Summer Training Report

On
ACTION PLAN FOR SBI TO IMPROVE ITS MARKET SHARE IN ODISHA IN FINANCING MEDICINE STORES AT

STATE BANK OF INDIA BBSR, LHO PREPARED BY P.SANTHOSH ENROLLMENT NO-11DM028 UNDER THE GUIDANCE OF
EXTERNAL GUIDE MR.DILIP KUMAR MISRA CHIEF MANAGER (SME), STATE BANK OF INDIA (LHO), BHUBANESWAR. INTERNAL GUIDE PROF.S.P. MOHAPATRA

Assistant Professor (Finance)

IMIS, BHUBANESWAR.

AS PARTIAL FULFILLMENT OF PGDM PROGRAM OF IMIS, BBSR

INSTITUTE OF MANAGEMENT AND INFORMATION SCIENCE BHUBANESWAR APPROVED BY AICTE, GOVT OF INDIA
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DECLARATION I, P.Santhosh student of Post Gruduate Diploma in Management of Institute of Management & Information Science bearing enrollment number 11DM028 declare that the project entitled ACTION PLAN FOR SBI TO IMPROVE ITS MARKET SHARE IN ODISHA IN FINANCING MEDICINE STORES submitted to State Bank of India, Local Head Office, Bhubaneswar is an original record of work done by me as a part of partial fulfillment of PGDM programme of IMIS, Bhubaneswar.

Date: Place:

P.Santhosh PGDM (2011-2013) EnrollmentNo: 11DM028

Acknowledgement I would like to take the privilege of acknowledging each and everyone for the guidance, concern, inspiration, encouragement, valuable ideas & for showing the right path to travel throughout the project. At first I would like to thank Mr Fanindra Kumar Mishra (AGM, SME NW-II) and Mr Dilip Kumar Misra (Chief Manager, SME), State Bank of India (LHO), Bhubaneswar for assigning me this topic. I am also grateful to A.B Behara (Manager, SME), Narendranath Barik (Chief Manager, SME) and J.P Sen (AGM, SME-I) for their guidance through out the project. I would also like to show appreciation to Prof. S.P. Mohapatra for his excellent guidance & his interest towards the project for the past two months. Without his motivation and consistent support this project could not have materialized. I would like to extend my gratitude to Mr D.Sunyani (AGM, Sanction SME) at RASMECCC (Sambalpur), Mr Rati Kanta Seth (Chief Manager, Sanction SME) at RASMECCC (Sambalpur), Mr Avisek Panda (Branch Manager, Choudhury Bazar Cuttack), and Swarastra
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Ranjan Kanungo (Branch Manager,Berhampur Bazar) for their co-opeartion & hospitality when I visited their place. I am grateful to my family for supporting & giving me the confidence to complete the project successfully. Apart from the above mentioned people,I would like to thank all the people who have cooperated in different places like Bhubaneswar, Cuttack, Berhampur, Sambalpur & Rourkela for the completion of the my summer internship program.

Date: Place:

P.Santhosh 11DM028

Executive Summary Project Title: ACTION PLAN FOR SBI TO IMPROVE ITS MARKET SHARE IN ODISHA IN FINANCING MEDICINE STORES Name of the Organization: STATE BANK OF INDIA Name of the Guide: Mr. Dilip Kumar Misra (Chief Manager, BBSR(LHO)) (External Guide) Prof. S.P. Mohapatra Assistant Professor (Finance) (Internal Guide) Objective of the Study: 8ilTo finance the medicine Stores throughout Odisha by taking over or fresh financing. Scope of the Study: 1. Existing Bankers & Amount of Finance 2. Interest Rate, Turnover, Credit Period 3. Comparision of finance and service schemes of banks 4. Understand the customer expectations 5. Perception of Public about SBI 6. How SBI can meet the expectations 7. Scope of making Schemes, Procedures, formalities more market friendly Need for the Study Small and medium enterprises (SMEs), particularly in developing countries, are the backbone of the nation's economy. They constitute the bulk of the industrial base and also
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contribute significantly to their exports as well as to their Gross Domestic Product (GDP) or Gross National Product (GNP). In the liberalized Indian economy, clientle have wide choices. SMEs are an important segment of Indian Economy as almost 40% exports are from this segment, and they also cater to the employment generation in our country. SME is proving to be profitable and rewarding for individual banks, and assisting the growth of SMEs will benefit national economies as well. Banks are looking to seize opportunities in this sector by debunking misconceptions of SME banking, diversifying their business base. This project is all about financing medicine stores throughout odisha which comes under the SME category. There are about 15000 medicine stores available in odisha. In this project, I have visited medicine stores at Bhubaneswar, Cuttack, Berhampur, Sambalpur & Rourkela. Questions were framed and I interviewed in-depth the retailers & distributors. Hidden Issues were found. Customers of SBI as well as of other banks were interviewed to understand the market better. The kind of service and product expected by the retailer & wholesale chain of pharmaceutical industry were arrived at .

