A STUDY ON SALES & DISTRIBUTION CHANNEL

OF

JK PAPER MILLS LTD.

JAYKAYPUR

BY

PURNO CHANDRO PANDA(Reg No: 35106116)

A PROJECT REPORT

Submitted to the Department of

SRM SCHOOL OF MANAGEMENT

In partial fulfillment of the requirements

for the award of the degree

Of

MASTER OF BUSINESS ADMINISTRATION

IN

SRM SCHOOL OF MANAGEMENTSRM UNIVERSITY

MAY 2008

ACKNOWLEDGEMENT

I am very much indebted to Dr. JAYASHREE SURESH, Head of

the Department MBA, SRM School of Management, Kattankulathur for

her encouragement during the project and the college management

for providing me all facilities to do the project work in JK PAPER LTD.

With profound sense of gratitude and regards, I acknowledge the

support and guidance of my internal project guide, Mr. ARUN KUMAR,

SRM School of Management Studies, Kattankulathur for his excellent

guidance and valuable suggestions throughout the execution of this

project.

I take this opportunity to thank Mr. KULDEEP SINGH

(Marketing manager) for his able direction of professionalism in

allowing me to complete the project work.

I also wish to express my sincere thanks to Mr. RANESH

BARNALA (HR manager) who gave me an opportunity to do

project here and all the staff members and non teaching staff in the

Management Department and the respondents for their kind Co-

operating during my project.

I would like to thank my parents, brother, for their invaluable

support and help even though I could never thank them enough.

DECLARATION

Purno chandro panda is a bonafide student of SRM School of

Management, Kattankulathur and would like to declare that the project work

titled "A STUDY ON SALES & DISTRIBUTION CHANNEL OF JK PAPER

MILLS LTD.," was undertaken in partial fulfillment of Master of

Business Administration degree course of the SRM University is my

work and was not duplicated from previous report.

(Purno chandro panda)

CONTENTS

SL.NO CHAPTERPAGE NO.

1. INTRODUCTION 1

2. OBJECTIVE OF THE STUDY 2

3. SCOPE OF THE STUDY 3

4. ORGANISATION & COMPANY PROFILE 4

5. DISTRIBUTION AND SALES 11

6. PRODUCTION AND PACKING 31

7. FINDINGS 60

8. SUGGESTIONS 61

9. CONCLUSION 62

10. BIBLIOGRAPHY 63

Manufacturer Manufacturer Manufacturer ManufacturerOr or

Or OrProducer Producer

Producer Poducer

Retail Wholesale Agents

Consumer Consumer Consumer Consumer

(Direct) (Direct) (Direct) (Direct)

SELECTING AN APPROPRIATE CHANNEL :

Marketing channel decision is among the most important decision that management

faces. A company channel decision is linked with every other marketing decision. The

company’s pricing depends upon whether is uses mass merchandise or high quality

specialty stores. The firm’s force the advertising decisions depend on how much

persuasion training, motivation and support the dealer need. Whether a company

develops or acquires certain new depend on how those products fit the capabilities of

its channel members.

As distribution is often the least flexible element of the marketing mix, distribution

channel decision is a key component of the marketing mix. Distribution Channel

decisions often involve long-term commitment to other firms. The management must

design its channel carefully with an eye on tomorrow because once a marketing

channel is established it is difficult and costly to change it.

Channel decisions refers to the selection of best routes, paths, for moving goods form

product to consumer and it is to be carefully decided because :

The cost involved in the use of channel enter the price that consumer has to

pay.

The channel decision also has a bearing on other marketing decisions linking

pricing, product and pricing.

The selection of channel is generally governed by the following factors:

The nature and type of product :-

The factor to be considered while deciding a channel are product’s price,

weight, standardization products, nature, after sale service.

Nature and extent of market: -

Areas to be considered are market size nature of the consumer (according to

their use) location of the buyer, number of consumer etc.

Existing channel for comparable products: -

While taking decisions about the marketing channel the channel operated by

the competitors are also to be considered.

Cost involved in distribution:-

It is the most important factor that determines the marketing channel.

Buying habits the consumer: -

While deciding the channel the company must make an expectation of the

quantity to be purchased by the consumers.

Middleman consideration:-

The Company must take into consideration the availability of the middleman,

the cost to be incurred and the benefit to be received etc.

Manufacturer’s considerations:-

The financial position of the company or the manufacturer and the volume of

production also matter while deciding the marketing channel.

In making a choice the manufacturer has to consider his objectives, resources and the

channel available to him after considering the above factor. The most preferable

channel of distribution which will produce the combination of sales volume and costs

that yields him the maximum amount of profit.

Family it may be concluded that a rational decision for marketing channels should

ensure:

Maximum geographical coverage of the market.

Maximum promotional efforts.

Minimum cost.

Criteria for evaluation of channel members:

The task of manufacturer does not end after the channel has been decided. The

services performed by the various agencies are also to be evaluated or reviewed at

frequent intervals.

The following criteria may be used for evaluation of channel members:-

Their sales performance.

Their marketing capabilities.

Their motivation to increase the volume of sales.

Competition faced by them.

Their growth prospects.

CHANNEL DESGINING DEVISIOSN:

While designing the channel the following steps need to be followed:

1. Analyzing customers needs i.e. service output levels desired by target customers.

However channel produces 5 services outputs.

