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Star Material Handling

Company Ltd.

BY :LOKESH CHANDRA

Star Material Handling Company


Ltd.
SMHC was one of the major manufacturers of material handling equipment in
India.

The range of equipment manufactured were used for in-plant material handling
by almost all industries.
Unit prices ranging from Rs.20000 to Rs. 90000 depending on type of equipment.
Life of product 5-15 years depend equipment service and used.

Most of the equipment were non-standard, and were made as per customers'
requirements.
2The

in-plant equipment manufactured by SMHC, in technical collaborations with

SALES AND SERVICES


SMHC had its factory located near Hyderabad. The marketing head office and all
other commercial and technical departments were located at the factory.
The field sales and service operations were carried out through employeecontrolled branches (at Delhi, Mumbai, Baroda, Bangalore, Coimbatore, and
Hyderabad) and agent-controlled offices (at Chandigarh, Lucknow, Calcutta, Indore,
Pune, Vizag, and Chennai).
The responsibilities of the branch sales persons were to :(i) Give effective pre-sales and post-sales service to customers
(ii) Generate enquiries, submit offers, negotiate, and book orders
(iii) Collect payments and sales tax forms
(iv) Collect and send market information to head office

The customers needed technical information and guidance from the company's
sales engineers.
3For

difficult problems, help from R&D department was sought to give solutions to
material handling problems faced by the customers.

Cont. . .
The domestic sales contributed 90 per cent of Rs 10 crore sales in 1995-96 and

the balance 10 per cent was exported to UK, US, New Zealand, Russia, and Gulf
countries.
The sales volume budgeted for the year 1996-97 was As 20 crore, out of which

exports were targeted at Rs two crore.

External Environment
Mr. Kumar felt that the economic environment had changed in the past 6 months

or so, after finalization of the company's budget, since there was a slowing down
of investment in new projects.
The change in political situation, with the installation of a new coalition

government in mid-1996, had contributed to the political uncertainty and slowing


down of the economic environment.
The receivables from customers had gone up to 65 days from the previous

quarter performance of 35 days.


Tight money market as banks and financial institutions had become over-

cautious.
Many customers were facing financial stringency and were not paying overdue

bills.
5

Competition
There were two major competitors out of 12 players. Both the competitors had

higher market share than SMHC


The two major competitors also had foreign technical collaborations with

Germany and the UK, respectively.


The strengths of the competitors were that they had a wider product range which

enabled them to give complete solutions to material handling problems.


They were in the industry for a longer duration of time in comparison to about 10

years of SMHC.
Compared to the superior product features, and post-sales service of SMHC, the

competitors had lower prices and better quality as their strengths.

Problems
Company had positioned its product correctly or not.
Drop in order receiving by company( 30%)
Unfavorable performance due to change in external marketing environment.
Debtors had gone up.
Competitor are performing better than the company
Customer not paying overdue bills.

Banks and financial institution become overcautious

Recommendations
Should increase their product range and offerings to the customers.
Increasing the targets of the Employee-controlled branches and Agentcontrolled offices.
Emphasis on pre and post sales service.