Contents Chapter Declaration Acknowledgement Executive Summary Introduction Analysis 1)Bhubaneswar 2)Cuttack 3)Berhampur 4)Sambalpur 5)Rourkela 6)OverAll Survey Results Recommendation Conclusion Introduction: The banking scenario in our country has been undergoing transformation especially from 1990. The process is marked by opening up of the economy to global forces. As a result of liberalization and privatisation, competition has been intensified among banks, causing stress on profit besides making them vulnerable to greater risks.
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Page no 2 3 4 7 9 16 22 27 29 31 34 37

In spite of so many changes in the banking sector the oldest and esteemed banking organization STATE BANK OF INDIA has been successful in maintaining its brand equity in the market Every banks primary objective is lending and the project which is given to me is totally based on a particular sector where SBI is interested to lend more namely Medicine Stores. SBI is interested in both retailers and distributors of this segment. As the market share of SBI in this sector is less for the time being, they wanted to understand the market better to get more customers. SBI needs an in-depth analysis and action plan which should be innovative and helpful to their objective. Also SBI wanted to understand how deeply they are into the minds of customers, how customers perceive SBI, by surveying the customers of SBI and non-SBI in this particular activity. The main objective of this project is to understand the customers expectati ons from SBI, accepting the suggestions, making improvements in approach, attitude, and delivery, so that credit flow from SBI to the retailers and distributors of medicine in Odisha can increase appreciably. To achieve the above objective, I have given a start to this project in the two months of internship with SBI. I have created many leads which has been passed on to their branches to turn into business for SBI. Analysis 1) Bhubaneswar In Bhubaneswar, I visited 31 retailers and 6 distributors. The customers and the noncustomers of SBI commented about their experences in SBI and other banks. There are more negatives than the positives. In Bhubaneswar the existing customers let alone the non-customers were not visited on regular basis, which is the major reason for losing some of the existing customers by SBI, other banks who are active in the market, approach the customers, through which they even take over the financing done by SBI. Visit is an effective tool to bring new customers and to retain the existing customers. People feel that the documentation is lengthy and the formalities are too many in processing of loan. People compare SBI with the private banks. People say that private banks are faster and simpler. Customers are expecting SBI make the process smoother and simpler. Trust:
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In the market, other banks are trying to build trust among customers. SBI had created the trust long back and still the trust is alive in the peoples mind. Before the trust gets faded, SBI has to take some serious steps to get back the lost customer and to bring new customer. Personal Touch: In service industry people expect personal touch from the companies. In case of SBI, it is missing, according to the customers. People complain that customer base of SBI is very high and they are unable to take care of all of them. Employees of SBI who are in the branch, dont care to do the work faster even with the help of computers, queue is very long and waiting time is high in SBI compared to other banks. People complain that the employees are so lethargic and they dont care about the customers. They also said that the SBI employees are having the attitude of saying come afterwards without understanding the urgency of the customers. Interest Rate: The major complaint about the SBI is Interest Rate. People tend to compare the interest rate of other banks before going for a long term relationship. As compared to the other banks people perceive that SBI interest rate is higher. SBI has to work on this to make customers feel that the interest rate is not high, particularly after the recent reduction in interest rate. Visible Competition: Out of 31 retailers visited in Bhubaneswar, 13 have Cash Credit and only one belongs to SBI and rest all belong to different banks. From this, we can understand that the competition is heavy and the market is big. So we should start working on the stratagies to meet competition.
40 30 20 10 0 Bhubaneswar Survey (Retailers & Distributors) CC availed CC availed from SBI

