principles: Establish Himalaya as a science-based, problem-solving, head-to-heel brand, harnessed from nature’s wealth and characterized by trust and healthy lives.

Develop markets worldwide with an in-depth and long-term approach, maintaining at each step the highest ethical standards. Respect, collaborate with and utilize the talents of each member of the Himalaya family and the local communities where Himalaya products are developed and/or consumed, to drive our seed-to-shelf policy and to rigorously adopt eco-friendly practices to support the environment we inhabit. Ensure that each Himalaya employee strongly backs the Himalaya promise to exceed the expectations of the consumer, each time and every time. Nothing less is acceptable.

Brand Identity . . . the promise of health, well-being and a prescription for good living The

Himalaya brand has much in common with the mountain range from which it draws its name. For centuries, the Himalayas have been an icon of aspiration, of man’s quest to unlock

epresent purity and lofty ideals. The fact that the Himalayas are the Nature’s secrets. They r epresent source of many of the herbs that are used in our products, makes our brand name all the more appropriate. The Himalaya logo is a visual definition of its brand identity. The leaf that forms the crossbar of the letter H evokes the company’s focus on herbal healthcare. The teal green represents

proximity to nature, while the orange is evocative of warmth, vibrancy and commitment to caring. The Himalaya brand carries with it the promise of good health and well-being.


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Location . . .

Starting off operations in Dehradun way back in the 1930s, the company later spread its wings to Gwalior and across the country. In 1975, the company set up an advanced manufacturing facility in Makali, Bangalore, India, which today houses the Corporate headquarters. In 1991, the company relocated its R&D facility to Bangalore. B angalore. 2.1.5 HIMALAYA Product Range and Brands:

Himalaya’s products can broadly be categorized into three main ranges, viz:

Pharmaceutical Personal Care Animal Health Pharmaceutical Range . . . health maintenance, eye, cardiac and skin care, immune booster

and cough control The medicinal range of products carry the Himalayan hallmark of researching ayurveda and capturing its benefits in formulations. formulations.

Using modern research

methodology and manufacturing practice, Himalaya has made available to people all over the world, an alternate alternate method of treatment, which has no known side effects. effects. The medicinal range comprises over 35 products and is broadly classified into four categories viz: Children’s Health Men’s Health Women’s Health

General Health Liv.52, Bonnisan, Himplasia, Menosan, Reosto, Tentex Royal Prominent among Himalaya brands is Liv.52, a liver formulation, which is also the flagship brand of the company. Every one-third of a second, one unit of Liv.52 is bought somewhere in the world. It is ranked number one in the hepatoprotective - lipotropic segment and number four among all pharmaceutical products in India. (ORG Marg, July 2003). Liv.52 celebrates fifty years in 2005. In 1972, continuing its tradition of introducing safe and natural remedies, Himalaya launched Bonnisan, a natural pediatric digestive tonic. A formulation based on years of


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research and clinical testing, the product found wide acceptance among doctors and mothers alike. The sweet tasting tonic became a trusted part of a baby’s growing up.

After extensive work on the formulations and related clinical research, Himalaya introduced Menosan, a herbal non-hormonal product for menopausal women, Reosto, a comprehensive therapy for osteoporosis and Himplasia, a unique product for benign prostatic hyperplasia, a new dimension in in BPH management. management. Some of the other well known products are Abana, Cystone, Gasex, Geriforte, Rumalaya, Diabecon, Mentat, Koflet, Himcolin, Septilin, Pilex, PureHands, etc.

Bab y Care. Personal Care Products . . . Health Care, Oral Care, Hair Care, Skin Care and Baby Himalaya has used its wealth of knowledge and research, in natural herbal remedies, to formulate a range of personal care products that cater to daily health needs. This range offers the goodness of natural solutions for daily use by the complete complete family. The use of natural ingredients in personal care products has been practiced since time immemorial, leading to increased use of herbs with a curative value. Modern research proves that herbs while being effective are also mild and soothing. Launched in 1999, Himalaya Herbals is a range of natural herbal personal care products spanning Health Care, Oral Care, Hair Care, Skin Care and Baby Care. The range comprises of fairness cream, soap-free face washes, facial cleansers, face toners, moisturizers, soap-free shampoos, conditioners, hair-loss control, weight control, pimple control, foot care, multi-purpose creams, skin nutrients, dandruff control, anti-stress, digestive health, pain relievers, cough & cold relievers, oral care and baby care products.


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Pure Herbs, Chyavanaprasha and Forest Honey

Pure Herbs, the pure and concentrated strength of a single herb in the right measure, stimulate & improve body functions. Himalaya Pure Herbs is a range of individual herb extracts. Each Pure Herb is the result of strict monitoring from the farm to the lab. At the lab, Himalaya’s proprietary techniques are used to extract the optimum value of each herb. This is followed by rigorous tests by R&D team for potency and consistency. The actions of these extracts benefit the body, irrespective of the individual’s body

constitution, state of health and metabolic functions. Everyone can benefit from the goodness of these herbs, irrespective of age, sex, body type or other health related factors. The Pure Herbs range comprises co mprises of the following: Amalaki: Useful in treating cough, cold, sore throat and respiratory tract infections. It protects cells from free radical damage and is an excellent anti oxidant. Arjuna: This herb improves blood circulation and is used as a tonic for the heart. Ashvagandha: Commonly known as Winter Cherry, this herb acts as an ant-stress agent that imparts a sense of well- being being and helps in coping with life’s daily stresses. Brahmi: A well-known herb that helps in improving general alertness. Karela: Commonly known as Bitter Gourd, it is known to aid in the metabolism of carbohydrates. Lasuna: Commonly referred to as Garlic, Lasuna helps in controlling the excess conversion of lipids and cholesterol. Neem: A popular herb, Neem has anti-bacterial, anti-fungal and blood purifying properties. It is very useful in skin disorders and helps maintain a healthy, beautiful and glowing skin. Shuddha Guggulu: It regulates regulates fat metabolism metabolism and helps remove excess cholesterol from the body. Shallaki: This herb treats joint problems. Tagara: It has mild sedative properties, which are useful for insomnia and sleep disorders.


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Animal Care Range Prominent products

LivestockAppetonic Vet, Appetonic forte Vet, Diarex Vet, Galactin Vet, Himfertin Vet, Himpyrin Vet, HimROP Vet, Inflamin Vet, Liv.52 Vet, Liv.52 Protec, Rumalaya Vet, Scavon Vet, Speman Vet, Styplon Vet, Tentex forte Vet. PoultryDiarex PFS, Geriforte Vet, Liv.52 Protec, Nefrotec Vet, Speman Vet, Speman forte Vet, Tentex forte Vet.AquacultureGerifort Aqua, Liv.52 Protect. CompanionAnxocare, Canisep, Digyton, Erina, Erina EP, Erina Plus, Himpyrin, Immunol, Liv.52 Vet, Nefrotec, Regurin, Scavon. Research and Development:

Quality Assurance Quality covers two areas - Quality Assurance and Quality Control.Pharmaceutical products are designed and developed with the following requirements - GMP (Good Manufacturing Practices) GLP (Good Laboratory Practice)GCP (Good Clinical Practice) GMP (Good Manufacturing Practices) for pharmaceuticals include assessmen t of quality, safety & efficacy: Crude plant material - pharmacognosy Plant preparation - analytical Finished product - formulation and development Stability - stability studies are conducted on all our products as per ICH (International Conference for Harmonization) guidelines to ensure quality of the product throughout its shelf-life s helf-life


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Good Laboratory Practices (GLP)

Organizational process; includes the conditions under which laboratory studies are planned, performed, monitored, recorded and reported Purpose 

to promote development of quality test data

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comparable for mutual acceptance in different countries co untries

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to avoid technical barriers to trade

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to develop standards for herbal formulations

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to protect human health and environment GLP principles - Standard Operating Procedures, test facilities, personnel and test systems

Good Clinical Practices (GCP)

An international ethical and scientific quality standard for designing, conducting, recording and reporting trials that involve human subjects Compliance with this standard provides public assurance that the rights, safety and well-being of trial subjects are protected, consistent with principles in the declaration of Helsinki, and that the clinical trial data are credible Objective to provide a unified standard


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Research Activities:

Pharmacognosy Pharmacognosy

Establish bona fides of herbal materials through morphological and microscopic studies Maintain herbarium of phyto-medical materials. Formulation Formulation and Developmen Developmentt

Pre-formulation studies to check the biochemical action of ingredients.Trials to assess safety and efficacy efficacy of formulations.