Lot size.

Waiting time.

Spatial convenience.

Product variety.

Service back up.

2. Establishing objective:-

the objective should be started in terms of targeted service output level under

competitive condition channel instruction should arrange their functional task to

minimize channel costs with respect to desired level of service output.

3. Identifying the major channel alternatives: - a channel alternative is described

by the following three items:

Type of available business intermediaries.

The number of intermediaries.

Terms and responsibilities of each channel members.

4. Evaluate the major alternatives: - under the light of economic, control,

adaptive criteria.

5. Establishing the distribution system.

FUNCTIONS OF MIDDLEMAN OR INTERMIDIARIES :-

Market channel members are critical to the success of any market endeavor because

they specialize in facilitating exchanges. They help in reducing the cost of

distribution.

Marketing intermediaries can be divided into two categories such as:

Merchant: are the intermediaries who assume the ownership of products

and resell them at a profit.

Agents: - the intermediaries under this category do not purchase products

and as such assumes no ownership of products. They negotiated and expedite

between the buyer and seller for commission.

Generally the channel members perform the following functions:-

1. SORTING: - It is the process through which the supply of goods and services

produced by the manufacturer is matched with the assortment demand by the

consumer. The activities performed by the middleman, under sorting are:

a. Sorting out : - Classifying the heterogeneous product.

b. Accumulation : - It means combining small groups of similar products into large group of homogeneous products.

c. Allocation :-It means breaking down large homogeneous stock into

small groups.

d. Assorting : - It is combining products into collection or it also refers

to the assortment which satisfier the consumer demand.

2. BUYING: - The middleman purchases a broad assortment of good from producer or the channel members for selling purposes.

3. CARRYING INVENTORY: - The middleman assumes all the risks lies with the purchase of the inventory.

4. SELLING: - The channel member performs all those activities, required to

sell a product.

5. TRANSPORTATION: - Sometimes the channel members arrange for the

transshipment of production.

6. FINANCING: - Middleman provides the funds to cover the cost of the

channel activities.

7. PROMOTING: - Middleman or channel members perform all the activities

to market the product or to promote the product in the market.

8. NEGOTYATING: - sometimes the channel member negotiates for the price

fixation.

9. MARKETING RESEARCH:- channel members also provides the

information about the market

10. SERVICING: - Middleman provides various services such as credit

delivery return etc.

ROLE OF MIDDLEMAN IN INDIAN ECONOMY :-

WHOLESALERS

Through the channel members are an important part of the organization and they

perform certain various functions some complaints made against them are as follows:-

It is very often contended that the charges a made by the middleman are much

more than the due to them and that this is due to their effort to appropriate as

much as possible out of the price paid by consumers.

Sometimes it is also argued that the number of middleman is too high and they

are nothing but parasites thriving at the expenses of the consumer.

During the period of shortage they concern supplies and dictate the price

which customer has to pay or has to go without the product.

Sometimes the services performed by the middleman are not up to satisfaction.

They do not take interest in increasing sales volume. Neither have they born

the risks arising out of the strikes, disturbance, recession etc.

Most of them just work as transfer agents.

As a step towards elimination of middleman, some manufacturer have started opening

their known retail shop. If would thus appear that some manufacturers are trying to

perform the functions of wholesalers themselves and the target of their attack is the

wholesaler but not retailers.

RETAILERS

The federation of India Chamber of Commerce and Industry has pointed that retailer

in India work on very low margins varying from 1.5% to 7.5%.

The Indian retailers are able to survive on low margin, due to his remarkable

capacity for thrift.

When there is keen competition retailers tend to undercut each other.

They perform various functions such as finance, risk sharing etc.

They compensate themselves by taking higher margin on their products or by

increasing their turnover.

RECENT TRENDS IN MARKET:-

In recent times firms have been taking to different kinds of non-traditional channel

arrangement such as:

a. Out sourcing of channel arrangement / marketing logistics.

b. Exclusive retailing.

Out sourcing of channel arrangement / marketing logistics.

Complete out sourcing of channel arrangement is the most striking of non-

conventional attempts. In this kind, firms contract outside logistics specialists to

operate as their marketing channels.

Exclusive retailing:-

Many firms’ have practicing exclusive retailing for the past several years. In recent

years however the idea has proliferated fast. More and more companies are now

recognizing the adequacy of the traditional wholesaler, retailers and are going in for

exclusive retail and are going in for exclusive retail network.

The different forms of exclusive retailing are as follows:

Exclusive dealers without franchising arrangement.

Exclusive retailing through showrooms.

Exclusive retailing through shop-in-shop.

Franchising.

ORDER PROCESSING AND EXECUTION SYSTEM :-

DIRECT INDENT DIRECT INDENT DIRECT INDENTFROM FROM FROM

WHOLESALER WHOLESALER WHOLESALER

MILL

SCRUTINY ASPER LAID DOWN

PROCEDURE

ACCEPTANCE OFORDER

ORDERCONFIRMATION

PRODUCTIONPROGRAMS

MANUFACTURINGAND

DISPATCHESTO CONSUMER

DIRECT TO THE THROUGH TOCONSUMER BRANCHES AMD WHOLESALER

CPMSOGMENT

PRODUCTION SECTION AT JK PAPER MILLS PVT LTD

PRODUCTION PROCESS:

After the orders are been scrutinized the next stop of the process is to issue production

letter containing the order’s size, specification etc.

