Paper Group 5 v6

8/3/2019 Paper Group 5 v6

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Group 5, Sec A

Sales and Distribution Management

Avinash Madhavan, PGP26331

Goutam Yenupuri, PGP26279

Guru Prasad, PGP26280

Ravi Makwana, PGP26226

Radhakrishna Gunde, PGP26297

Santosh Kamble, PGP26308

Mauelle Graff

Group 5, Sec A

Sales and Distribution Management

Avinash Madhavan, PGP26331 Goutam Yenupuri, PGP26279 Guru Prasad, PGP26280 Ravi Makwana, PGP26226 Radhakrishna Gunde, PGP26297 Santosh Kamble, PGP26308

Mayuele Graff IEP12015

PAPER INDUSTRY-A Sales & Distribution Perspective


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The Paper Industry

An industry on gradual decline since the advent of PC

MS Office a potent enemy for writing paper, Internet for newsprint &printing

On the upside growing abolishment of plastics and polymers

as packaging material

Interesting Facts for the industry in India 15th largest market worldwide, per capita consumption low at 9 kg;

compared to Japan (250 kg), S. Korea (170 kg), China (46 kg)

Main raw material is straw bagasse as compared to soft wood

worldwide, 40% of paper is recycled

De-licensed since July97 and foreign equity participation allowed up to100% yet no foreign player of note in the industry except International

Papers acquisition of AP Paper

Ballarpur Industries, one of the key players along with ITC was once one

of the 30 shares comprising BSE Sensex, now almost a penny stock

trading at ~Rs 25


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Product segments

Industry

Paper & Paperboard

Writing

Printing

Packaging

Tissue

Newsprint

Writing &Printing

coated wood-free

uncoatedwood-free

copier paper stationery cream-wove


4/21

Customer segments

Building Wallpaper

Business Copier Paper, Stationery, brochures,letterheads

Domestic Tissues, paper plates & cups, toilet paper

Media Magazines, Newspapers Publishing Books

Educational Exercise Books, Wall charts

Electrical Insulation

Entertainment Cards, board games, kites, etc. Industry Packaging, Filtration, cigarettes

Financial Money, forms, certificates

Covering B2C & not B2B & B2B2C


5/21

Business changing from the traditional production & distribution driven to consumer-centric

business with finished products - Office Supplies and Stationery and also Retail (P3)

Paper Mill

Distributor

Paper ProductsCompany

Wholesaler

Retailer

ProductionCentric ConsumerCentric

PaperMill/Products

Distributor

Wholesaler

Retailer

Modern Trade

Office Planet

Landmark

Big Bazaar

P3 (Print, Paper, Pens)

Navneet

Stationery

Office supplies & stationery


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Segmentation by behaviorProduct

segment

Consumer

Segment

Type of Product Characteristics of consumer behavior

Copierpaper

Price sensitive Convenience Product Low consumer involvement Low brand difference Low risk Low effort Consumers passively receive information

Brand loyal Preference Product Medium to high consumer involvement

Medium to high brand difference Low risk Moderate effort Behaviour passes through the standard cognitive

process of beliefattitudebehaviour formation.

Stationeries Price sensitive Convenience Product Low consumer involvement L

ow brand difference Low risk Low effort

consumers passively receive information

Brand loyal Preference Product Medium to high consumer involvement Medium to high brand difference Low risk Moderate effort


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Key Players

ITC Paperboards & Specialty Paper Division

(Secunderabad, AP)

(Finished Product Brands: Classmate, PaperKraft)

Ballarpur Industries (Gurgaon, Haryana) (Brands: Royal Executive Bond, BILT Matrix, 10on10)

JK Paper (Delhi)

Tamil Nadu Newsprint & Papers (Chennai)

Century Pulp & Paper (Mumbai) (Brands: Century Copier)

AP Paper Mills (Secunderabad, AP)

Bindal Papers Ltd. (Muzzafarnagar, UP) (Brands: Bindal FinePrints)Yash Papers Ltd (Faizabad, UP) Sidharth Papers (Kashipur, Uttarakhand)


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Design of Sales channel PAPER MANUFACTURER

Fixes Quotas based on production capacity and demand

Cash terms with Distributors, wholesalers and retailers Highest bargaining power

Takes order on a real-time basis and fulfills them based on inventory levels andproduction capacity

DISTRIBUTOR Offers a maximum of 60 day credit to retailers/ wholesalers

Deals on a cash basis with the manufacturer Takes orders on a real-time basis from the retailers and can also place orders real-

time. However, order consignment is received on a weekly basis.