Accelerated stability trials to check physical, chemical, chemical,

microbiological and biological aspects of formulations. formulations. Standardize processes for uniform quality.Transfer of technology to the production department. d epartment. Immuno-pharmaco Immuno-pharmacology logy

Study the mechanism of drug action at a molecular level.

Attempt to understand the

endogenous mediators involved in the activity. Develop immuno-protective agents to counter opportunistic infections in AIDS, carcinogenic malignancy, septic shock, organ organ transplantation and chronic infections. Substitute work with in vitro (in the laboratory) cell line models for in v ivo (in the body) experiments. Veterinary Pharmacology

Study the safety and efficacy efficac y of veterinary formulations in experimental and clinical trials on different animal species. Study the mechanism of action in the formulations.


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Top Ten FMCG Ayurvedic Companies in India COMPETITOR

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DABUR

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ZANDU

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HAMDARD

OTHER PLAYERS IN THE MARKET. 

Aayam - Manufacturer of herbal and Ayurvedic products

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Admark Herbals - Diabetes herbal medicines manufacturer

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Amar Remedies - Ayurvedic tooth paste, nasal drops and balms manufacturer

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Amsar - Herbal concentrates and natural plant products manufacturer

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Ashoka Herbals - Hawaii based distributor of Ayurvedic A yurvedic oils

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Auromere Ayurvedic - Lodi, CA based Ayurvedic products importer

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Ayurvedic Rasayanas - Ayurveda medicines, remedies, herbal food supplement manufacturer

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Bipha Drug Laboratories - Ayurvedic drugs manufacturer

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Cochin Ayurvedic Centre - Ayurvedic medicines store

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Exotic Naturals - Herbal products exporter

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Ganga Pharmacy - Ayurvedic medicines manufacturer

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Herbals Aarogya - Herbal body care and food supplements manufacturer

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Megah Vision Traders - Manufacturer of neem oil & powder

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Neeru Enterprises, Rampur - Mentha oil manufacturer

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Nupal Remedies - Manufacturer of Ayurvedic medicine


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PCD Enterprises - Medicinal herbs exporter

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Pentavox - Manufacturer of Ayurvedic medicinal products & herbal h erbal cosmetics

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Pharm Products - Herbal medicine supplements manufacturer

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Pravek Kalp, Noida - Ayurvedic products supplier

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RN Rajan - Herbal raw materials exporter

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Shelter Pharmacy - Ayurvedic herbal products

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Sunjay Pharma - Medicinal plants and herbal extracts exporter

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Surya Herbal - Ayurvedic medicines manufacturer

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Swaraj India, Barabanki - Herbal oil distillation


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Chapter 2 -RESEARCH METHODOLOGY

To understand the project, primary p rimary research was important to get basic insight into their businesses. The objective of conducting primary research was as follows:

satisfaction policies

PRIMARY RESEARCH

The data for and insights of the distributor were collected through primary research in the form of interviews. The interview brings greater clarity and it helps in understanding not only the competitor's performance but also Himalaya drug distribution company

INTERVIEWS Interviews of different distributors were conducted for and the d ata was properly noted.. Himalaya drug distribution company's distributors as well as competitor distributors were interviewed to better understand the process of benchmarking. Also those distributors were selected who do business for Himalaya drug distribution company as well as its competitors. Interviews of ABI were also conducted to know their understanding of company and work at distributor's level. After the interview data was sorted according to project details and after


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assimilation and benchmarking a procedure to improve the performance of Himalaya was arrived upon. Sample Size:

Respondents were Purchase manager of the concerned institutes/organization. Sample size: 45 (comprising each institute belonging to different institutional channels)


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CHANNEL PARTNERS The channel partners play a major role in ensuring that the product reaches the target customer. The following is an overview of its channel model.

CHANNEL STRUCTURE The products of the company move to the target customer through a pre-defined channel. The following is the structure that is generally followed by an FMCG company. The following is the channel structure followed by them in divisions.

Company

Distributor

Retailer

Consumer


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THE SCOP E OF EVERY CHANNEL PARTNER

DISTRIBUTOR They play a major role in making goods available to all the retailers. The loyalty of the distributor with the company depends not only on the policies of the company but also on business and profits by better performance and help them in achieving the same with the company and is essentially responsible for the growth of the company. Proper margins and support by the company to the distributor makes them work efficiently

The distributors can be encouraged by making them aware of their contribution to company's progress and also making them understand that how they can improve their business and profits by better performance and help them in achieving the same.

RETAILERS Retailers are the link between customer and company. The products of the company are distributed to its customers through the retailers. Generally they sell many company products and thus have very low loyalty to a particular company. Tough competition exists at retail outlet which might lead to compan y losing some of its customer.

To maintain the loyalty of the customer towards company, the company has to continuously make the customer aware about the attributes of the product and remind him about the superiority of the product over the competitors. Thus, window display and advertising plays an important part of visibility. A better company retailer relationship leads to better visibility at the retail outlet. Not just relation but offer provided to retailer for display and keeping stock of company's product helps in retaining the customers.


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CONSUMER They generally consist of the normal people who buy product for daily usage purpose. Most of the products of Himalaya drug Distribution Company are targeted towards adults. Company's biggest strength is the pharmaceutical product however company has products in other category like OTC (Over the counter), wound care etc which also contribute cont ribute to the overall business of the company WHOLESALER There are many consumers who do not use Himalaya drug distribution companyproducts hence the company should focus on creating greater awareness awareness among the consumers about their products and provide best quality product. This will help in building customer loyalty to their brand. In some rural and urban part of the country the wholesaler also come into the channel of distribution. The wholesaler is another member in the channel who helps in making the product available at the retail outlet. Generally in divisions, retailers prefer to buy their stock from distributor but in other small cities and rural areas, a reas, wholesalers do the job of making goods available. They act as intermediaries between the retailers and the distributors


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1. INTRODUCTION TO PROJECT

1.1.1. A DISTRIBUTOR - AN INTRODUCTION A company sells a variety of products to a customer. Many companies sell products to a distributor before they reach the final customer. A distributor is a middleman between the manufacturer and retailer. The job of distributor is to transfer the ownership of goods from company to the retailers. The whole process is known as distribution channel where goods are transferred from one channel member to another. ano ther. Normally in FMCG companies, distribution channel consists of two intermediaries between company and consumer. Company sells the product in large quantities to distributor and then the distributor breaks it into the bulk deliveries to supply the products to the retailers. A distributor takes into consideration the process of selling the company product to retailers. For this process, a distributor needs to hire salesmen. Salesmen visit different retail outlets in the market and take orders of company product. These orders are then delivered by the distributor to the retailer. Distributors are also in charge o f handling visibility in retail outlet. It's done according to company's directions and budget. A distributor does his business in a particular area given by the company. The expansion of area of a distributor occurs if company wish to expand his business.


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1.1.2 CONCEPT OF LARGE/SUPER DISTRIBUTOR D ISTRIBUTOR A Large/ Super distributor works in a similar fashion to a normal distributor; distributor; however, there are some differences which are discussed here. The area is divided among different distributor so that goods are made available to everyone in every area reachable. But in concept of large/super distributor model, Company appoints a single distributor instead of 2-3 distributors d istributors for handling the same area. In short, the companies who have Large/super distributors have limited distributor handling large areas in particular cities. For e.g. in city like Gwalior, approximately 4-5 distributors are working for the company. Company Co mpany operating with lesser number of distributors has some risk. The huge business of company is in the hands of few distributors. Distributor doesn't need to be just competent of handling huge business but also needs to be capable of handling men and investments. Large/super distributors take order of more number of retail outlets. This is the reason that their transaction per day is huge both in quantity and value. From the company's point of view, having the entire area covered by b y one large/super distributor is economical as a s compared to having 2-3 distributors. The goods good s ordered by retailer will be delivered to 2-3 different distributor which will be expensive compared to delivering the goods to one person. This will also reduce the chances of stock out by any 1 distributor. Some other characteristic which differentiate large/super distributor from others are: 

Investment: The investment of large/super distributor is more becaus e of big size of their business.

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Margin: Large/super distributor gets the higher margin of profit compare to other distributors.

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Appointment of Salesmen: The number of salesman appointed by large/super distributor is more as their coverage area is more.

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Appointment of supporting staff: Due to huge number of transactions the support staffs working at large/super distributor is more.