The production department now manufacturers the product as per the specifications by

the sales department. The following is the production Process of the J.K.P.M.

First the raw material (Bamboo and Hardwood) are introduced in the Chipper Plant.

The raw-material are come out in chips of different sizes. The chips are graded into

acceptable and unacceptable chips. The unacceptable chips are recycled back to the

chipper plant and the acceptable\chips are stored in the silos. From the silos chips are

introduced to the digester where chips are cooked by addition of chemicals. Here the

chips are reduced to raw-pulp which is introduced into the blow tank where the

washing, bleaching, screening is done to get the pulp. Then the pulp is sent to the

stock preparation where it is refined and desired colors are added to the pulp. Then it

is introduced into the paper machine to get different type of papers.

FLOW DIAGRAM

Raw-materials Chipping Digesting Screening

Washing

Bleaching

Addition ofPassed to paper

machine Chemical Refined Pulp

Screening

MACHINE WISE PRODUCTION :

Paper Machine – I

Variety GSM

Maplitho 80-160

Pulp board 180-285

Paper Machine – II

Variety

M.G. Posters / TDL Posters 29-90

Paper Machine – III

Variety

J.K. Copies, modi Xerox 75-80

Maplitho 90-100

Paper Machine – IV

Variety

J. K. Bond 58 and above

Excel Bond 70-80-90

Maplitho 54-70

Wax match tissue 44

PRODUCT MIX OF JKPM :

A product mix consists of all the product lines and items that a particular seller offers

for sale.

J.K.P.M. being a producer of quality paper offcers variety of papers. Here in the

machine itself the various products mixes are made. The product mix of J.K.P.M., is as

follows :

VARIETY OF PAPER BUDGETEDPRODUCTION

J. K. COPIES 48176

PULP BOARD 7873

SPARKEL COPIES 2043

JK COPIER PLUS 613

JK EXCEL BOND 1224

SS MAPLITHO 25598

JK EVERVITE 3216

POSTERS 5373

JK BOND 1823

PACKAGING AT JK PAPER LTD.

PACKAGING :-

Packaging is the activities of designing and producing important tool. Packing is

required to protect the products form damages and to place the product in a right and

sage condition. It performs many sales task from attracing attention to describing the

product to making better sale of the product. JKPM adopted the following method of

packaging for safe delivery of the product.

PACKAGING MATERIAL :-

Wrapping paper use for Reams packing.

Reinforced plastic Fabric pieces used for Bundle packing.

Plain HDPE cloth used for Reels and Bundle packing.

Laminated wrapping paper used for copies packing.

Cartoons used for packets of copier packing.

Bop tape for cartoon packing.

TYPES OF PACKING :-

The types of packing varies according to different variety.

For copier paper 500 sheets are packed by alaminated wrappin g paper. JKPM

printed (or modi Xerox printged in case of goods going to the modi xerox

company) then packets of 5 or more are agin packed in a cartoon according to

the size of the cartoon.

For other large size writing, printing and packing paper are primarily packed

by a wrapping apaper which is called reams. The number of sheets in a ream

may be 150/250/400/500. then number of reams are agin packed by a plastic

fabric pieces which is called bundle.

But in case of goods going for export, reams are packed into a pallets made of

wood. Then a ploythin cover round the paletts.

In case of Reels they are packed by plain HDPE cloths.

MODE OF PACKING :-

For packing of paper both the system Manual and Automation are exist in the

company. Automation system used for the packing of copier paper. All the reams,

Bundles, Reels are packed by manually.

SUPPLY OF PACKING MATERIAL :-

Except wrapping paper all the other packing materials are supplied by outside agency

on contract basis. Wrapping paper are produced by the company itself.

The information mart on reams and bundles :

Identification of the mark of mills.

Commodity name.

Variety name.

GSM

Size of sheets

Dae of packing

Reels :-Identification of the marks of mills

Commodity name Variety name

GSM

Reels serial number

Width, diameter

Date of packing

Gross weight

Mark of industrial use.

DISPATCHES :-

Creating a customer and creating a product do not complete the process of marketing.

Delivering the product is an equally important part of the process. Once the paper are

ready after packing the next step is to plan for the dispatches as per the specification

received at the time of receipts of orders. While planning for dispatches the most

important decision is to be considered is the distribution channel. Distribution channel

are the means and way by which the product moves from the producer to the

consumer. The physical distribution system is an important marketing devise which

calls for planning, iomplementing and controlling the phgysical flow of goods and

services from the points of origin to the points of consumption in order to satisfy the

consumer at a profit.

The dispatch planning can be for sale propose or for branch depots transfers.

Since paper is a mass consumption item usually mass distribution strategy are

employed in paper industry. JKPM has a distribution net work employing 118 odd

wholesaler and 5 consignment agents having numerous dealers and retailers under

their fold.

Depending upon the purchasing pattern consumers are divided in to 5 categories.

