RUCHI SOYA INDUSTRIES LIMITED

Executive Summary Project 3D

Dimensions, Diagnosis & Development of Distribution

Submitted By:

Aman Garg IMI, New Delhi 2010-2012

Project Objective
The main of objective of carrying out Project 3 D was to check the level of effectiveness that the current Nutrela s Distributors have in place for the area of Uttar Pradesh-West. Along with this, the project aimed at conducting a Satisfaction Survey among its distributors to understand the Health & Wellness of the same in terms of

y y y y y y y y

Distributor Profile. Distributor Effectiveness thru Interface Distributor Service Levels Distributor System Implementation Levels Distributor Understanding & Perseverance of CBD philosophy, Its Products & It s initiatives in last 18 Months. Distributor Expectations from CBD in 2011-2012 Distributor Hunger Intensity & Readiness for CBD s Aggressive Growth Plans Customer Representative Effectiveness

Methodology/ Approach
The methodology used was meeting the Distributors in person and conducting a survey in pre-designed format. The survey included question related to all possible areas where a distributor could face problems. After completing the survey, general discussion methodology was used to understand the wider perspective of the problems and also to touch upon the areas which were not cover under the questionnaire. During the general discussion the DB would compare the practices followed by other companies. For carrying out the survey, we were given 5 forms that we had to fill up from the distributors and 4 forms that we needed to fill up from the Customer Representatives. y y y y Distributors Profile Distributors Perspective Feedback Form Distributors Stock and Sales Statement Distributors Pending Claim Summary Distributors Coverage and Numerical Availability CR Profile sheet for Reference Market Work and Service Level Analysis CR s Beat Schedule CR s Coverage and Numerical Availability

y
y y y y

Coverage Schedule
The overall coverage schedule included 32 distributors, 11 CR visits out which I could cover market with 18 CR s. On covering these 35 distributers based in a cumulative 21 towns across eastern Uttar Pradesh, I covered 6 SO s areas and 2 ASM areas. Particulars No. of Distributors met No. of CR covered Number 32 11

Observations
Out of 32 distributors visited, I could capture the response of 29 distributors. The detailed response of the DB s can be seen below. Not Satisfied
Value Pack Launch CFA Appoint. & SCM Service PTD Model Claim Settlement Process TSP Damage Policy CR Initiative

12 13 9 16 10 3

Neutral Satisfied 15 2 1 15 1 19 0 13 14 5 23 3

Analysis and Discussion

Value Pack Launch
y Most of the distributors said that there is no sales and repeat customer for the value pack as it costs Rs 10 for 75gms as compared to other pack which cost Rs 25 for 200 gms. So naturally customer would prefer 200gms packs. Moreover in areas with low average household income people would prefer buying loose bad which cost Rs 10 per 200gms sold under Ruchi brand. However the response cannot be correctly attributed as the launch was recent and it actually takes about 3-4 months at least to measure the correct response from the market. It can also be inferred that it may not help in attracting new customer but it could very well cannibalize the sales of 200gm pack.

y y y

CFA Appoint. & SCM Service

y Almost around 50% of DB s were not satisfied with the CFA and SCM service. They had a common complaint that they were unhappy with the movement of the CFA out of Bareilly. Bareilly, UP is said of be a big hub for CFA with good transportation facility and its location advantage.

Compared to Ghaziabad, bareilly lies in the centre of UP thus giving a better coverage option. DB s from Moradabad, Rampur, Pilibhit, Puranpur, Bareilly, Badaun, Bisalpur, Shahjahanpur were unhappy because of shifting of CFa outside bareilly. Also DB s from kaimganj, kasganj, farrukhabad, etah wanted CFA in Kanpur. They had a very valid reason that due to loading and unloading of stock twice there is a lot damage which has to be beared by the DB s as company does not have any oil damage policy. One complaint made by all the DB s is the unavailability of stock at CFA.

PTD Model
y y Since Nutrela is not a established brand as compared to Fortune and Nature Fresh, customer would always prefer buying the other brands if they are available at same price. In this case we need to provide better competitive pricing to the DB s so that DB see and opportunity in selling the Nutrela brand. In case we do not provide enough margin to DB he will not willing sell Nutrela edible oil even there is a demand from the end customer. By providing enough margin to DB, both DB and retailer sees and opportunity in selling Nutrela over other brand. Also, the company should establish an online system through which daily SMS including rates could be send to all the DB s. Otherwise every time DB needs stock he has to call the SO/ASM for rates and it has often found that they do not provide rates even after being asked by DB.