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1.1.3 BENEFIT OF LARGE/SUPER DISTRIBUTOR The relationship between the company and distributor is a symbiotic relationship in which both the company and the distributor get a lot of benefits. The benefits for the company and distributors are discussed as follows: 1.1.4 BENEFIT TO THE COMPANY 

The business is in the hands of few capable distributors

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Better company-distributor relationship

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Better control and supervision of distributor because of less number

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Cost of delivering goods to all the distributor is reduced

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Enhanced communication

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Easy focus on a particular distributor

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More business with few distributors

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Easy tracking of salesmen and merchandisers

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Lesser training cost of salesmen due to fewer distributor locations

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Less chances of delay in delivery

1.1.5 BENEFIT TO THE DISTRIBUTOR 

Expansion of business

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Higher margin

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Higher responsibility

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Greater span of control

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Larger retail outlet coverage

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More focus on expansion

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Reduction in the unavailability of product

Besides, this also leads to benefits to other stakeholders in the business like the retailers. The following are the benefits for the retailers:


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1.1.6BENEFIT TO THE RETAILERS 

Good retailer-distributor relationship

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Quick complain solving

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Less chances of delay in delivery of products


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2. A HAWK-EYE INTO THE BUSINESS OF LARGE DISTRIBUTORS BUSINESS 2.1.1 INVESTMENT

Every business needs an investment for its sustainability. For any distributor, investment is basically consists of the following a. Stock keeping b. Salaries c. Rent d. Infrastructure e. Maintenance f. Electricity and other miscellaneous expenses. As we know a distributor does the business of buying and selling. Thus a large part of his investment goes in buying and keeping the stock. Apart from stock keeping, money is also invested in warehouse/godown. Other than these expenses, Salaries and miscellaneous expenses like electricity etc also contribute to the overall expenditure. Funds need to be raised by them so that they can do these huge dealings. In such cases, FMCG companies can play a supportive role. Some companies help there distributor in meeting their their finance needs. Companies generally have tie ups with commercial banks for providing loan at lower interest rates or for longer period. This not only reduces the burden of finance but also helps distributor maintain their business smoothly.


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BENCHMARKING WITH OTHER COMPANY The investment of the distributor varies depending on the size of his business and distributors of Himalaya drug distribution company are investing enough money into the business to keep it running. Himalaya drug distribution company currently are not providing any help to its distributors in raising funds whereas other companies do provide such support. The company should thus support their distributors in their financing needs and also support in their business decisions to help them grow grow their business which in turn will benefit the company. DISTINGUISHING CHARACTERISTIC A large/super distributor needs to make huge investment in his business. The reason for such big investment is the amount of transaction they do every day. The size of daily order they handle is quite big. For companies like HUL, daily order comes to proximately 10 lakh. Their investment is approximately 1-2 crore depending on their size and area they handle. Due to the large area handling, the number of salesmen and merchandisers hired h ired by large/super distributor is more which adds to their investment. Other things which separate large/super distributors from other distributor are their inventory. Companies Compani es like HUL where there is only 1 day inventory stock keeping doesn't come into consideration, whereas in Himalaya drug distribution company distributor needs to keep stock for approximately 15 days which leads to investment in storage. In places like Gwalior, space is constraint and for large/super distributor with huge quantity of goods to be stored, large amount of investment is required. INSIGHT Huge investment in business doesn't guarantee the huge profits to the distributor. A distributor can make huge investment but his returns might be more or less same. The amount of investment should be backed by returns from the business. Company can supervise that distributors are investing the right amount of money in the business and his earnings are in proportion.


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2.1.2 MARGIN

Margin is the profit percentage earned by a distributor. The profit of the distributor is derived from the buying and selling of the goods. Distributor gets a fixed margin on different categories of products. In this model, percentage of margin is fixed on the basis of the type of product like in OTC product, a distributor will get 10% margin. This 10% on OTC product are according to the pharmaceutical rule. Similarly different products have different margin. Thus a distributor with greater sales will achieve greater profits. Large/super distributors follow the ROI (Return on Investment) model. As per this model, a distributor gets fixed margin on his investment. These margins are fixed and company ensures that a distributor gets that much percentage of margins. ROI gives an assurance to the distributors about their earnings. earnings. If distributor is not getting the specified ROI then company reimburses some of the expenses of the distributor to achieve the ROI targets. Large/super distributors invest huge amount of money and their transactions are also big which leads to them earning large amount of profit. But their expenses ex penses are also quite high hi gh in infrastructure, salaries etc. This is the reason they would prefer ROI model where returns are guaranteed. BENCHMARKING WITH OTHER COMPANY Himalaya drug distribution company provide enough margins on their product to their distributors. Himalaya drug distribution company do not have many product categories. There are basically 3 categories and margins on them are according to normal standard followed by the industry. The margins are goods compare to other FMCG company. Though, company can go for ROI model and give distributors fixed returns.


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DISTINGUISHING CHARACTERISTICS The business of competitors like HUL is huge and their product category is also wide. Due to large area handling, turnover of large/super distributor is also in crores. They follow the ROI model where they calculate a fixed margin for the distributors. The margins are on the turnover. The large/super distributor earns 0.7% of turnover. If this percentage is not met by the large/super distributor then company reimburses to ensure that they get the necessary return on their investments. In terms of ROI, large/super distributors get approximately 30% ROI INSIGHTS The actual profit of the distributor is calculated after deducting all the expenses. After getting fixed margins on the different products products sold, the expense will be deducted. The remaining part will be their profit. In this model percentage of returns earned by the distributors is not calculated every time. In this method, the returns of the distributor are not fixed. They will keep changing with an increase or a decrease in their expenses. The distributor would like to avoid variability in his profit. In positive manner, this may motivate them to save on their expenses. A smart distributor will achieve that but on the flip side; s ide; a distributor might resort to unethical practices. ROI model is where returns of the distributor will be fixed. But to keep a check whether a distributor is getting the specified returns, monthly calculation needs to be done. There is no fixed format followed to calculate ROI at every distributor. However, some companies follow a fixed format through which they calculate the returns on investment of the distributor. If company thinks of adopting ROI model, mo del, they need to prepare a model where calculation of ROI can be done easily and precisely.


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2.1.3 INFRASTRUCTURE

Infrastructure plays an important role in the investment of distributor. Office is the place where the distributors actually work. Infrastructure is basically havin g office with all the facilities available. Most of the distributors don't invest much of their money in providing better infrastructure but they need to create a place where everyone can work efficiently. The offices of large/super distributor are big and spacious. It includes the owner's cabin and some distributors also provide extra cabins for their salesman s alesman to take rest after doing the market visit. Large/super distributors handle large areas and so the number of salesmen and their daily orders are quite large. To make transactions faster, they need to have enough number of computers for transferring the data. Some of the large/super distributors also invest in meeting rooms in their office. BENCHMARKING WITH OTHER COMPANY Himalaya drug distribution company have been working with some of their distributors for long period of time. Their offices are well structured but there is always room for improvement. A place for salesman to take rest after market visit or if there is any meeting to be conducted at distribution point is not available at every distributor. DISTINGUISHING CHARACTERISTIC The investment of large/super distributor in Gwalior is more as compared to others in smaller cities or in the outskirts of Gwalior. So they cannot afford to have big offices in cities like Gwalior where space is constraint. co nstraint. Their offices contain all the important things like computers, separate cabins, notice board, chairs etc. Some large/super distributors have separate office for ABI. Facilities like TV and meeting me eting rooms are also available at distributors point.


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INSIGHT Investment of a distributor depends on the company with whom they are dealing. Some distributors may invest their money in having well structured office for their employee whereas other might go for standard office. They know that maintaining a big office will reduce their profit. So it depends on distributors what facilities they want at their offices. But in the end there needs to be a pleasant office for everyone to work.


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3. STRUCTURE

3.1.1 MAN MANAGEMENT A business needs multiple people to perform multiple activities for its success. Different people are appointed to do different kinds of work. In general, a distributor needs to appoint following: 

Salesman



Merchandiser



Delivery person



Loaders

Distributor

Operational manager/Group leader

Team leader

Casher

Accountan t

Godown

Computer oprator

Salesperson and Merchandizer

Keeper

Assistant

Fig (a).Structural hierarchy of distribution system.