1. Direct consumer.

2. Wholesaler

3. Consignment agent.

4. Branch / depots

5. Dealers

6. Retailers

7. Export Buyers

WHOLESALER :-

A wholesaler is a trader who purchases goods in a large quantities and results to

retailers in small quantities. Wholesaler generally places order through branch officer

or in some cases directly to the mill on behalf of the retailer. In the case when the

wholesaler places their order through branch office, the order is to be executed through

Branch Office. Company has nothing to do with the retailer, Wholesaler are fully

responsible for payment delivery to the company. The company has totally 118

numbers of odd wholesalers covering of the major cities in India. The company has

more than 5000 retailer all over the country.

Although the title of goods flow from JKPM to the dealers, organization has the

typical system of appointing wholesaler who are risk takers and have been vested with

the responsibilities of developing dealers in their respective geographical domain and

product line. They are appointed basic on their:

Past business experience.

Financial credibility.

Organization market.

Distribution strategies for specific regions.

Distribution strategy for products.

The Wholesaler raise indents in the name of the dealer identify by them and the

consignment are billed on such dealers. In other words dalers take ownership and are

liable to pay for the same . However in case any consignment is not honored by the

dealer for any reason whatsoever the wholesaler has to accept the material as a case in

need buyer and take possession of the goods. Similarly wholesaler has to pay for any

payment default made by dealer.

Wholesaler deposit a security amount which is determined basing on the quantum of

business product line dealt. In a nutshell wholesaler occupies a pivotal position in the

distribution system and is most influential in the marketing performance. The

wholesaler get the material at discount price form the retailer price and he sell it to the

retailer at some fewer discounts. E.g., if the wholesaler gets 20% discount of the

retailer price, he will supply the material to the retailer at 15% or 16%. A wholesaler

has to pay 4% central sales tax which is adjustable with the ex-mill price. The function

performance by the wholesaler is as follows:-

To develop dealers and institutional

customers To meet the sales target

Payment follow-up

Implementation of promotional schemes

Gathering feedback regarding competition,pricing etc.

He place the order on behalf of retailer and so if fully responsible for

payment delivery of materials.

APPOINTMENT OF WHOLESALER:-

Appointment of wholesaler is totally look after by New Delhi head office. They recruit

area-wise wholesaler according to need. If someone is selected as wholesaler he has to

deposit Rs.8 lakhs as a security.

MODE OF PAYMENT:-

Wholesaler pay to the company through bank.

BENEFITS TO WHOLESALER:-

They get discount over Retail price. Moreover they also get Trade Discount

and some cases extra discount over the Ex-mill price.

They will get 10% interest p.a. on his deposited security money.

He will get maximum 30days credit facility form the company.

As his business going expanded, his profit will be more.

DRAWBACKS:-

Wholesaler has to supply paper on credit basis.

There is a risk of lossing money. If the retailer closes the shop and absconded.

For a long distance wholesaler high freight charge decease his profit margine.

Suggestions:-

Branch Office should always maintained a good rapport with the wholesaler. It

is better if the representative from branch office visits wholesaler and sort out

about their problems and complaints.

Orders of wholesaler should be executed as early as possible.

It is better to offer some extra incentives for high selling in particular period.

Branch Office should keep the wholesaler about the develop metal programme

of the mill.

EXTRA DISCOUNT:-

Extra discount officering by the company on Ex-mill price varies wholesaler to

wholesaler. Where the company find a competitive and tough market they offer high

extra discount for the wholesaler on the area. The extra discount offered in south zone

is higher than the other because the market in south is wider than that of other zone.

Consignment agent:-

They are the non title taking channel members who take the possession of

consignment and sale them to dealers and retailer. They deposit the sale proceeds with

J.K. and are remunerated basing on their performance by getting a pre-determined

commission.

Consignment agent survey the market in his are and idetified the potential demand.

Then he places an order for the material in the company manufacturer receives the

order and despatches the same to the godown of Consignment Agent. The

consignment agent will stock it in his godown. Then he sells the stock to the

wholesaler or direct to consumers and will be totally responsible for collection of

money of goods sold. He will pay to the manufacturer only after the goods sold and he

will receive his commission on the basis of his turn over. JKPM has 5 consignment

agents in five cities of India. Name of the cities, agency and their communication and

incidental are as follows :

CityCommission

Consignment Agent(in Rs. Per tones)

Pune Noble Enterprises 1000

Bangalore Transasia 1500

Kochi Palanippa & comp. 1200

Vijayawada Palanippa & Comp. 1200

Hyderabad Ram Trading Comp. 1200

JOB OF A CONSIGNMENT AGENT :-

He will receive the material from JKPM according to his demand and will

store in his godown. The papers will be sent to the agent either by train or by

the truck.

He will sell the paper to the wholesaler or direct consumer.

He will responsible for sell of stock in his godown.

He will be totally responsible for collectio of money of goods sold.

APPOINTMENT METHOD OF CONSIGNMENT AGENT :-

The appointment mode of consignment agent lies with Head Office, New

Delhi. They see the pontentialities of area, market and decide about the

recruitment or cancellation. Instead party should have no contact with Head

Office.

If someone has selected as a consignment agent by Head Office he has to pay a

security of 12 lakhs. This security will be deposited in favour of company.

REQUIREMENT TO RUN A CONSIGNMENT AGENCY:-

He should be a financially sound party.

He need a godown to store the papers.

He need some staff.

