DISTRIBUTION CHANNELS

OF

PIDILITE

Apoorva Yadav(6)

Jayashree Chakrabarti (13)

Ankush Gulati (44)

Shashank Karpal (55)

Vaibhav Mishra (59)

About the Company…..

• Pidilite - established as a partnership firm Parekh Dyechem Industries in 1961

• Started by three brothers -Mr. B K Parekh, SK Parekh and H K Parekh

• Name changed to PDI Industries after merger with Kondivita Industries in 1984

• Merged with Pidilite Industries in 1989 – Merged name changed to Pidilite Industries

• Launched Fevicol Brand in 1956

• Has become Largest manufacturer of adhesive

• Pidilite’s mainstay of earnings is consumer & industrial adhesives and sealants (Almost 60% of turnover)

• Company has in total 40 brands spanning 400 industrial and consumer products

• Expansion of Product Portfolio has lead it to be recognized as a leading FMCG player

• Most brands amongst the top two in their respective segments

• Some leading brands - Fevicol, Parcol, Fevibond, Fevikwik, Pidifix, Pidivyl, Pidiseal, Acrolyte, Fevicryl etc.

• Launched several new products in last few years - Fevi Stik(Super glue stick), Feviseal EasiMix,Prime tape, Acron (art materials)

Fevicol –Company’s Largest Brand.

Fevicol is synonymous with adhesives in India. Pidilite offers an extensive range of consumer, craftsmen, engineering and industrial adhesives under Fevicol brand name. Excellent quality, extensive product range, close relations with customers and award winning advertisement have made Fevicol one of the most trusted brands in India and the largest selling adhesives brand in Asia.

• Pidilite offers a range of hobby & craft products under the Hobby Ideas brand name. The products are complemented with book, videos and training workshops to make hobby fun and easy for hobby enthusiasts. Pidilite has also opened India’s first chain of hobby & craft retail stores under the Hobby ideas brand name. The shops offer a large variety of hobby & craft products sourced from around the world.

• Pidilite offers a wide range of constructions chemicals under the Dr. Fixit brand name. The extensive product range is used for waterproofing and repair for both new & old constructions. Dr. Fixit is market leader in retail market of construction chemicals and the products are available in all leading cement, hardware, tile and paint shops.

• M-Seal is India's leading sealant brand. Pidilite offers a range of sealants for sealing, joining & repairing applications for both consumer & craftsmen market under M-Seal brand name. M-Seal is also gaining acceptance in international market.

• Pidilite acquired Roff brand in 2004. Roff is a pioneer in construction chemicals in India and is well known for modern tile fixing solutions like tile-on-tile and waterproof tile joints. Pidilite also sells several construction chemicals under Roff name for application in waterproofing, sealing, flooring, concrete treatment & plastering

DISTRIBUTION STRUCTURE

MANUFACTURING UNITCHANDIGARH(HARYANA)

AMRITSAR(PUNJAB)

Main GODOWN(DELHI)

COMPANY DEPOT.(KANPUR)

C&F AGENTGHAZIABAD

WSS(42) WSS(46)

WHOLESELLER RETAILER RETAILER WHOLESELLER

FORMAL

INFORMAL

Distribution Structure

MANUFACTURING UNIT

Main GODOWN

C & F CO. DEPOT

WSS

RETAILER

PRIMARY SALES

SECONDARY SALES

Ownership Flow

OWNERSHIP TRANSFER

• Goods are first manufactured in the company owned manufacturing units situated at Vapi, Bhiwandi and Malhaar

.

• Goods are then sent to the various Main Go-downs spread across the country for further distribution.

• Goods are then sent to the C & F agents and the Company owned Depots

• Retailers also sell the goods to the end consumers under their dealership.

TRANSPORTATION SYSTEM

FACTORY (MAHARASTRA)

MOTHER GODOWN

TRUCKS

KANPUR(COMPANY DEPOT)

GHAZIABAD(C&F AGENT)

TRUCKSTRUCKS

WSS(42)WSS(46)

TRUCKS TRUCKS

RETAILER RETAILER RETAILER RETAILER RETAILER

3 WHEELERS/VANS

TRANSPORTATION SYSTEM

Transportation system from the factory to the respective distribution stages are covered solely by road.

From the factory, the goods are transferred to the Main go-downs in respective zones via trucks.

Then trucks are used to transfer the goods to company depots and C&F agents.

Then the goods are sent via trucks to different WSS in their assigned regions.

Later the goods are sent to wholesalers or retail outlets, via three wheelers or vans.

C&F AGENT

• C&F Agent have infrastructural and transportational facility

• They are responsible for the transfer of goods.

• No sale takes place at this level.