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But due to large size of business, a large/super distributor appoints more than just the above people. Considering the volume of transactions taking place daily, a large distributor employs more number of people to handle that. The hierarchy of people working at large/super distributor is as follows: The operational manager/group leader is in charge of looking after the working of other people. Team leader doesn't handle each and every salesman. A team leader is in charge of 10 salesmen and merchandisers and 4 team leaders report to a group leader/operational manager. The The company employee (ABI) (ABI) has control control over every person in the hierarchy. Large/super distributors outsource transportation agency, delivery of goods to a transportation agency which reduces their burden and also provides better cost efficiency.. The payment to them is generally done by the company. BENCHMARKING WITH OTHER COMPANY Himalaya drug distribution company's distributors handle smaller areas and so the number of salesmen and merchandisers employed by b y them is less compared to large/super distributor. Some distributors of Himalaya drug distribution company are handling larger areas and for which they have recruited more employees. However there is an absence of team leader and group leaders. Salesmen are handled and controlled by the distributors. DISTINGUISHING CHARACTERISTICS They have a greater span of control to enable handling 30 salesmen and merchandisers with other back offices. More people are appointed to make the work of the distributor simple. The span of control helps in managing the work more efficiently. Each and every individual appointed by large/super distributor plays an important role in the business. Also Large/super distributors are not required to hire tempo as well as loaders for the delivery of goods as it is outsourced.


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INSIGHTS The hiring of people in the business depends upon various factors like investment, size, work as well as the kind of distributor's area. If distributors have a limited area to handle, then there is no need of man management but if area of distributor is expanded then there is need to have such span of control for better control. Number of people and their designations doesn't specify the kind of business distributor a does but in order to manage it in a more systematic manner, such man management is important. Having a flat management structure is comparatively more convenient then to have more hierarchy. 3.1.2 ROLE OF SALESMAN

Salesmen are one of the critical elements of a FMCG company. They are the ones who run their business. Their job is to go to the retail outlets and take weekly order of the company's products. The visit to the retail outlet is done daily through different routes for a whole week. They not only take orders given by the retailers but also try to maximize the orders by pushing for higher orders. Generating maximum sales and maintaining the reputation of the company in the eye of retailer are the most important jobs for a salesman. The salesman needs to be persuasive and appealing. They represent the company to the retailers. So they need to have

They need to make sure whether company's products are clean and properly arranged in the outlet. Salesman should maximize the order size but also ensure that there is no dumping of the product in the outlet.


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BENCHMARKING WITH OTHER COMPANY Himalaya drug distribution company have a good salesman team at most of the distributors. A continuous effort to educate them and make them aware of company's product and schemes at regular intervals will be beneficial for the company. Increase in the sales can be made possible if the salesman has strong convincing abilities. Training and workshops focusing on behavior and maintaining good relation can do wonders to the company. DISTINGUISHING CHARACTERISTIC Though salesmen work for the distributors, most of their responsibility is for the compan y. Large/super distributor with the help of company employees constantly approaches the salesman for better performance. Training sessions are arranged by the company for the development of salesmen. In some companies, salesmen are periodically appraised by company employees regarding their progress and other sales related issues that they may face. There is a constant effort to ensure that any difficulty gets solved as soon as possible. Large/super distributors are in-charge of handling the salesman team. They may not handle it directly but they have people at different level who are responsible for it. The T he job of the distributor is to look whether salesman is performing their duties properly and resolve any problem faced by them. INSIGHT Salesmen need to be loyal towards the company and that loyalty comes with the experience. It's not universally applicable; a newly appointed salesman can give better performance than an experienced one. What distributor needs to be taking into consideration is whether they are giving the required performance. It's the job of o f the distributor to see that salesman s alesman is working properly and for keeping a constant track company's software can be useful. Tracking the performance of salesman periodically and making them aware of their weakness and strength is necessary. During market visits, he may not be aware of his performance but if someone supervises him during his market visit he will come to know his weaknesses and areas for improvements Indira Global Business School

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3.1.3 TARGET ALLOTMENT

The business of FMCG companies grows with increase in their sales. Encouraging salesmen to increase their sales can be achieved through target setting. Targets are essentially the approximate figures given to a particular salesman to achieve in a particular month. Salesman's targets are not just based on the value of sales but it's also based on the SKU's. Companies first allot the target for every distributor and then at distributors point separate target for salesman are set. Salesmen wise target setting is done by distributor with the help of company employee handling that distributor known as ABI (Area Business In charge). This is how the targets percolate in the entire value chain of an FMCG company. The basic points taken into consideration while setting the target are the class of the retail outlets and the size of area handled by the salesman. Past performance and capabilities of the salesman are also taken into consideration. Large/super distributors use company software in defining the targets. Checking of past performance of the salesman and calculating the target is done by b y the company software. After setting the target, large/supe r distributor keep a daily check on salesman's progress and performance with the help of company software. WITH OTHER COMPANY As mentioned above, the method of allotting target is the same for every distributor. Benchmarking for Himalaya drug distribution company will be continuing the same method but focused should be put on making salesman aware of their targets and how much of progress they did. Progress of salesman and reviewing the target should be done weekly to avoid performance hiccups at a later stage.

When compared with the software used

by competitors, their software so ftware is better equipped for target allotment as compared to the software from Johnson & Johnson.


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DISTINGUISHING CHARACTERISTIC Large/super distributors go through the same procedure of setting target like any other distributor is the process takes place as described in the following paragraph. The distributor and ABI sit together and allot the targets for the salesman. The follow-up is the key differentiating factor for distributor's performance. The distributors of HUL get the weekly data from the company software which not only specify what salesman's target is but also provide information about how much percentage is achieved. Some companies put salesman's target and daily updates on the board boa rd to encourage development. developmen t. User friendly software makes the work of distributor and ABI simpler and easier. INSIGHT Targets are given to the salesmen to increase the sales. Targets need to be encouraging. But setting unachievable targets may lead to frustration and lack of interest on the part of the salesmen. Targets will then become a de motivating factor. Some time company also gives low target to the salesmen where everyone is able to achieve it and get the benefit of incentive. This method might work for some time but this will not bring the excellence in the salesmen and sales will be steady. This would lead to stagnation for the company. It's the job of the distributor and ABI AB I that targets are allotted such that the y not only help in increasing the sales but also help in developing the skills of the salesmen. Targets should be considered as a challenge for the salesmen and those who achieve them should be acknowledged.


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3.1.4 ROLE OF SUPPORT STAFF

Support staffs are the people employed to do the back office work and work apart from market visit and merchandising. Back office work includes inclu des preparing bills, managing accounts, delivering products, petty cash management etc. Large/super distributors have big businesses to handle as a result of which their back offices work wo rk is greater for which they appoint more support staff compared to others. Support staff is responsible for all work before and after the market visit of salesmen. The work load of o f support staff increases further because they to handle all account, ensure that goods are delivered to right retailers and the payments are properly collected and accounted. Due to larger area coupled with greater transactions, the work of the back b ack office people in large/super distributor is challenging. Some of their work is outsourced as in case of delivering the products to retailers. Yet managing all the accounts and ensuring the authenticity of each one of them is demanding. The large/super distributor will hire approximately 5-6 back office people depending on his business and investment size. BENCHMARKING WITH OTHER COMPANY The distributors of Himalaya drug distribution company who handle big areas generally have a properly appointed back office people. For other distributors, back office people are not present but they generally appoint loaders and drivers for delivering the goods. Division of labour leads to efficiency. The overheads of the distributor due to appointment of support staff is not properly justified if the work load is relatively lesser. DISTINGUISHING CHARACTERISTIC Large/super distributors need to appoint support staff to divide the work and ensure proper functioning of their business owing to their size. s ize. The job of the support staff is to reduce the workload of the distributor. They do all kinds of work from entering the data of the sales into the company software to making reports and claims to managing cash and accounts etc. Back office people report to operational manager/group leader as well as the distributor. ABI can


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also ask for reports from the back office people. The performance of back office people is reviewed every 6 months. Their appraisal is dependent on their performance. INSIGHT Hiring support staff is different from having a loyal lo yal and hard working supporting staff. An efficient team can handle large business volumes even with fewer resources. The work of back office staff is not just entering transaction details but also ensuring that it is done with accuracy.The company software helps in increasing the efficiency of their job and also reduces the complications of it. The work of making claims and report is done easily with the help of software. More paper work and greater detailing in software increases their work and adds to irrelevant complications. SALARIES AND INCENTIVES Salary is the amount paid to hired person for his work. For a large/super distributor, salary is one of the major expenses. The reason for the same is the number of salesmen, merchandisers and back office people hired by large/super distributor. Some companies classify their salesman according to their performance and pay salaries accordingly. Also back office people's salary keep on increasing with better performance on their part. Generally Salaries are paid in cash but some large/super distributor also pays them through bank account. Incentives are extra additions to the salary. They are given to encourage salesman to give better performance which in turn leads to better performance for the company. This thus helps in developing a partnership between the companies through the formation of mutual symbiosis. There are different parameters which are used for the payment of incentives. These parameters can be any of the following a. Sales targets b. Visibility targets c. Coverage targets Indira Global Business School

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d. Profit targets e. Efficiency targets Generally incentives are provided when salesman achieves 100% or more of their targets or if they give best performance throughout a year. Some companies purposely p urposely set higher targets and hence give incentive to the salesman even if salesmen they achieve around 80 to 90 percent of target. Incentives are not just provided by the distributor but it is also provided by the company. Large/super distributors follow the incentive program developed by the company. Based on that, incentives are divided between distributor and the company. Some companies along with salary also provide benefits like provident fund, insurance etc. Besides salary, companies also provide Travelling Allowances to the salesman for their daily market visit. This allowance are either given separately or included in the salary. Salaries, incentives and benefits to the salesman are normally decided by the company and there working policy BENCHMARKING WITH OTHER COMPANY Himalaya drug distribution company are on the same scale as its competitors when salaries and incentive are considered. The salary paid to Himalaya drug distribution company's salesman, merchandiser and back office people is through cash which is the normal policy followed everywhere except in some companies where is it paid through bank account. Himalaya drug distribution company also have incentives program for achieving value based and SKU based targets. These targets and incentives policy is decided by the company and the payment is shared between the distributors and the company. Benefits like provident fund are not provided to anyone but some distributors provide benefits like insurance.