Benefit to Consignemtn Agent :-

He will get the goods at a discount price and retail price. Moreover he will get

discount and extra discount. The price on which he get the material is called

ex-mill price. Trade discount is deductible from the ex-mill price.

He will get 10% interest per annum of the security deposited.

He can make the payment to the company only after his goods sold.

Drawbacks:-

The main drawback for consignment agent is that he has to collect money from

the market and send to the company through bank. So it is a rick-taking factor.

In case of any failure or payment from any wholesaler or consumer he will be

totally responsible for the payment of materials.

He has to pay freight charges from the factory to his godown.

SUGGESTION:-

The company has 4 consignment agent in South Zone and one in west zone. But there

is no consignment agent in north zone and east zone. So it is advisable to recruit one

consignment agent in each north and east zone. Because high freight charges decreases

the profit margin of the wholesaler. So they cannot place a order of small quantity.

They may think for another option. If any consignment agent nearest to them they can

also place order for small quantity by paying a lower freight charges.

It is better to search for direct consumer party to rather than wholesaler. Where

the profit margin is high for consignment agent.

Head Office should maintain a regular and good contacts with the consignment

agent and ask them to provide feed back about the service of the company.

BRANCH / DEPOTS:-

Company has certain offices to which the customer places their order for papers. Such

types of papers are executed through the branch office. Branches are responsible for

collecting order from the market and placing the sum to the company. The following

are the four branches of JKPM , viz.

New Delhi

Kolkata

Chennai

Mumbai

Branches also distribute the paper product. New Delhi Head Office is responsible

strategy formulation to complete with the market. They also look after the new product

development and packing improvement.

The following is the comparative analysis of the various channel members of the

company :-

FACTORS Direct sale from Sales through depotsMill consignment agent

------ Depots expenses

1. Costconsign-mentcommission etc. to beborn additionally

2. Central Tax Applicable (apart Not applicable4% from the local tax)3. Central Applicable ApplicableExcise duty andcess4. Freight Borne by customer Initially born by mill

Borne by customer Borne by mill Althoughthe cost is subsequently

5. Transit riskrecover-ed yet.Customer is notburdened to thefomalities for any claim.

6. Delivery lead High Lowtime

Under Sales Initially through depotsinvoice. Cenvat transfer challan

7. Documents benefit can be subsequently throughneeds availed by a depots invoice wherein

customer if required convent benefit can notbe availed.

So as the customer also benefitted from the direct purchase from mill because in case

of depots / branches, consignment agent, the consumer has to bear some additional

charges. Such as

Freight from mill to depots.

Depot incidental charges.

Insurance from mill to depot.

DEALERS:-

Dealers are the first stage buyers to whole the goods are despatched on the advice of

wholesaler. They have this responsible to break the bulk and distribute the

consignment among the identified retailers and end users. They distribute the

consignment among the identified retailers and end user. They are responsible for

payment. Since they are in direct contact with the retailer / end user. They assume the

roles of “eyes” and ears of the marketing network. They pick up the field level

information about competitors which form an important portion in the marketing

feedback analysis. Further dealers are not exclusive to JKPM and may deal with

competitors products. Hence their roles become a lot more important in pushing JK’s

product lines vis-à-vis competitors.

SUGGESTION:-

Since the dealers deals with the competitors product also, the company is required to

make sufficient provision to catch hold their attention towards its products.

The company is required to have atleast minimum knowledge about their dealers.

RETAILERS

They are the second stage buyers who distribute the products to individual buyers /

end-user. They are at the fag end of the trading activities. Retailer is the link between

wholesaler and consumer. He is a specialist who maintain contacts with the consumer

and the producer and is an important link in the mechanism of marketing. The retailer

perform the following tasks.

He buys from a variety of wholesaler.

He stores the paper in his godown so that they are held as reserve

stocks for future.

He packs the product in small containers for his customer.

He also pays an attention towards the advertisement of the product.

DIRECT CONSUMER:-

The following are the direct consumer of the JKPM.

Printers.

Publishers.

Note Book manufacturers.

Diary retailer calendar manufacturers.

Units producing packaging materials.

a. O.E.M. (Original Equipment Manufacturer) Selling:

JKPM also deals with direct consumer. Direct Consumer purchase paper

directly from the company for their own use. Modi Xerox is a number one

direct consumer also supplying. Modi Xerox also supplying the packing

materials to the company for their purchase product. The other direct consumer

is Sudhir Paper Industries.

b. Sales Through Interest:

JKPM has a website through which product information can be gathered and

free sample / orders can be placed in case of following branded items.

JK Copier

JK Excel Finessee

This is in an inception stage and more used as a promotional tool then an effective

distribution channel in the metros.

EXPORT BUYERS:

Normally buyers from the outside countries place orders through Head Office, New

Delhi. After receiving the despatch advice the procurement is been send to the

overseas buyers from Chennai Port. JKPM export around 12% to 15% of the total

production to other countries. There are almost 20 to 25 countries who purchase paper

product from the mill. The number of such parties are : 453, selected parties has to

deposit a sum of money as a security in favour of company. The name of the countries

who are often buyer of the company are as follows.