Margin: 2%-3%

Uses third-party logistics for transferring goods from godown to company

WHOLESALER

Deals on both cash and credit basis with retailers depending on the size of business Also manufactures notebooks from paper purchased

Margins: 2%-3%

RETAILER Supplies to end consumers ( Xerox shops, SMBs, offices, etc)

Margin: 8-10%


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Kartikeya Distributors (BILT)

Paper Mill

BILT

Distributor (UP)

Karthikeya Distributors

Wholesaler

100+ in UP

Retailer

Far flung areas

Retailer

900+ in UP

Bulk Customers

Xerox Shops

InstitutionalCustomers

Large IT Companies

Company OwnedShowroom

P3

Modern RetailWarehouse

Big Bazaar

Front End

Big Bazaar

Kartikeya Distributors is the exclusive distributor for BILT (factory located near

Gurgaon) for UP. Located in Gwynne Road where most other paper distributors

in Lucknow are located.

Turnover: Rs. 80 Cr Infrastructure: 3 Warehouses in Allahabad, Kanpur and

Lucknow, 5 Retail OutletsEmployees: 52 Distribution: 1000 wholesalers & retailers

Incentives: None Technology:Tally (Licensed) for accounting

BILT produces Grade A Paper - highest quality, lowest margins for dealers. Asthe demand is high it has fixed quotas for its regular buyers and supplies above the

quota on a case to case basis.


10/21

LUCKNOW PAPER Distributors (JK)

Paper Mill

JK paper

Retailer

Bulk Requirements

Distributor(UP)

Karthikeya Distributors

Wholesaler

100+ in UP

Retailer

Far flung areas

Retailer

900+ in UP

BulkCustomers

Xerox Shops

InstitutionalCustomers

Notebook Makers

Modern RetailWarehouse

SPAR

Front End

SPAR

Lucknow Paper Distributors is an exclusive distributor for JK Paper (factory

located in Rajgangpur, Orissa). It is also the distributor for 3 small scale Grade B

& C Manufacturers. It is located in Lalbagh in Lucknow.

Turnover: Rs. 30 Cr Area: Lucknow & Allahabad

Employees: 22 Distribution: 600 wholesalers & retailersInfrastructure: 1 Warehouse Technology:Tally (Licensed) for accounting

JK Paper produces Grade A Paper - highest quality, lowest margins for dealers. Italso does quota based distribution.


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K.K. trading Co. (trident)

Paper MillSuper

StockistSub-Dealer Retailer

K.K. Trading Co. is distributor is an exclusive distributor for Trident (factory

located in Nainital). It manufactures Grade A Paper and is a relatively new entrant.

It is located in Aminabad in Lucknow. The company is also a dealer(non-exclusive) for Orient Paper, Bharat Paper & Abhishek Industries

Turnover: Rs. 50 lakhs Distribution: 15-20 sub-dealer

Employees: 10 Infrastructure: 3 warehouses & 1 SOArea: Eastern UP

Incentive: Quantity discounts (75P to Re. 1) per kg for quantity >150-200 tonnesCash discount for specific products (passed on to retailer/customer)

Trident has 3-4 super-stockists per state

Credit provided by company to distributor in range of 15 days to 3 months

The margin for the distributor is 2-5%Logistics done by 3rd party - GATI


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CHANNEL CONFLICT

Retailer directly purchases from the manufacturer if the order size is significantly large

causing loss of business to the distributor/wholesaler

Bargaining power heavily in favor of large players like BILT who employ take-or-paycontracts. Distributors may want to shift to smaller players given low-differentiation

and as quality improves for smaller players

Small Players try to push sales during off-season by delivering quantity more than thatordered leading to loss of trust

Lack of Availability at the distributor level also frequently leads to retailer switching toanother exclusive distributor.

Price difference for end-consumer in modern retail and traditional chains is causing

conflicts between smaller distributor/retailers and established modern retail channels

Difficult for retailers to make significant growth in revenues as end-consumers likexerox shops may purchase directly from wholesalers


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AREAS OF IMPROVEMENT(Distribution Channel)

The industry has been in transition whereas earlier the supply-demand equation was infavor of manufacturer, now the larger distributors have option of procuring by import(Brazil) as global logistics systems improve

Quota System is an age old strategy to appease dealers given supply-demandmismatch and also to save companies the pain of forecasting. Now with systemsavailable to identify trends and forecast, it may be relooked

There is general deficiency in usage of statistical analysis in this sector. A transactiondata base can be built to do customer and product segmentation and pricing can bedone better

Smaller Players can employ CnF agents to stock surplus in off-season rather thandump on to the stockist

We generally found company sales staff complacent and uncooperative. Trainingprograms may help to forge better relationships with dealers and also to be better ingathering market intelligence

The large players could train the distributors on adding value to paper by processinginto other value-added products like notebooks, envelopes, bags, etc.