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DISTINGUISHING CHARACTERISTIC Large/super distributor differs from other in number of salesmen, merchandisers and back office people appointed by them which increase their expenditure on salaries. The right amount of salary paid to them will bring loyalty towards the distributor and company. Large/super distributors periodically review the performance of the salesman's to increase the salary for good performance. Apart from salesman's performance, the performance of back office people is also reviewed. Company takes the primary role in deciding the salary and incentive program of the salesman. The company software makes the work of ABI and distributor easier by showing the progress of salesman in terms of showing how much is achieved and what are his strong areas. Periodical check on the achievement will make sure that incentives are given to the deserving candidates. INSIGHT The number of people appointed by the distributor will depend upon the size of his business. More back office people are appointed by those distributors whose area and business is large. The salaries paid to them need to be appropriate. Salesmen and merchandisers, initially, get normal salary but their performance brings additional income. The salesman that brings in good business to the distributors should be given higher salaries. This kind of increase in the salary to some salesmen can motivate other salesmen to perform better and reach that level. A distributor and company need to ensure that such incentives program does not lead to any negative feeling among the salesmen. Incentives are motivating factor for the salesman to achieve the targets and get the added benefit. But tempting incentives may lead to salesmen achieving their targets in a wrong manner. To achieve targets the salesman might sell goods to those retailers who don't have the capacity to sell that product. This kind of steps leads to dumping of product, increase in sales return and larger number of expired product sold in the market.


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3.1.6 COMMUNICATION HIERARCHY Communication is one of the important elements in any business. Communication is basically passing on the information, idea, thought etc. from one person to another. At distributors point communication is done in hierarchy, i.e. it flows from top to bottom or from bottom to top depending upon the kind of communication. At large/super distributor communication flow is as follows:

ABI/sales officer - company employee

Distributor

Group leader and back office people

Team leader

Salesman merchandiser

The team of salesmen and merchandisers is handled by team leader who communicates to group leader/operational manager. The company employee can communicate to any one from distributors to salesmen. The communication regarding targets, targets, achievement, new product etc is periodically passed on to the employee at distributor's dis tributor's point.


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Communication needs to be clear and understandable. Ambiguous and vague information may lead to problems and loss to the distributor as well as the company. Better communication is needed while transferring information regarding schemes, new products, company's future projects etc. so that the results will be as anticipated. Large/super distributors make sure that most of the information about company products and schemes are passed to the salesmen. Company also makes sure that distributor gets the information related to next month's scheme and focus brands before the beginning of the month. Some companies also fix a particular date on which information is passed to them. BENCHMARKING WITH OTHER COMPANY Compared to other competitors companies, Communication Co mmunication at Himalaya drug distribution company is good. But most of the information passed on is filtered and is not clear to everyone. Company does not clearly communicate to the distributor about their focused brands as well as future projects like IME. A greater focus on conveying the right information at right time is necessary. DISTINGUISHING CHARACTERISTIC Large/super distributor handles more staff and hence it is necessary for them to make clear communication. Passing information from one person perso n to another without any filtration is a very difficult task. In large/super distribution model, company employees play an important role by communicating the perfect information to ever yone. Besides, distributors are made aware of company's plans and schemes in advance. ABI transfers the precise data to to distributor with regards to to distributors targets, focused brands, new introductions etc. which enables distributor to be efficient. At large/super distributor point the information is not just passed by the ABI but it is also passed through company software. Distributors see to it that every employee has the perfect data and any contribution from the salesmen about idea and information is conveyed to company employee.


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INSIGHT Communication is not just passing the information from one person to another, it is awareness created at distributors point. Proper communication is required so as to ensure better and more aligned focus of both company and distributor. The future steps of company and their plans need to be made clear to distributor so that both company and distributors can achieve excellence. Whenever a new concept is introduced the lack of awareness may lead to failure of that concept. RETAIN DIVEST ACQUIRE ANALYSIS Retain

Divest

Acquire

Limited people appointed

Bad salesman attitude

Continuous Training Program

Training program

Old software support

Make salesman

for target

aware of their target achievement

Target allotment method

Better IT support for target allotment

Payment through cash


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1. PROCESS

4.1.1 RETAIL REPLENISHMENT Retailers form an important element in the business of distributors. Salesmen go to the market to take order from the retail outlet and delivery of the same is done on the next day or within 2 days. The payment for the product by the retailers is done in either of the 2 ways viz. cash and/ or credit payment. This complete process is known as retail replenishment. Every salesman visits a particular retail outlet once in a week. Their visits are fixed according to the coverage plan of the distributor. The number of outlets covered by a particular salesman is approximately 30. Every distributor follows a different method of retail replenishment. Whenever the siz e of the order is big, the distributor prefers to take payment p ayment in cheque. Normally Normall y distributors don't give any credit period to retailers unless it's a class A outlet or outlet which gives good business and has nice relationship with distributor. The payment through cheque and/or cash is done when delivery of goods is completed or at the time of next visit of the salesman. The order taking is done in gadget or in company's book boo k depending on the company compa ny procedures. The salesman needs to be aware of all the company's product and also the schemes offered by the company to retailers. A salesman s alesman with better knowledge generally performs better b etter and generates higher revenues. Sometimes, delivery of goods is not done to retailers because of reasons like inaccessibility of the shop when distributor's deliveryman reached the place, unavailability of product at distributors point etc. Some retailer's might return some of the stock due to reasons like damaged goods, delay etc. Distributor needs to ensure that such hiccups happen rarely and sales return is very nominal.


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BENCHMARKING WITH OTHER COMPANY Himalaya drug distribution company have a good relationship with most of the retail outlets and payment is done whenever goods are delivered. The payment mode is either cash or cheque depending upon the retail outlet. The default rate in payment is very low. General problem faced by retailers of Himalaya drug distribution company is that the product not always available when it is required by the retailers. Most of the loss of sale is generally due to non availability of product. Even after following the method of keeping the stock for 15 days, distributors face the problem of shortage. The delay in delivering product leads to loss to both the distributor and company. DISTINGUISHING CHARACTERISTIC Normally the process of taking order and delivery of goods is completed within 2 days. But the retail replenishment of large/super distributor of company like HU L is very different from other company. They deliver the goods within one day from the day of receipt of order. E.g. if on Monday, an order is taken by the salesman then the delivery of the goods is done on Wednesday. It is because they follow the 1 day inventory model where goods are delivered to distributor after the order is taken from the market. Their method of taking order is through an electronic gadget known as palmtop. Palmtop is a touch screen electronic machine like cell phones where data and SKU details of the entire product range are are available. The mode of collection is also different at different distributors. Some distributors like to get payment when goods goods are delivered while some prefer that payment is made to salesman during their next visit. But in general payment through cheque is preferred by large/super distributors to avoid risks like theft.


