Distribution policies

Anand Polymers has a two-level distribution network. They have around 10

distributors and 120 dealers. The distributors cover different locations and are
the companys direct clients. Some dealers are in different locations where
distributors are not present and in that case Anand polymers supplies them
directly. Mostly, they prefer dealing only with distributors.
Anand tanks are sold at about INR 5.30/litre. Nandini is also the same rate
while Kalyan is sold at INR 4.80/litre. The process works such that a particular
dealer/distributor has only one brand of tanks, mostly. This way cannibalization is
minimized and there is maximum outreach for the company. Presently dealers
direct customers to the dealer with the preferred brand for the customer.
The tanks do not have a set MRP and the dealers/distributors sell it at their own
rates to customers. The company gives a margin of 8-10% to its distributors and
dealers. There is a credit period of 30 days extended by the company yet in quite
a few cases, the payment time is higher. As described by the owner, leeway is
necessary for dealers or they may join a competitor in what is a very congested
market.
Anand polymers is open to anyone approaching them for dealership. There is no
security deposit or lock in amount required. The first 2-3 consignments are sent
and payment immediately collected by cheque. Once the company is satisfied,
credit is extended to new dealers. Some major distributors and dealers for Anand
Polymers are:
1. SiddhiVinayak Enterprises, Mangalore
2. Natarajan Enterprises, Mangalore
3. Sunrise Marketing, Koteshwar
This is a purely B2B model. Very rarely do customers directly come to Anand
Polymers to buy. If they do, they are a charged a higher rate than what the
dealers generally offers. This way the company either makes a better margin or
the dealer will get a new customer. There is a sales representative for the
company but he only handles the dealers and distributors. Initially, they did try
sending the representative directly to customers but it did not work out. The
representative meets dealers at least once every week while the owner meets
them once in 2 months to continue the good rapport they share.
Enough stock is maintained with the company to be able to service the
dealer/distributor within 1-2 days. The transportation cost is included in the price
quoted to dealers and distributors.

Analysis:

Based on our discussions with Mr. Ganesh Kini, the manufacturing capability is 6
tanks a day. There are 9 different sizes that are readily made.
Nandini 500L and 1000L
Anand 200L to 5000L
Kalyan 200L to 5000L
The 3000L and 5000L are slowest moving goods and there is an inventory of 1015 tanks ready. The other sizes are available in large numbers to be able to
service at short notice.
CAPEX:
Machines INR 60L
Land INR 1 cr
OPEX:
Anand Polymers only considers the cost of manufacturing and purchase in OPEX
costs. The cost comes to about INR 32-35/kg. With a material turnover of 250
tonnes, the cost works out to:
32*1000*250 = 80,00,000/Annual Turnover: INR 4,00,00,000/Initial layout INR 1.6 cr
ROI 5 years
The business has grown to a point where the ROI now would be 6 months. We
can see that the Gross profit is around 3,20,00,000/-.

Growth plans:
In this market, the dealers and distributors rarely go out into the field. Customers
come to purchase and most of the times, they are plumbers who are buying on
behalf of the customer or the customer has been briefed by the plumber on what
to buy.

To further expand, Anand Polymers plans to hold a dealers, distributors and

plumbers meet where they can expand the potential markets for their dealers
and distributors.
Promotion expenses are usually borne by the company to a large extent.
Hoardings and wall advertisements that carry the dealer/distributor name are
mostly covered by Anand Polymers. For their own advertising, weekly or monthly
advertisements are run in local newspapers.