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Sales channel design

Territory Design

Recruitment of Sales Force Mainly through referrals and advertisements

Very low attrition rate.

Employee strength is kept optimum

Training No Training. Only reactive corrective action.

Sales Target Average sales target set for Kartikeya byBallarpur for the UP state is around Rs 5 crore monthly Sales Target is set byBallarpur which is divided judiciously among the salesman The target is monitored by Sales head through personal correspondence with the salesmen Kartikeya gives non monetary incentives to Salesmen, BILT gives incentive once a year for

achieving the set target consistenlty

Criteria Example

By Area City, Region or district

By Retailer size Turnover of Rs. 5Cr and above

By Paper type normal paper, hygiene paper, copier paper


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Some salient information

Competitor's information is obtained by sales headthrough market visits which is conducted once inevery month

Retailers are open to divulge competitors product

details as there is no loyalty to any particular dealer Retailers dont have any prejudice to any particular

company as product is very similar; they only seekquality at low price

Relationships are maintained with retailers bydistributors through formal and informal means

Kartikeya Distributors serves 1000 + retailers in UP


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Sales Hierarchy (BILT)

National Sales

Head (VP Sales)

Zonal Sales(GM-Sales)

Regional Sales(DM-Sales)

Area Sales(ASM)


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Sales Hierarchy

The Sales Hierarchy is very simple and formal The salesmen of various citiesdirectly report to the Sales head of Kartikeya (located in Lucknow)

The Sales head directly report to the assistant general manager of Kartikeya

The incentives, motivation and the setting of sales target for the salesmen ishandled by the sales head

AGMKartikeya

Sales Head

Kartikeya

Salesmen

(Lucknow)

Salesmen

(Kanpur)

Salesmen

(Allahbad)


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Sales hierarchy: Trident papers

Country SalesHead

Regional Sales

Manager

Area SalesManager

Sales Officer

Regional Sales

Manager

Area SalesManager

Sales Officer

Regional Sales

Manager

Area SalesManager

Sales Officer

Regional Sales

Manager

Area SalesManager

Sales Officer


19/21

Design of Sales Territories

CompanyL

evel Whole Indian market into four zones viz. east, west, north andsouth

Created sales territories on the basis of balancing salespotential and balancing workloads

Each zone is divided into 4-5 sales areas Each sales area is sub-divided into 8-9 sales territory. (These

could be a town or combination of 2-3 districts)

Macro Level (Distributor) Each super stockist serves a bunch of 4-5 districts called region

Each district or town or district is divided into sales bits

one or two sales executive serve each sales bit depending on thesize of bit and volume generated from the bit


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Selection, Training andEvaluation of Sales Personnel

Selection Process1) Pre Interview Screening2) Preliminary Interview3) Final Interview4) Medical Examination5) Checking References

6) Job Offer7) Induction Programme

Sales TrainingPeriodically trained on new trends in market and effective skills for

sales/marketing of products

Evaluation of Sales Personnel

Evaluated quarterly for their targets Monthly reports from the sales executives are reviewed to monitor

the progress


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Industry contacts

JK Paper

Chief Distributor Details:

Name: Lucknow Paper Distributors

Location: Lalbagh

Owner : Mr. I.D. Goyal

Mob: 9935595472

Regional Sales Manager : Mr. Suman

Mob: 991003369

Location: New Delhi

BILT


Name: Kartikeya Paper Distributors

Location: Aminabad

Owner : Mr. Harendra Rai

Mob: 9919501311

Regional Sales Manager : Mr. Bhanu Kapoor

Ph: 011 - 40549234Location: New Delhi

Trident Paper


Name: KK Trading Co

Location: AminabadOwner : Mr. Mohit Khanna

Mob: 91612050000

Regional Sales Manager : Mr. Anil

Mob: 9919501314

Location: Barnala

Century Paper


Name: Agarwal Paper Distributors

Location: AminabadOwner : Mr. Sudhanshu Agarwal

Mob: 919335904453

Regional Sales Manager : Mr. Kishore Kumar

Mob: 011- 22056450

Location: Nainital

Documents

Paper Group 5 v6