An Irate Distributor: The Question of

Profitability

Presented By:
Group 10

Under the guidance of Prof. Madhurima Deb

Case Question

To Convince Sachin Mandore to make further

investments to improve profitability while
explaining him the rationale behind the
investment
Nutripack India
• Nutripack Limited was a Global US Based Food Company with annual
turnover of $10.5 Billion
• NutriPack India limited was strated in 1994 and showed a growth of
18% compared to the global growth of 8%
• Turnover of 7.5 Billion INR with employee count of 600
• Market Share of 12% in a category of about 27 billion INR
• Two products NutriJams and NutriPower accounted for more than
71% of the company’s revenue from India
Indian Retail and FMCG Industry

Penetration for Health Food Estimated revenue of $US

Drinks growing at 25% only 470 billion in 2011 and $675
45% billion in 2016 with CAGR of
7.5%

Processed food and nutritional

food was estimated to be 6 million retail outlets with
around US $ 135 billion in 2012 atleast 4 to 5 levels of
and growing at 10% to surpass intermediaries
US $200 billion by 2015

Multitude of retail formats

Market size of US $ 13.1
from family owned shops to
billion in 2012 and expected
pan shops grocery stores etc.
to reach US $ 33 billion by
2015
Intermediaries
Nutripack
India Ltd.

C & FA

Super
Distributor Distributor

Wholesaler Sub
Distributor

Retailer
About the Situation
• Amit Kumar has taken over the territory
• The past 5 years the company has had a growth of 32% on Y-o-Y basis
when compared to other regions where there is 21% growth
• The Jalgaon region functions on Low margins and high Volumes
• The region has high potential and NutriPack is in 4th rank in spite of all
growth, in past 2 years there has been decline
• It has only one distributor Sachin Mandore
• He has to be persuaded to increase his increase his investment on
NutriPack
Amit’s Perspective
• There is a fall in number of retailers stocking NutriPack’s products
• The market is underperforming and can achieve more
• For achieving better growth the distributor needs to invest more,
penetrate more shops
• More than 50% of the market is untapped
Reasons for Distributor’s repulsion
• Distributor margin is just 4.5% but he has to pay for warehousing and
transport, thus he has very little earning from the process
• The past investments haven’t paid back so there is disinterest
• Credit extended by company is for 14 days but the distributor credit
period for others is 15 days thus it makes the business unviable
Perspective of Retailers
• Stock outs is a common problem
• Non delivery in case of non payments by Sachin’s agency thus
triggering a stock out till next visit
• Poor penetration in some places, Sachin’s Agency targets only big
retailers more
List of Problems/Needs Identified
• Credit Issue
• Issue about Stock outs
• Distributor Margin
• Penetration issues
• Need for Investment
• Ensuring Profitability and good returns for everybody in the channel
Current Financials
• He is getting 7% PAT
• 4.5% is margin on revenues
• Even at 10.5% interest he needs to
pay 20% tax taking cumulative
return only to 8.4%
• However improving sales without
much impact on costs can be of very
favourable impact to Sachin
 Solutions
• Motivation from Marico’s model for existing retailers
• Try to co-relate the retailer stock out with the distributor stock out
• Make a stock replenishment plan so that current retailers have total loyalty
• Appoint a bigger sales force for acquiring more retailers in the area
• Don’t make capital investment, focus on strengthening and then growth
THANK YOU