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INSIGHT The process of order acceptance depends on the size of the company. The more the number of products and SKUs, greater is the need for an efficient order acceptance process. As far as payment is concerned, every distributor has his own way. Cheque payment is more preferable as it avoids risks of theft. Some distributors also give cash discounts to retailers for prompt payments. No standard format is followed while giving discounts; it is according to the distributors will. Whether it takes 2 days to delivered goods or 1 day, it is necessary for the company to ensure that the goods are delivered on time and there is no shortage of any product. The area handled by a distributor is called his coverage. Large/super distributors handle large area and planning for it is done by distributor and company employee known as ABI together (Area Business In charge). The Th e salesmen visit the retail outlet in the route allotted to them. The route of salesmen is pre planned by distributor and company employee. This route remains fixed until some changes are made depending upon requirements. The addition of a new retail outlet or store generally depends on the introduction of new product. During those days, revision of the route is done by distributor and company employee. The route to salesman is decided on the following basis:

Most of the distributors and salesmen work for the company since a long period of time and hence their route and coverage plan are fixed. There are minor modifications which take place from time to time. Changes in coverage and distribution planning happen when there is an introduction of a complete new range of product by the company or due to some changes in the designated salesman itself.


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BENCHMARKING WITH OTHER COMPANY The coverage and distribution planning at Himalaya drug distribution company is done by both distributor and company employee. When there is an addition of area to a particular distributor, it is necessary that the company looks after their work and helps them in coverage planning. A helping hand from company might ease of the pressure on the distributor. DISTINGUISHING CHARACTERISTIC Large/super distributor alone does not carry out the work of coverage and planning. Most of it is done with the support of company employee. Once routes for the salesmen are decided there are very little modifications. Merger of routes or changes in the coverage is done when there is introduction of new product or when company plans to expand their reach. If company wants to cater to new retailers the planning p lanning for the same will be done don e by both distributer and company employee. In some companies, a particular salesman is assigned a route according to the kind of retail shops he visits. For e.g. if a salesman is new, large/super distributor might give him route where there are more of class B and class C outlet. (Class B and class C are outlets where business is generally uniform and not voluminous). A capable and well experienced salesman may get the route where the entire outlets are of Class A (Outlet which gives maximum order).


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INSIGHT Most of the area given to particular salesmen is decided when distributor starts his business. Changes to those routes happen at minimal level. But when there is case of addition of new area, salesman's route might change. But company should keep in mind that route of particular salesman is not changed very frequently as it ma y lead to bad b ad reputation of company in the minds of the salesman. Whenever distributor gets the new area he might not be aware of how business takes place in that area or how the coverage of that area was done previously. In such a case, company employee need to play a huge role in helping distributor undertake coverage and distribution planning. Planning new routes as well as allocating retail outlet considering all the aspect like simplicity to salesman etc., can be done by distributer with the support of ABI. 4.1.3 IN MARKET ACTIVITIES AND SCHEMES

The company sells the goods to the distributors who in in turn sell them to retailers. retailers. This process of transfer of goods from distributors to retailers is called as in market selling for the distributor. There are 2 types of schemes: 1. Primary/Invoicing schemes 2. Secondary/Retailing schemes. market activities and schemes are provided to retailers and distributors to promote sales. There are different kinds of schemes given to retailers depending upon the target objective like visibility, bulk discounts etc. The normal procedure is that the company offers same schemes to every retailer and it is percolated through th rough the distributors. The duration of schemes for retailers varies from a month to 3 months. Schemes are updated every month to ensure maximum benefit to both retailers as well as the company.


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Company changes the schemes according to 

Season



Demand of the product



Product life cycle



Focused brands



Company's objective etc.

The display scheme given to retailers is through salesmen. Every distributor gets certain budget for window display along with information on the kind of display and the products. The distributor with the help of the company employee known as ABI divides the budget among the salesmen. This division is done on the basis of salesman's route, class of the shops, capabilities and convincing power. Salesmen are made aware of all the schemes so that they can inform the retailers accordingly. Distributor's point notice board also c ontains all the information of schemes offered during that month. At the end of the month, scheme for the th e forthcoming month is communicated to the distributors and salesmen. BENCHMARKING WITH OTHER COMPANY The schemes provided by Himalaya drug distribution company depend upon season and company's focus brands for that month. However, sometimes the company fails to communicate its focus brands to its distributors which lead to problems and improper utilisation of the schemes. Himalaya drug distribution company should ensure that every detail of the scheme is provided before the month begins and salesmen are clear about all the schemes. This would lead to better communication from salesmen to the retailers which would in turn benefit them.


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DISTINGUISHING CHARACTERISTIC What sets large/super distributor apart apart from other distributors is the way they pass the schemes to the retailers. retailers. The method remains the same i.e. company gives large/super distributors budget for window display and information about other schemes following which the distributor divides the budget between his salesmen The salesmen are given training to enable them to get more windows for displays which are the main source of visibility. For companies like HUL, there number of SKU and products are more. This makes it difficult for salesmen to remember all the schemes. That's why they use a palmtop which contains the details of every scheme on every product. Palmtop is also the devise though which an order is taken. Other important thing which helps large/super distributor in maximising their scheme utilisation is having better understanding of company's focus brands, demand estimation, seasonality and retailers buying habit. INSIGHT To achieve maximum utilisation of a scheme, a salesman should communicate and explain properly all the schemes to the retailers and take orders depending on their benefits. However, it is not always possible that retailers order depending on the schemes available. Sometime salesmen don't tell every ever y scheme to the retailers because becaus e they think that retailer will not order that product on which scheme is available. This might lead to creation of doubt in the minds of the retailers regarding them being not given the scheme and thus getting lesser preference as compared to a competitor retailer. Knowledge of schemes to the retailer can help them reconsider their order decisions. The salesmen should also ensure that there is not excess dumping of products on the retailers. Better window display and visibility can be achieved through better experience and training of the salesmen. Company can provide training when new approach of window display is introduced like Inner Circle to ensure the success of the concept. The notice board


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with the details of the scheme and print outs to the salesman about the regular monthly schemes will help them know the schemes better. RETAIN DIVEST ACQUIRE ANALYSIS Retain

Divest

Current retail

Delay in delivery

replenishment

Acquire

Most of the payment through cheque

mehod

Coverage planning

Shortage of products

Company's participation when making changes in coverage planning

Ongoing scheme

Updates about schemes and market activities in software


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2. CUSTOMER SATISFACTION

Customer satisfaction here is used with reference to distributors as the customers. Most of the large/super distributors are happy and satisfied s atisfied with the company they are working with. After working for any company, generally there is great level of comfort which builds up. That comfort level brings in loyalty. Better company compan y policies and friendliness of the staff s taff lead to greater loyalty which in turn helps reducing unethical practices. In large/super distributor model, most of the work is handled by the company representatives who follow a fixed policy, making makin g the work of the distributor easier. The difficulty arises when company fails to support s upport or listen to distributor's problems and/or opinions. In large/super distributor model, information about the products as well as schemes is provided promptly to the distributor on their demand. Quick response from thecompany helps in generating better company-distributor relationships. BENCHMARKING WITH OTHER COMPANY Most of Himalaya drug distribution company's distributors are are associated with the company since long period of time. The comfort level between the company and the distributors is quite good. But the company compan y still lacks promptness in solving distributor's problems. p roblems. Most of the distributors have problems with company software and an d complain related to that is not getting solved. The lack of response from company leads to distributor not working properly. Some time distributors also have problems with the behaviour or response of ABI


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DISTINGUISHING CHARACTERISTICS Distributors of larger size generally get a lot of support from the company and the support varies depending upon their size. Large/super distributors have a lot of responsibilities and play a major role in the functioning of the company. Company also needs to ensure that the distributors are functioning properly. A friendly attitude of the company encourages the distributors to work efficiently. Solving complains and givin g importance to distributor's opinion can bring improvement in their work. This helps in improving the performance of the distributors and appraising them about company expectations from them. INSIGHTS Every customer including distributors welcome open and welcoming attitude. Giving less importance to their opinions and problems will lead to unproductive behaviour. The distributors appreciate the support from the company compan y during critical junctures which in turn leads to better relationships. The company should ensure that the distributors accomplish their responsibilities. But excess friendliness could lead to misuse of company resources by the distributor and hence should be avoided. Company should be vigilant in all the activities of distributors to ensure proper and efficient functioning.