SRILANKA, BANGLADESH, JORDAN, MALAYASIA, SOUTH AFRICA,

NIGERIA, SUDAN, GERMANY, SPAIN, UAE, EGYPT, KENYA,

AUSTRALIA, MALTA, UGANDA, SINGAPORE, NETHERLAND, CYPRUS,

YAMEN, TANZANIA, JAPAN, SURIA, GHANA, MORROCO, MORITIOUS.

Quantity of Export:

In the financial year JKPM exports Metric Ton of

paper.

In the financial year JKPM exports Metric Ton of

Paper.

In the financial year JKPM exports Metric Ton of

paper.

In the financial year JKPM exports Metric Ton of

paper.

Requisite for export:

A company before going for export must satisfying the following.

The company must have signed a bond with the authorized person on

behalf of Govt. of India.

There should be minimum amount in the bond at time of export.

Minimum amount means an amount equals to that of expected amount

to be realized from export.

The consignment to be exported should be marked properly.

Mode of Despatch :

Except Bangladesh all the other export executed through Chennai port. There are some

shipping agents in Chennai port. They worked for company on contract basis. The

company gives them responsibilities for shipping arrangements. They arrange ship for

country wise despatch. For Bangladesh all orders are executed through Kolkata. All

the main functions of export are looked after by Head Office, New Delhi.

Mode of payment :

Oversease party make the payment to the company through the Letter of credit.

Payment is very quick and clear in case of overseas party. There is no question of

delay payment.

Benefits of export :

The benefits provided by the Govt. of India, to encourage export is unde the provision

of DFRC, DEPB (Schemes of Govt. ) the import duty will be nil up to the value

realized from the export.

DFRC : Duty Free Replenishment Certificate.

DEPB: Duty Exemption Pass Book.

The time period to avail the benefit by the government is limited up to a period of 6

months only. And to avail this benefits the company have to produce the proof of

export or a copy of Arel to the authority with whom the manufacturer or the company

has signed the bond.

Under export, the shipping Bill, Bill of lading and the final invoice will be prepared by

the customer. And all the documents are dealt by H.O.

Document used in export :

Indent

Latter of Credit

Shipping Orders

Dock Receipt

Bill of Lading

Insurance Policy

Final Invoice

Bond Account

Arel

In case when consignment can not be exported due to some reason and it lies in the

port and can be realizable the company with prior approval of H.O. can sell them in

local market, but in such a case the company has to pay the tax @ 24% on the value on

which the consignment will be sold + central tax @ 16.125 for the number of days the

consignment lays at port.

Evaluation of channel members:

The performance of the various channel members are evaluated from time to time.

Their criteria for evaluation are their performance, market growth, future prospects

etc. In case the performance of the channel member are found to be non satisfactory

the agreement made with them may be terminated before the tenure. The company is

directly linked with the wholesaler, consignment agent and branches / depots, so the

evaluation of these channel member will be taken care by the company itself. And the

other channel member will be evaluated by their suppliers.

Physical Distribution and Logistics:

Since the paper is a mass consumption item and exhibits a commodity type behaviour.

Physical distribution and logistics take most of the importance in the over all

distribution strategy. It should function hand with the marketing efforts and

complement it so that “right thing reach the right place at right time”. Since J.K. is

having all India Marketing Network the task gets more complicated because of its

location in remote place diverted from the trunk route. Physical distribution is studied

covering the Transportation and Ware-housing & inventory.

J.K. Paper Mills employs the following physical distribution system :

1. Mills – approved / nominated transport dealers.

2. Mills – approved transporters – depots – dealers.

3. Mills – approved transporters - consignment agent – dealers.

4. Mills – transporters godown at destination dealers.

For Ex-mill sale J.K.’s responsibilities ceases once the consignment is loaded in trucks

(most preferred medium of transportation) . Then the consignment moves under the

carriers / owner risk till it reached and delivered to the consignee. Transit risk is

covered under insurance arranged by the wholesaler themselves or by mills the cost of

which is recovered in the invoice.

CST invoicing is prepared in case of inter state sale. Under CST Invoicing the

company has to pay the excise @ 16.125% (16% - advolorum tax + .125 cess on

production) in case of the utilization of waste material for production purpose, the

excise duty is @ 8.125% (8+.125) and the sales tax @ 4% of Ex-mill price.

OST Invoicing is prepared in case of intra sales. Under OST Invoicing the company is

not required to pay the excise duty. The sales tax and additional taxes to be paid by the

company are :

Entry tax @ cost 1%

Surcharges @ 10% on OST

The company is also required to pay @ 500/- for cutting charges.

The company is required to prepare the invoice under the following guidelines.

The invoices is to be maintained serially.

The number should start with 14.

It should be pre-authenticated by the authorized person.

It should disclose the registration number.

It should disclose the CEC number

The numbr which are to be used for invoicing purpose is to be made

known to the central excise officer.

It should also disclose the name of the party, consignment number

the quantity, the price etc.

1. Door Delivery

Consignment are door delivered to the dealers without providing the consignee copy

of the lorry receipt which the transporter after the loading of the consignment. This

approach mostly followed for wholesaler based in north, east ( only in Kolkata ) and

West zone.