• These C&F agents get monthly emoluments from the company for their service

DESCRIPTION OF CHANNEL PARTNERS

WHOLESALE STOCKIST

• Wholesale Stockist are a very important link between the C&F Agents and the retailers.

• The number of these stockist is not fixed and varies according to following :

The sales potential of the region. The geographic size of the region. Primary sale takes place at the Wholesale stockist.

Hence :their selection, motivation and evaluation becomes very important to the company

RETAILERThe WSS sell the goods to the retailers who in turn sell it to the end

consumer.The retailers are classified in terms of their sales potential in the

following manner

The retailers are classified in terms of

Class A Greater than Rs 30,000 pm

Class B Between

Rs 30,000-10,000 pm

Class DBelow Rs 5,000

Class CBetween

Rs 10,000-5,000

SELECTION OF WSS Capital Investment

This is dependent on the

• Present required turnovers

• The estimated future capital investments that will be required by the distributor

• based on company’s growth plans in the area Infrastructure

The basic infrastructural requirements for a WSS are :

• Two rooms measuring at least (10*10) sq. feet each.

• Delivery vehicles preferably 3 wheelers

• Sales executives called Interim Sales Representatives or ISRs.

• Storage godown

Relevant Experience

• It is imperative that the distributor has had at least 2-3 years of experience as a channel member in the FMCG sector

• So that no training is required to be imparted to him on aspects of the business.

• The distributor should not be dealing in competitor’s products.

• Should be able to function as a dedicated channel for Pidilite.

• The business should not be driven by his staff rather has complete self involvement.

COMPANY

C&F AGENT

WSS A WSS B WSS C

SOLD AT 108.93

SOLD AT 112.30 (MARGIN 3%)

SOLD AT 112.30 (MARGIN 3.25%)

SOLD AT 112.30 (MARGIN 4%)

SOLD AT 108.65

SOLD AT 107.82

BILLED AT 114.60

MRP 127

BILLED AT114.60

MRP 127

RETAILOR RETAILOR RETAILOR

BILLED AT 114.60

MRP 127

INCENTIVES TO THE WSSMargin based payments

Adventure Works: The ultimate source for outdoor equipment

A.UNDERCUTTING

•AT THE WHOLESALER

WSS

WHOLESALER RETAILER

112.30 112.30

110

CHANNEL CONFLICTS

• TO WOO THE RETAILER TO BUY OTHER NON BRANDED PRODUCTS.

ON THE NON BRANDED PRODUCT,HE CHARGES HEAVY PREMIUM

THIS MORE THAN OFFSETS HIS LOSSES ON PIDILITE PRODUCTS

Reasons for undercutting

SELLS BELOW DEALER PRICE

AT THE RETAILER

WOO THE CUSTOMERS TO BUY OTHER ON BRANDED PRODUCTS

CHARGE HEAVY PREMIUM ON OTHER PRODUCTS

RETAILERS PRIMARILY DEALING IN MICA,PLYWOOD ETC

o DONE BY B OR C CLASS WSS IN A TERRITORY EARMARKED FOR WSS A

CLASS CO PRICE SP

(OWN AREA)

SP

(WSS A AREA)

RETAILER

SP

CLASS A 108.93 112.30 112.30 118

CLASS B 107.82 112.30 110 116

The main reason for this is to gain higher volumes and to gain revenues.

• Once a distributor is appointed, the company generally does not take away business from him, except when the underperformance has been observed over long periods.

• While evaluating his performance, his targets performance is studied relative to that of

other distributors in the nearby area (because growth patterns may by regions).

• Also, if a WSS is found guilty of Stock inflow,he is terminated.

EVALUATION

• The WSS sells the goods at credit to the retailers for a 20 day period .

• The retailer has to pay within the limited perioud or the 1% cash discount which is offered by the company,is not given to the retailer .

• As already explained,out of 2%CD( Cash Discount) given to the retailers,1% is given at the time of delivery and 1%if the retailer pays back wihin 20 days.

• In case the payment is not made in 20 days,an intrest n the money @4%is charged by the WSS.

• If the retailer does not pay by the end of the month,the remaining goods are confiscated by the WSS,as a company policy .

CREDIT POLICY

• STOCK POLICY:

• As per the company regulations the distributor is supposed to maintain a stock of 3 weeks .

• The stock is formalized by the company; the dealer can negotiate on 3-4 end days, the stock policy is formed for the month.

• RETURN POLICY :

• The company follows a policy of return when the product has not been sold for six months, is damaged or has defects.

• RETURN ON INVESTMENT :

• The company does not gives any guarantee to the distributor with regard to returns on his investment which is in line with the market credentials of the company .

• PROMOTION POLICY :

• The trade promotions are mostly secondary schemes,which are primarily for the retailers.

Thank youThank you