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RETAIN DIVEST ACQUIRE ANALYSIS Retain

Divest

Acquire

Comfort level between

ABI's negligent attitude

Listen to distributors idea,

company and distributor

Friendly nature

suggestion etc

Provide complete information

Quick problem solving Periodical

updates about

company's plan


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CHAPTER 3 -BENCHMARKING HIMALAYA DRUG DISTRIBUTION COMPANY'S DISTRIBUTORS PERFORMANCE - OTHER ESSENTIAL ELEMENTS 1.1.1 INVENTORY MANAGEMENT

Every distributor gets goods from company according to the policy of company. Some large/super distributors adopt a method where they receive goods from the company daily as per order generated at distributor's point. When company have depot near to the distributor's point they may follow this method. The advantage of this method is that there is no stock keeping. It is because goods are delivered as per the order. This is known as 0 or 1 day inventory. Other large/super distributors follow the method of keeping stock. The stock may be kept for 15 days to 2 weeks depending upon the product and company's norm. In this method, distributors generate a master order which is for the complete month and goods get delivered to them thrice in a week as per their requirements. The master order is prepared by the distributor and the company representatives with help of company software. The division of the delivery of goods in 3 installments across the week is done by the distributor and company representative as per their experience and market demand. The changes in the master order are very rare but the distributor can change it 3 days in advance before the delivery of the product. BENCHMARKING WITH OTHER COMPANY Himalaya drug distribution companyfollow the second method for ordering of goods i.e. master order method. Every distributor gives gives the master order for the the complete month. This master order is delivered to distributor in 3 installments every week. The break of the master order is done by b y distributor and the company representative known as ABI (Area Business In charge). The inventory norms of the company are on average of 15 days. The distributors need to make sure that tha t it is followed religiously. Generally master order prepared by the distributor d istributor is not followed properly. There is a high frequency of changes in the orders which leads to failure of the company to deliver the goods Indira Global Business School

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to the distributor at the required time and poor stock practices of the distributor. The master order should be prepared based on expected sales in the next month and growth of the distributor. Changes in the master order should be avoided. Any changes in the master order should be informed to the company3 days before the delivery of the goods. 1.1.2 EFFECTIVE MERCHANDISING

Merchandising is done by merchandisers. Merchandising is setting up window displays or any other kind of visibility prop in a retail outlet. Basically salesmen get the budget bu dget from the large/super distributor for any any kind of display to be put up in the shop. Salesmen then convince the retailer and book a place in the shop. After booking the place in the shop, the merchandiser sets up the display. Large/super distributors hire at least 3 merchandisers to do merchandising. The merchandising activities are done on the same day and at most on the next day. In some companies after the salesman books the place in the shop, he calls the merchandiser and informs him about the shop and details of the display. Some big companies send the merchandisers along with the salesmen so that display can be done on the spot. Apart from putting the display, companies like HUL have audit of shop. The professionals are hired by the company for doing audit. They visit the shops and check if the display is properly maintained. Generally, it is a surprise visit. Visibility is important for an FMCG Company and every company makes sure that it is wisely wisely done by the distributors and retailers. BENCHMARKING WITH OTHER COMPANY Some of the distributors of Himalaya drug distribution companyare small in size. They don't appoint merchandisers. But those thos e distributors who have large business need to appoint merchandisers. Most of the times, even after after the booking of place, merchandising activities get delayed to about 1 week. This leads to loss to both the distributors and the company. This eventually leads to wastage of all resources like money, customer loyalty, sales as well as reputation. Merchandising is important when a new concept is introduced. After the


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salesmen manage to convince the retailer to stock a particular new product, it is necessary that the company ensures that the displays are in place to attract customers. 1.1.3 CARITY ON SCHEMES AND OTHER INFORMATION

The better the understanding, the better will be the actions taken. Clarity Clarit y can bring better understanding and the same can be conveyed better. The salesmen and distributors need to be aware of all the schemes offered by the company so that during the market visits, salesmen can use this knowledge to increase sales. At large/super distributor the salesmen are made aware of the scheme in an effective manner. In companies like HUL, salesmen use palmtop to stay in touch with all the latest schemes. This enables them to be aware of all the schemes offered by the company while taking an order. For other companies, better communication by distributor as well as company employees to the salesmen leads to effective utilisation of scheme. All other relevant information of the company and their plans is communicated to distributors well in advance so that there is no ambiguity. Information like companies focus brands for the next month is communicated before the beginning of the month to ensure proper synchronisation between the company plans and distributor's actions. BENCHMARKING WITH OTHER COMPANY Communication at Himalaya drug distribution company is good and company does put a lot of effort to make it clear. The schemes are communicated to distributor and salesmen sales men before the beginning of the month and the pamphlet containing all the information about different schemes is put up on the notice boards. Besides, all the queries of the salesmen are answered by distributors or ABI promptly. Despite this, utilisation of schemes is not good at all distributor points. The reason behind it could be that all the schemes are not started on the same day of the month. There are 2 cycles of schemes which might bring confusion among the salesman. There are also a few loopholes when it comes to information about company's plans and focus brands. Distributors are not made aware of company's focus brands and new concept introduced by the company like IME Indira Global Business School

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(In Market Excellence). The communication related to this is relatively slower and takes a lot of time. ROLE OF COMPANY IN DISTRIBUTOR'S ACTIVITY The company looks after the business of the distributor. Company supervises the working of the distributors and ensures that distributors follow company rules and policies. The company employee known as ABI (Area Business In charge) works and interacts with distributor on company's behalf. Any information, data, idea etc of the company is passed on to distributor mostly through ABI. The job of ABI is to work with distributor and perform the following activities: 

Allocating targets



Appointment of salesmen and merchandisers



Make coverage plan



Decide on salaries



Check the weekly progress of salesman and distributor



Prepare master order etc.

In large/super distributor model, ABI plays an important role. Separate ABI's are there for every distributor and they are responsible for their distributor's activity. This way ABI can concentrate on his work properly. They look after everything that the distributor does and makes sure that distributors are working according to the company policy.


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BENCHMARKING WITH OTHER COMPANY The ABI of Himalaya drug distribution company are hard working and efficient. The relationship between ABI and distributor is also good. ABI helps the distributor d istributor in all the above specified jobs. Company should make sure that ABI get along well with the distributor and there is no dispute between the two. ABI can help distributor in expanding his business as well as sales. He is the link between the company and distributor. Company should also ensure that ABI are well updated with the information, data, and idea of the company so that they can effectively communicate the same to the distributor and vice versa.


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2. CURRENT POSITION OF HIMALAYA DRUG DISTRIBUTION COMPANY

Himalaya drug distribution company are currently working with 16 distributors all over Gwalior. Out of these 16 distributors one o ne distributor was recently converted to a mega distributor. Mega distributors are like large/super distributors who hand le huge area. This concept adopted by Himalaya drug distribution company is a pilot project and the project has been successful. Some distributors of Himalaya drug distribution company are in charge of small area and their progress is mediocre, whereas other distributors are showing good progress over the year. The profit/business of the distributors also also depends on factors like like 

Area



Types of retail outlet



Consumer preference



Population etc

In certain areas, Sales can be progressive without much effort from the distributor. Job of distributor should be to take advantage of the area allotted to them and grow as much as possible. Himalaya drug distribution company being a popular brand have high consumer preference and awareness especially in the baby products category. The business of other categories and awareness about them is also showing signs of growth. The distributors are obliged to work for company like Himalaya drug distribution company and company can make sure that the brand popularity and sales keep ke ep on increasing. It can be done through marketing, advertising and sales at retail outlet. Distributors come into picture when target is to increase increase sales and this will also lead to growth growth of distributor as well as company.


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FUTURE TARGET Every company strives for progress and the future target of most companies is to grow by increasing sales. Sales can be increased when the consumption of company's product increase. This is where job of marketers and advertisers are important. Apart from marketers and advertisers, making products available at each retail outlet can motivate consumers to buy the product. Distributors are the one whose responsibility is to make product available to the retailers and achieve higher visibility at the retail outlet. Himalaya drug distribution company can focus on improving the performance of o f distributors step by step. This can be done through achieving benchmark. Benchmarks are setting standards after comparison with competitors for future growth.


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3. ALTERNATIVE MODELS

The following are the two models which can be looked upon closely to understand the pros and cons of the large/super distributor model and get a better insight about the implementation feasibility of the model. 3.1.1 OLD MODEL •

Total 16 distributors in Gwalior Division

•

High transportation cost as goods are delivered to 16 different places.

•

Difficulty in supervision

•

More chances of stock out

•

More responsibility responsibility on the part of ABI. They are responsible responsible for handling more than 1

distributors •

Lower risk as it is spread over 16 distributors

3.1.2 NEW MODEL •

Only 6 distributors in Gwalior Division

•

Low transportation cost as goods are delivered to 6 distributors only.