Series1

Out of 6 distributors visited in Bhubaneswar only 1 has availed from SBI and rest are with different banks. Retailers visited in Bhubaneswar:

No 1

Name of the Retail Shop Omsai Medicines

Contact Person Mr. Pradeep Ranjan Das

Contact Number

2 3 4 5 6

Sanjeevan Medicine Store Kalyan Medical Hall Lavanya Medical Store Sarala Medi-Care Clinic and Lab Lingaraj Medicine Store Mr. Ajay Sahoo Kumar Mr. S K Chandhuka

7 8 9 10 11 12 13 14 15

Indramani Medicine Med Plus Medi-Land Medi-Corn Ananya Medicine Store Kalinga Medical M/S shanthi Pharmaceuticals Sarala Medicine Store Apollo Pharmacy Mr. R.K Agarwal

No 16 17 18 19 20

Name of the Retail Shop Nigam Medicine Kusuma Devi Drug House Chandramukhi Medicine store Sai Pharmaceutical The Life Medical Store

Contact Person

Contact number

21 22 23 24

Soumya Medical Hall Bayani Medical Store Rajendra Drug House TaraTarini Medicine Store Mr.Nirupama Tripati Mr.Ashok Mr.Prdeep Padhy Mr. SK Sahoo 9692036323

Jena, 9439540036 kumar 9861086386

25 26 27 28 29 30 31

Ranjan Medical Store Needana Drug House Ganesh Medical Store Rudra Medicine Store Durga Medicine Store Janata Medical Store Lingaraj Drug House

Distributors Visited in Bhubaneswar:

No 1 2 3 4 5 6

Name of the Distibutor Shop Misra Pharmaceutical Agency Suhasini Pharmaceuticals Sudha Pharmaceutical Eunic Pharmaceutical Dilip Pharmaceuticals Sri Krishna Traders

Contact Person

Contact Number

Mr. G P Mohanty

Finance: Bhubaneswar is a big town compared to the other places in odisha and it is the capital of Odisha. It has several large Government / Private hospitals / nursing homes and is emerging as
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a Healthcare Centre of Odisha & Eastern India. Turnover of the retailers and distributors here is high. Out of 10 Retailers, atleast 5 retailers would need finance for their day to day business. In Bhubaneswar there are more than 1500 retailers. If we finance atleast 700 of them with an average of Rs 6 lakh, we can tap Rs 42 cr of advances. Most of the retailers prefer cash dealings because of the comfortable credit periods (2 to 3 months) given by the distributors and the other reason is, when the retailers deal with cash, the margin they get for each medicine is high. But the retailers who have high turnover, prefer to avail finance from banks. Out of 10 distributors visited, atleast 9 distributors would need finance. In Bhubaneswar there are more than 150 distributors & if we cover atleast 100 distributors with an average finance of Rs 20 lakh, Rs 20 Cr can be financed. For all this to happen SBI has to approach the customers and rigourous marketing is very much needed. Cuttack: Cuttack is a city of business. I have visited 18 retailers and 4 distributors. Here I came to understand that SBI is out of the market, People trust SBI but they dont become customers of SBI. The same problem is prevailing throughout Odisha. SBI has to work on their marketing stratagies, SBI officials should meet the existing customers, review their needs, if possible, the limit can be enhanced. Customers would be happy to meet a person from SBI because they have suggestions & complaints loaded in their mind which they could never express. Customers know better than SBI about their need, as the market situation is changing fast. So its better to know the reality from them instead of planning on our own. SBI has the largest number of branches(delivery points) compared to any other bank. This is the major advantage which SBI has in their hands, to exploit.Branch managers of SBI also feel that there should be vigorous marketing efforts otherwise; staying in the market is quite tough. All the competitors are encircling and is really heavy competition among the banks. Interest rate: People were very much concerned about the interest rate but recent fall in interest rate is a strong step taken by SBI. The first question comes to the customer mind before availing any facility from the bank is interest rate. Few weeks back our interest rate was very high and whenever people hear that, they back off. They go to the bank which can give less interest rate. Documentation:

People perceive that our documentation part takes more time than any other banks. Our documentation is centralized and avoids fraud completely but we should work on the speed of the processing of documents. As far as I understand in this 2 months time, our documentation part is best among all the banks. It is perfectly designed in the way that only genuine people can get through the process. Marketing: SBI lacks in marketing, SBI should do lots of campaign which would attract customers. SBI should make the people aware of its products to the public through the best marketing practices ever used in banks. Financing: As Cuttack also has large number of hospitals / nursing homes, doctors, the retailers and distributors have huge turnover. There are about 1000 retailers and more than 100 distributors at Cuttack. If we finance 500 retailers with an average finance of Rs 5 lakh then we can finance Rs 25 Crore and if we finance 70 distributors with an average of Rs 15 lakh so total like Rs 10.50 Crore can be financed to the distributors. Currently we do not have even 10% of the market, so lots of marketing efforts should be done as early as possible which can help SBI to penetrate into the market.

25 20 15 10 5 0 Cuttack Survey (Retailers & Distributors) CC availed CC availed from SBI

Series1

As we can see out of 22 outlets visted only 4 was covered by SBI. As I said before competition is real heavy and we need work real hard to utilize the oppurtunity. Retailers Visited in Cuttack: No Name of the Retail shop 1 2 Sabithri Medical Store Cuttack Drug House

Contact Person

Contact Number

10

3 4 5

Gourav Medicines Panchamukhi Medical Store Nigam Pharmaceuticals Chemist & Druggist Laxmi Narayan Medicine Store MAA Medicine Store Dwivedi Medicine Store Cuttack Medical Hall Jay Jaganath Medicine Store Mummy Medicine Store Dash Medicine Store JibanJyothi Ajay Medical Store Subhathra Medical Hall Mr. BIJAY DEV 9437670931

6 7 8 9 10 11 12 13 14 15

No 16 17 18

Name of the Retail shop Jay Durga Medicine Store Rama Medicine New Rabeendra Medicine Store

Contact Person

Contact Number

Mr.Manas

9437014826

Distributor Visited in Cuttack: No Name of the Distributor shop

1 Saan Medical Store 2 Rupa Medical Store 3 Konark Pharmaceutical Co. 4 Santuka Agencies Berhampur:

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Berhampur plays a vital role in pharmaceutical business of southern Odisha. Pharmaceutical distributors of Berhampur supply stocks to retailers & sub-stockists of Gajapti, Gunupur, Malkangiri, Nowrangapur, Koraput and Kandhamal districts apart from Ganjam district.
25 20 15 10 5 0 Berhampur Survey (Retailers & Distributors) CC availed CC availed from SBI

Series1

In the survey out of 7 retailers only one had SBI Cash credit and others did not have any credit facility with banks, out of 13 distributors, 6 of the distributors are with SBI. The distributors here also have huge turnover . If we Finance 150 distributors with an average finance of 25 lakhs, Rs 37.50 Crore can be financed here. Retailers are not as high as expected, so we can hardly cover 300 retailers by financing 4 lakh in an average. So in total Rs 12 Crore can be financed. Employees of SBI: Employees should be the main concern for SBI. There are many customers losing faith in SBI just because of the lethargic behaviour of the employees towards day to day transactions of the customers. Apart from marketing and approaching the customers maintaining a good rapport with the customer is very important these days. Customers expect utmost respect from the banks which are serving them, but according to the customers perception SBI branches are not delivering their best. Employees are not fast enough and they seem to be lazy, this might not be true in all the places but many customers have started perceiving it, this way, which is actually very dangerous for the future of SBI. Due to some employees and some of the branches the whole brand is getting affected. Each and every employee should be responsible for maintaining the brand name through their best efforts at the work place. A customer is the most important visitor on our premises, he is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so. -Gandhi

The above quote is 100% true and it should be kept in the mind while serving our customer. Current Account Misuse:
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Some of the current account holders having their cash credit account with different banks and they come only for transactions to our bank. If they transact Rs 10 lakh also, there is no benefit for our bank, this makes the service useless and there is no benefit for the bank. In this case the time of the employees are killed and other customers who are truly, beneficial for the bank are also made to wait. Retailers Visited in Berhampur: No 1 2 3 4 5 6 7 Name of the Retail Shop Sambhidevi pharmaceutical Patro medical store Maa tarini Medicine Store Help Pharmacy Lifeline medicals Balaji Medicine store Seetha ratnam medical store