y y

Claim Settlement Process

y This is one of those areas where company needs to improve a lot. The company has a poor claim settlement procedure. Most of the time the DB is not aware that the scheme provided to him is a secondary scheme. At the end of every month the SO note down the claims of each and every DB. But these claims take over 2 months to be settled. Due to such a long period of time it becomes hard for DB to keep a track of which claims have been settled and which are still pending. To avoid this company should send a credit note to the DB whenever a claim is settled. Few companies have a online claim settlement system such as bungee. Also many companies also adjust the claims in the next bill. There have been many claims which have been pending for months. DB will never forget his claims even its of a very small amount. In yr 2010 company launched a scratch card offer. It s been almost a year the end customer has not received their gifts and the end customer still awaits.

y y

Damage Policy
y y Most of the DB s are unaware about the companies TSP damage policy. TSP being rats favorite food has a lot of damage. How hard the DB tries he cannot stop the damage. Some DB s doesnot want to sell TSP because of the same reason. I think it is very unjustifiable for DB to carry the cost of damage alone. To resolve the company can provide claims for damage due to rats. But this will lead to lot of extra effort which needs to be put down. Another thing which can be done it that company

deducts a fix percentage from the bill of TSP ie company could provide let say 0.5% deduction from the bill for TSP damage irrespective of the amount of damage faced by DB. Apart from TSP the company needs to rethink on providing claims for oil damage.

Account Statement
y y y The account statement provided by the company is very complex and needs serious efforts to understand. The separate entries of Ruchi Soya Industries ltd and Nova Trading Co make it impossible for a DB to decipher. There are different codes used in the A/c statements whose purpose and meanings are not specified. Even the SO/ASM are unable to explain the A/C statement to DB s

Critical Issues and Problems

y Improvise on the claim settlement process. o No credit note send to DB o Should Look into providing more primary schemes o Online claim settlement process Poor communication gap between the top management and end customer o Yearly conference should be held with the distributors o Goodies to DB Lack of brand development and customer loyalty for the brand. o Company needs to come up with new advertisements which should be aired regularly. o Hoarding and wall paints. Poor CFA and SCM service and unavailability of stock. o CFA should be strategically located o Supply Demand should be matched To look into the matter of role that currently the Exclusive CR s play for Nutrela. CR needs to be trained before the pitch for sales Packaging of Nutrela is way behind, poor and dull as compared to Fortune o New pack New look Relook into the Damage Policy o Damage for TSP is must o Claims for Oil damage should be provided

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Benchmarking Report (Distributor practices)

While bench marking instead of comparing Nutrela with the FMCG sector as whole, the bench marking should be done with other oil companies such as Cargill, Adani Group, Bungee etc.

Customer Care Initiative

Currently no other firms provide a similar initiative as provided by Nutrela. The only issue that the Db currently face in this initiative is that there is no follow up action taken on the suggestions and recommendations that are provided by the distributors.

Response time From Company

On an average the response time that is currently offered by other firms is 1 week and current set of Nutrela distributors expect the same for the Nutrela as well. In general there was a universal request of making sure that all the problems/queries relating to Nutrela gets solved within a 1 months time and does not get elongated. Therefore there was a common suggestion from db regarding this to ensure that necessary action is also taken on the problems being faced by them.

SO/ASM Visit frequency

Most of the DB s are happy with the visit frequency of SO/ASM. Other companies also follow the same pattern. There this area does not need any changes.

Replacement Terms
Currently the other FMCG firms either provide a full replacement policy (mainly done by local oil firms) or provide a limited level of replacement policy (done by big oil traders). Another interesting point that was noticed in replacement terms was that some firms have also given their SO a power of making claims up to a certain limit which make the damage process much simpler and quicker for the distributors. If we talk about other big FMCG firms such as Pepsi co and Godrej, Anik, they currently provide a full replacement policy with replacement from both the db and the retailers as well.

Market Credit days

Most of the companies provide zero credit day period. Many small companies however do provide 1015 days of credit period. Thus there need not be any changes in the market credit days

Conclusion
Distributors are concerned their margins and the right stock availability. In order to improvise upon the sales the company needs to keep in the DB s interest as they are important part of the distribution system which will help in developing the brand visibility and loyalty. For this, the product to be attractively priced and available when demanded. Nutrela has great challenge ahead before it becomes a market leader. Right now it competes both with the established and local brands. If a correct strategy is not followed the sales will not improve. Nutrela needs to develop brand loyalty and compete with the other brands on price and availability. Also DB is the most important part in the Supply chain. The companies have a lot of best DB s in almost every town. By improvising upon the customer service, the company can become a market leader in its segment.