•

Easy supervision

•

Less chances of stock out

•

Less responsibility on the ABI. ABI ABI will be responsible for handling only 1 distributor

•

Higher risk as it is spread over only 6 distributor distributor


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4. STRUCTURAL CHANGES

With the changes in the operations and the distribution model, there will be changes in the company structures so as to ensure better and more efficient functioning as well as proper implementation of the complete process. The following will be the changes that are recommended. MORE RESPONSIBILITY ON ASM As ASM (Area Sales Manager) is in charge of looking after all the changes happening at the distributor level, with the change in the distribution d istribution structure, his job will include more responsibility. He will be responsible for supervising the reduction in the number of distributor and ensuring that the right distributors are selected. Besides, the increase in the responsibility of the distributors will lead to their increase in needs which would warrant higher efficiency from him. The progress is according to company expectations. The whole process of adopting new model is in the hands of ASM with the help of RSM (Regional Sales Manager). EACH ABI WILL HANDLE SINGLE DISTRIBUTOR Right now each ABI handles 2 to 3 distributors. In new distributor model, the ABI will be in charge of single distributor. In large/super distributor model, company person helps distributor in their each activity and his complete involvement with one distributor will be useful in maintaining better distributor-ABI relationship. The single distributor per ABI will also bring better efficiency and concentration on only one large business


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CONCLUSION Considering the current situation of Himalaya drug distribution co mpany and analyzing the strengths and weaknesses of the company vis-à-vis the competitors, the company should implement the large/super distributor model in a step wise process. This will help the company not only in improving its efficiency but will also be beneficial for the company in the long run in improving the overall distributor- company c ompany relationships and giving an edge to the company over its competitors. The implementation process will have to be closely monitored as it will pose a few challenges as mentioned earlier. The company officials and the entire team from the company including the ASM, ABI and the respective sales professionals will have to be aligned with the goals of the company and also clearly educated about the entire process as well as the benefits for the smooth and effective implementation. The company should also look into the distributor's perspective very closely so as to ensure that the process has a support from the distributor and also their insights and ideas are taken care of at the first stage itself. This will lead to avoidance of repetitive work and would help in reducing the costs and time required for implementation.


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RECOMMENDATIONS After a complete analysis of the distributor d istributor model followed by the company and the pros and cons of the same, the following are the recommendations which could help in achieving higher operational and cost efficiency for the company. The process can be divided into three stages as shown in the following diagram

Stage 1

•

•

Stage 2 •

Stage 3

Track the progress of every distributor

Expand the business of capable distributor distributor by eliminating less progressive distributor Support the distributor in managing their expanded business

The process of reducing the 16 distributor to 6 distributors can be done in stages.


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STAGE 1 In the first step, company needs to track the progress of every distributor to separate the wheat from the chaff. The past performance of o f distributor will help company to distinguish between growing and stagnant distributors. This will of further help in stage 2. STAGE 2 In this stage, those distributors will be selected who show better growth over a period of time. The business of growing distributors will be expanded by eliminating the less progressive distributor. Eventually the number of distributors d istributors will be reduced from 16 to 6. The process will be a well monitored slow transition process and the method of eliminating 10 distributors will be done one by b y one. This will help in making the transition easier for the company. STAGE 3 The distributors who are finally chosen for the th e role of the super/ large distributors will be given higher responsibility. The company needs to ensure that the expansion takes place smoothly and distributors do not face any problem. The support of company at each level will help in growing the business of both the distributor as well as the company.


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COST BENEFIT ANALYSIS NEW MODEL BENEFITS

distributors handled by them

COSTS

n and merchandisers if existing salesmen leave the job


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INVESTMENT IN SOFTWARE

As per the feedback from the distributors, the company needs to make some investment in the software. The following will be the costs and benefits for the same BENEFITS 1. Automatic data transfer from company's computer to distributor's computer 2.

Schemes will be updated from company's computer to distributor's computer

3.

Showing daily updates of target achieved by the salesmen

4.

Different kinds of report can be prepared like Non eco monetary outlet, Outlet wise

5. monthly report, Outlet wise SKU reports etc 6.

Claims can be prepared easily

7.

Advance versions will help make work trouble-free

8.

Reduction in manual work done in software resulting in quicker work

9.

Quick complain solving will reduce the breakdown loss

COSTS 1. Initial investment in improving software is large 2. Periodically introducing new version will add to more investment in advancement 3. Maintenance cost for the software will increase with increase in complexities in it 4. Set up of Service centre for handling software related problem


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INVESTMENT AND MARGIN

BENEFITS 1. Limited distributors investing huge money 2. Fixed profits according to investment 3. Time saving in checking the investment and returns of the the distributor due to fewer 4. distributors 5. Ease of supervision COSTS 1. Developing model for ROI 2. Reimburse the fixed margin if not earned


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LIMITATIONS



The study is limited to geographical area of Gwalior city .



Time limit is one of the biggest constraints as the time period of 8 weeks is not sufficient to the whole catchment area.



The sample size of this study is too small as co mpared to the total consumer base of HUL. Therefore, a complete picture of the whole market pattern can’t be expected through this study.



Trustworthiness of the data is also a great deal of concern.


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MY LEARNINGS AND GAINS

1. Good understanding of the channel flow of products. 2. Practical approach to the problem. 3. Developing a better communication and negotiation skills. 4. Knowledge of business etiquettes. 5. Rich experience in sales and marketing functions. 6. Appreciation from company guide for the job. 7. Gained self-belief and confidence.


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3.1 SWOT ANALYSIS:

STRENGTHS: HIMALAYA enjoys a formidable distribution network covering over 3400 distributors and 16 million outlets. This helps them maintain heavy volumes, and hence, fill the shelves of most outlets. The new sales organization named 'One HIMALAYA' brings "Household and Personal Care" and foods distribution networks together, thereby aligning all the units towards the common goal of achieving success. HIMALAYA has been continuously able to grow at a rate more than growth rate for FMCG Sector, thereby reaffirming its future stronghold in Indian market. Project Shakti - Rural India is spread across 627,000 villages and possesses a serious distribution challenge for FMCG Cos. HIMALAYA has come up with a unique and successful initiative wherein the women from the rural sector market HIMALAYA products, and hence, are able to reach the same wavelength as of the common man in village. Apart from product reach, the initiative also creates brand awareness amongst the lower strata of society. This has brought about phenomenal results. WEAKNESS: HIMALAYA's market dominance, originating from its extensive reach and strong brand presence, allowed it to raise the prices even as raw materials were getting cheaper. Hence, though the volumes decreased, the margins grew, and company was able to earn more profits. But higher margins attracted competition in areas of operations. HIMALAYA's strategy remained focused on creating power brands and earning higher margins. It was not left with any other option but to try cutting down the costs in order to protect volumes, if not increase it. As shown in above figure, the key differentiators for an FMCG player are ability to call shots and pricing power, and HIMALAYA has shown weakness over both these factors. HIMALAYA's weakness was its inability to transform its strategies at the right time. They continued with the same old strategy which helped them gain profits but was not genuine in this changed environment. HIMALAYA's risk aversion and market myopia led to stagnation of business, and ferocity of competition forced it into a defensive mode. Lack of pricing power in core business and absence of growth drivers have put HIMALAYA on a deflationary mode. Indira Global Business School

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Opportunities: India is one of the world's largest producer of FMCG goods but its exports are miniscule as compared to production. Though Indian Cos. have been going global, their focus is more towards Asian countries because of the similar preferences. HIMALAYA is one of the top companies exporting FMCG goods from India. An expansion of horizons towards more and more countries would help HIMALAYA grow its consumer base and henceforth the revenues. Opportunity in Food Sector - The advent of modern trade has opened up greater opportunities for HIMALAYA to diversify its brand and strength its food division. It could look loo k at introducing products from its parents stable like margarines and could also look at expanding its Knorr range of products. Well-placed to take advantage of future FMCG Growth HIMALAYA reach out 80% of 207 million households in the country through various brands. It has a very well- defined product portfolio spread across many product categories. Penetration levels for some major categories like skin-cream (22%), shampoo (38%), toothpaste (48%) and processed foods, continue to remain low offerings offerings but great growthopportunities products. Threats: ITC has reduced its dependence on the cigarettes business - Contribution of the core business in revenues has come down from 87% in FY99 to 70% in FY05. Over a period of five years, ITC has extended its presence into areas like foods, retailing, hotels, greetings, agri, paper, etc. These are businesses that can give it growth impetus in the long run. With ITC gaining momentum in each of these businesses, it is turning into a consumer monolith, and hence, the greatest threat to HIMALAYA's Business. SSKI India has gone on to say, "We maintain Out performer on ITC with a price target of Rs. 2200, while our Under performer call on HIMALAYA remains unaltered (price target of Rs.160)


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BIBLIOGRAPHY:



www.himalaya.co.in



www.yahooanswers.com



www.scribd.com



www.ibef.com


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himalaya sip report

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