Distributor visited in Berhampur: No Name of the Distributor 1 Trinath & co 2 Kalinga Pharmaceutical 3 Adarsh Pharma 4 Setty Ramaya Patro & co 5 Prem Narayana Pharma 6 Sree Mahaveer Agencies 7 KSR Agencies 8 Sairam Pharmaceuticals 9 Nataraj Agencies 10 Divine Medicure 11 JNR Pharmaceutical 12 Kedarswar Pharmaceutical 13 Amar Pharmaceutical Agencies SBI bank Market Share in Berhampur: Our bank is doing well in Berhampur compared to other places but we have around 20% market share in the pharmaceuticals sector which is very less. The oppurtunity is spread widely and we have to grab it before someone else does it. Actually in Berhampur comparatively we do better because the SBI branches are located exactly in the business place and the market is very huge. We have not Utlized the opportunity fully.
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Location: Location is another concern for all the banks, if the bank is located in the right place where the business is actually happening then it is very much beneficial for the bank to increase their business but it is not possible all the time to locate the branches in the business place. So in that case proper promotion of the products of our bank will help us the customers to reach us where ever we are located. Sambalpur: Compared to the other places like Bhubaneswar, Cuttack & Berhampur, at Sambalpur, Pharmacetical business is very small. Retail shops and Distributors are very less in numbers. I met 3 retailers and 3 distributors, none of them are the customers of SBI.
8 6 4 2 0 Sambalpur Survey (Retailers & Distributors) CC availed CC availed from SBI Series1

One of the customers compared with the UCO bank and said that SBI may be technologically advanced but the speed of processing is really less where as UCO Bank is doing their best to serve their customers. There was also another comment that our customer base very high with rural and low benefit customers more in number. The customers who wanted to deposit Rs 100 /- or Rs 200 /- are coming to the bank twice a week and the business people who wanted to do bigger transactions are getting affected. If this condition is going to continue then SBI will have only the customers who can deposit such small amounts. I met some of the SBI officials also in Sambalpur, they said that the pharmaceutical market is very small. They also said that marketing leads are not so efficient .He also said marketing of SBI has to improve. Multi Product Sales Team & Relationship Officers should do more activities. They should be given frequent trainings to update their knowlegde about the market. Retailers Visited in Sambalpur: No Name of the retail Shop

14

1 2 3

Maheswari Medical Store Shree Shakthi Medical Store Samaleswari Medicals

Distributor Visited in Sambalpur: No 1 2 3 Name of the Distributor Shop Shree Narsingh Medical Store Health Pharmaceutical UTKAL Medical Agency

Rourkela: In Rourkela out of 7 medicine stores visited near Rourkela General Hospital only 2 of them have cash credit, none of them are with SBI. The credit need of medicine stores at Rourkela is very low. The retailers have only 1 lakh of cash credit, as there turnover doesnt push them to go for much credits. Neither the market is huge nor the need, high.
8 6 4 2 0 Rourkela Survey (Retailers) CC availed CC availed from SBI Series1

One of the customers claims that because of the poor service he had to change the service provider. This customer has the perception that the government employees dont work sincerely and he says that SBI employees are proving to be like government employees by not catering to the need of the customer. The same customer says that the bank is very good but the current service is very poor. He expects the management to reshape the work culture. Retailers visited in Rourkela: No 1 Name of the Retail Shop Omsai Medical Store

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2 3 4 5 6 7

Priyadarshinee Medical Hall Buruna Medical store Santi Medical hall Babamani Medical Store Biraja Medical Store Chinmayee Medical Store

Overall Survey Results: The graph below explains the market situation and the height of competition in this medicine sector. As we can see HDFC & ICICI are out of the market. They are totally not seen in this sector. As there are so many banks competiting in the market, the customers are spreaded over different banks. SBI stands high in the market but actual scenario is, there are more opportunities but utilization is less. There are 22 banks which are active and want to get hold of the market. As the competition is very heavy, no one is able to have a sizeable market share in any of the places. The customers are loyal to their banks and it is difficult to take over the finance, in very few cases taking over may be possible. In this sector so many customers are in need but they are yet to avail the finanace from any of the bank. So it is better to cover such people who are in need and finance them. PNB, Allahabad Bank, UCO Bank are the potential competitors in this sector. The existing customers of these banks are satisfied with the service provided to them. Existing customers of these banks are even loyal and these banks get positive word of mouth marketing from their customers. In the case of SBI word of mouth seems to be haing negative impact. Survey Results of Bhubaneswar, Cuttack, Berhampur, Sambalpur & Rourkela