2. Self Delivery

Consignment are kept in the transporter godown and are delivered on production of

the consignee copy of lorry receipt either by the original buyer or any subsequent

endorse under endorsee E.I. Sale. This is the most preferred arrangement in south zone

where the 1st stage buyer can transfer the consignment to the second buyer simply by

endorsing the document and without paying the second point sales tax. However the

2nd buyer always have the bonus of reselling it to 3rd buyer and collect the local taxes

to ensure statutory compliance. Such transaction give the following advantages.

i. The first buyer need not bear the brunt of local levies on the entire

consignment. They can break the bulk by effecting E.I. Sale among few

buyers and pass on the bonds of collecting the local levies.

ii. They need not pay the freight for the entire consignment since the freight is

paid by the 2nd buyer to the transporter for that much quantity sold to him.

Rest quantity lies with the transporter till they are released by another’s but

the goods should be cleared from the transporter’s godown within 60 days

else the transporter will claim damages as per their policies.

Transportation:

JKPM follows 3 modes of transportation for shifting of its products to its warehouse.

Rail

Road

Water (Pots)

For delivering goods to branch office consignment agent and wholesaler, company

needs transportation facility. Trucks and rails are two way of transportation. Among

these two the cost incurred by rail is less than the road transportation. But the process

of railway is very lengthy. They take much more time to deliver goods to destination.

On the other hand unless and there is a big quantity to export is meaningless to contact

railway. So maximum wholesaler, consignment agent prefers the road transport by

trucks.

The water way are used only for the export purpose.

Since the road transportation is the most preferred mechanism for physical distribution

any commission and commission on the part of the transporters will have fare reaching

consequences. Hence JKPM identifies transporters and enters into formal agreement

for ensuring performance guarantees and commitment. For induction as approved

transporters the following criteria have to be fulfilled.

Sound financial position.

Past experience with sister concerns.

I.B.A. approval (Indian Banker Association)

Network of Branches

Infrastruture facilities at the transshipment points station.

Execution of bank Guarantee worth 1.5 lakhs retailer deposit of

equipment amount in ash.

The transporter have to deposit an amount of Rs. 4,00,000 as security.

Which the transporters will entitled to a interest @ of 8% p.a. ( if

transporter deposit the security in Cash )

The transportation agreement apart from selling out the operatinal norms reflect a

carrot and stick approach to ensure better services to out terms and conditions.

The transport agreement between the mill and transporters are based on the following

terms and conditions :

The transporters will be allowed 24 hrs to place the indent trucks.

The transporters have to deposit an amount of Rs. 4,00,000 as security

towards performance guarantee. The deposit may be accepted in form

of cash or in form of bank guarantee.

The transporters will be allowed a discount @ 3% on the total freight.

All the consignment loaded in the truck will be covered with good

quantity of tarpaulins to avoid any chance of danger in transit due to

rain wate.

The transporters are required to prepare the “lorry receipt” on “to-pay”

basis.

The transporters has to store the consignment till the delivery and the

unloading charges will be paid by him.

The transporters should have sufficient storage place.

The product should be delivered from the transporters godown against

the production of lorry receipt.

In case of any decrease and increase of the rate of diesel, the calculation

of diesel escalation will be :

Present freight rate *30% (revised rate of diesel-present rate of

diesel) / present rate of diesel = per ton increase.

The negotiated rate are based on 9 MT truck load basis.

The transporters have to arrange for the safe and timely deliver is goods

within a period of 76 days and the maximum period allowed is 10 days.

Delivery penalties are imposed for transit delay beyond the

specific time frame and also quick deliver incentive are

provided as per the following rates.

For the first 5 days from 11th days Rs. 300 per day

For the 2nd days from 16th days Rs. 400 per day

For 21st days onwards Rs. 500 per day

Subject to a maximum of Rs. 10,000

JKPM has some selected number of road transporters. Name of these transporters are

as follows :-

1) M/s. Transport corporation of India

2) M/s. Savani Transport Limited.

3) M/s. East India Limited.

4) M/s. Nutan Raj Road Lines.

5) M/s. Indian Road Lines.

6) M/s. South Eastern Freight Carriers.

7) M/s. Deepak Road Lines.

8) M/s. Southern Road Lines.

9) M/s. New General Trading and Transport Corporation.

10) M/s. Balaji Road Ways of India.

11) M/s. Noble Enter Prices of Company.

12) M/s. ABC India Limited.

13) M/s. Savani Carrying Pvt. Ltd.

14) M/s. Modern Road Lines.

But among the above transporters the first 7 are doing regular business with the

company.

Freight fixation for the transporters :-

JKPM is distributing it’s product to nooks and corner of the country from remote

locality. Freight constitute a major component in the over all landing cost and of let

customers have become discerning about this. Further since the consumers based at far

of place don transporters have adequate idea about the local factors influencing the

logistics. Hence JKPM taken over the responsibilities of negotiating the freight to

different. Destinations although the freight is actually born by the customers.

Following is the procedure is adopted for freight fixation.

1. Quotation are invited from the different transporter.

2. Official visit to various transshipment points to collect the prevailing

rates.

3. Feed back is obtained from our branch office.

4. Movement of seasonal goods / corps are considered.

5. Availability fo trucks in the local market towards different destination

is assessed.

6. Basic rates charged by the local truck union to different destination are

referred to.

7. Any cost escalation in case of price hike of diesel is also reviewed.

Basing on the above factors freight is negotiated and finalized for a quarter and

communicated to the respective zones. Freight is reviewed from time to time i.e. at

every quarter to ensure that it is as per prevailing market condition. And customer

made to pay reasonable amount by the transporters are justifiable remunerated. The

company is also providing extgra incentives for direct transportations is such case the

transporters will enjoy some extra incentives as the products moves toward the

destination point directly without any break. If the goods are unloaded from one truck

to another there is a possibility of damages to the goods. So extra incentives are

provided for direct transportations.

Evaluation of performance :-

Performance of transporters are periodically reviewed and they are given business as

per the vendor rating given to them. While doing so customer preferences are kept in

mind. Occasionally visits to the transshipment point are paid to assess the

infrastructure facilities required for safe and damage free delivery of consignment.

SUGGESTIONS:-

Containerization may be opted as a better option when the quantity or volume of

production is too high and at the same time where the time and safety is of utmost

important. The other option for transportation is creation of hubs to minimize the

transit time. The hubs will also provide the following benefits:

1. Better supervision of material

2. Minimization of damages of finished goods.

3. Improve the customer satisfaction.

Warehousing and inventory:-

Every company must store its goods while they wait to be sold. The company must

decide on the best number of stocking locations. JKPM had 5 branches and 5

consignment agent and they hold stock with them. Company has its own warehouse.

These stocking helps JKPM to deliver goods more quickly to customer.

JKPM has the provision of verifying the stock at the end of each day. And the

concerned the person is required to check the physical balance in had with that shown

by the books of account and rectify the books of accounts.

The documents maintained with regard to the warehousing are:

Stock Card / Bin Card.

Receipt / Go down Check.

Physical Verification of the stock.

Stock account.

Whenever any stock is shifted to the warehouse it is to be recorded in the stock care or

also called as bin card. Record in the bin cards are made lot wise or size wise. Bin card

shows the quantity received dispatched and balance in hand.

The stock here refers to the finished production but not the raw-materials nor the

work-in-progress.

The account book maintained with relation to the warehouse is known as “Stock

Account”. This is to be maintained by the company as per the requirement of the

central excise rules.

The requirement for a warehouse is:-

It should be properly located.

The warehouse must be properly insured.

The warehouse must have sufficient fire fighting equipment.

Sufficient storage apace.

The stock is needed to be properly placed in a proper order.

THE PRICING STRATEGY:-

The price set by JKPM covers all the manufacturing and selling cost of paper plus fair

rate of return. The marketing department of JKPM at Delhi usually set the pricing

policy. One of the important external factors that influence the pricing decision of the

JKPM is competitor’s price. JKPM is operating a pure competition market. The price

adjustment elements of JKPM are:

Trade discount.

Additional discount.

Cash discount.

Trade Discount:

It is a discount allowed by the company on its Ex-mill price during the general trade

process. Every customer is liable to avail this uniform discount.

Additional discount:

JKPM also provide additional trade discount to its customer because of the

competition in the market. The additional discount is totally driven by the market. The

additional discount varies zone wise, market wise, wholesaler’s wise, substance wise.

Cash discount:

A cash account is a price reduction to buyers who pay their bills promptly. Its give

discount @ 2% to the parties. Who pay their bill in 10 days of getting the stock. For

advance cash payment cash @ 2.5% is allowed.

FINDINGS

1. JKPM is employing the more number of security guard at the entrance of the gate.

2. The production process of the JKPM is very long.

3. JKPM is spending more money for the purpose of packaging.

4. JKPM also provides TPM policy in industry.

5. JKPM is importing the raw material from different distance places.

6. JKPM also provides safety and health policy to all employees.

7. JKPM also provides the Environment policy to the environment.

8. JKPM also provides the procurement policy to the farmers.

9. JKPM also provides the Quality policy to the customers.

10.JKPM also provides the training and development to the new employees.

SUGGESTIONS

It is better to search for direct consumer party to rather than wholesaler

where the profit margin is high for consignment agents.

All machines should be made automated so that the work or assignment

will finish in less time and less efforts.

Direct trucks should be used for the transportation to have a quick delivery

of order and less damage.

Try to know the need of the customer and try to satisfy the customer.

JKPM should use the below mentioned distribution channel.

Manufacturer----------Retailer-------------customer

Administrative control should be converted in to engineering control for

example asking 10 people to load the finished product on to the truckle for

dispatching. if it is loaded using conveying system helps us in quick

loading. No damage while loading and creating safe working environment.

During rainy seasons they are complaints in finished product damage by

water through road transport. If this method of transportation should

carried out through containers by rail. The following order we can get….

1. Elimination of transition damages

2. First moving to the destination.

3. Logistic cost will reduce.

4. Safe transportation.

Create market potential nearby places so that logistic expenditure will be

reducing cost.

CONCLUSION

From the study conducted with the customer, it is understood that the customer looks

mainly for these factors before selecting any paper. These are good quality, long lasting

and less cost. At finally, there for it may concluded that JKPM have a following good

characteristic which mentioned above, so the sales of JK product day after day going to

increase. Again it provides the good satisfaction to the customer and become leader in

Indian paper industry.

BIBLIOGRAPHY

www.indiainfo.com

www.jkpm.com

www.itcportal.com

www.tnpl.com

Research methodology- C.R.Kothari.

Marketing management- Philips Kotler