Cash Credit Availed

15 10 5 0

BOI SBI Indian Allahab Andhar Yes bank Federal UCO Axis bank BOB UBI Dena IDBI IOB Canara OBC Utkal ING URBAN CBI PNB UNION

Cash Credit Availed

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SBI Position in the overall survey: Out of 93 retailer & distributors surveyed, only 48 have been financed and the rest have not availed any help from banks. SBI have covered 13 out of 48 outlets which has credit from bank. Compared to other banks, SBI is doing better but we are losing customer because of the dissatisfaction in the service. In the past most of them were the customers of SBI and then shifted to other banks. So everyone has experienced the service of SBI, SBI lost customers rapidly due to lack of service & marketing. So retaining & making customers happy is possible only through serving the customers better and proper marketing.

100 50 0 Total Survey(Retailers & Distributors) CC Availed CC Not Availed from any bank CC Availed from SBI Series1

Represenatation of the Market Situation:

13 45 48 93 Total Survey(Retailers & Distributors) CC Availed CC Not Availed from any bank

Recommendation: 1. Understand the customer needs by visiting them on a regular basis. 2. Approaching the Non-Customer of SBI for continuous persuasion. 3. SBI should look into the documentation process and make it faster, if possible can reduce the least important documents. 4. People trust SBI and SBI should maintain it by proving themselves to be the best in the banking business. 5. Employees should be suggested to show personal touch towards the customers by the management. 6. Faster service in the branches to reduce the waiting time and to move the queue faster. 7. Attitude of the employees should be taken care of by regular guidance.

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8. Interest Rate should be kept low as it is a important component to acquire the customers.(since done) 9. Management should work upon the stratagies in regular intervals as there is heavy competition. 10. Bhubaneswar, Cuttack, Berhampur are the best places to penetrate into the market where as Sambalpur & Rourkela have very limited oppurtunities. 11. Marketing is must for SBI, SBI lacks in marketing and it should be taken care of, enough marketing should be done to tilt the market towards SBI. 12. Credit limit of existing customers should be reassessed through regular visits, can be enhanced. 13. Branch managers should be monitored, suggested and allowed to express their views & suggestions about the market situation around their branch. 14. SBI should make sure that people are aware of all the products & services provided by them. 15. Some branches have more customers, SBI should identify those branches and provide facilities to the branch to provide service and control the situation that will help both the employees and customers. 16. High value customers should be identified in each and every branch by their respective branch managers and keep in touch with them that will help to retain those customers. 17. Frequent training should be provided to the Multi Product Sales Team & Relationship Officers. 18. Medicine Stores are unable to prepare a detailed stock statement so as per the advise of LHO, BBSR simplified stock statement as below can be used. Simplified Stock Statement: Phials Phials Tablets Injections Ointments Surgical dressing Tonics Steroids/hormonal preparations Vaccines IV Fluids Drops Approximate nos Approximate price per Approximate value piece

strips ampoules vials ..tubes ..assorted packs ..phials ..ampoules ..vials ..doses ..pints ..vials
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Health foods/baby foods

kg

Conclusion: State Bank of India has to concentrate on three places namely Bhubaneswar, Cuttack, and Berhampur to penetrate into the Medicine sector. Retailers as well as Distributors are interested in these three places to get the help of bank through Cash credit as they have high turnover. The retailers whose turnover is not high will not go for the credit from banks. vigorous marketing should be carried out by SBI to retain the existing customers and to bring in new customers. SBI has buit an unshakeable trust in the mind of customers which will help SBI to move further and achieve milestones. The medicine sector is really huge and it is growing everyday, financing to this sector is profitable and this is the right time to compete and penetrate into the market. There should not be any further delay or hesitation in financing this sector. The market has enough promise take risk. SBI has taken the initiative for this huge project of financing medicine stores before any other bank. Entering the market early is always a good sign to get the best out it.

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