COVER PAGE NAME :- JAIMIN N DAVE ROLL NO :CASE :- INDRAPRASTHA ICE AND COLD STORAGE LTD.

SUBJECT :- MARKETING MANAGEMENT

1st page

Major decision issues, Mr. Sanjay Aggrawal , CEO of IPCSL wanted to differentiate its firm from the common cold storage companies by upgrading its cold storage facility located in Azad Nagar area of Delhi. He upgraded his facility by installing Controlled Atmosphere (CA) and Gas Controlled (GC) units. GC storages ( 3900 MT ) can be used to store kiwi and red grapes for upto 2 months who tend to get spoiled in 10 days in the normal cold storages. CA ( 100 MT ) can be used for different produces but is mainly used for apples. IPCSL also constructed a deep frezzer storage which would be used to store milk products, ice cream and sweet corn. In this manner he increased the total capacity to 5000 MT by 2001 (double than the original size).In making this transformation Mr. Sanjay dragged his company into a debt of Rs.55 million. One of the major issues was that while its facility was getting upgraded he lost his old customer base to his competitors. After IPCSL became operational again its competitors cut their prices by 10 to 15%.Due to this IPCSL was left with very few customers and its facility remained almost empty. Also due to its upgrading overheads increased marginally as IPCSL had to employ better skilled and trained staff. Unfortunately for Sanjay his upgrading plan also coincided with the slowdown in cold storage business. To cover the cost incurred in up gradation and expansion drive IPCSL has priced its services at Rs.20 per month per box (of 20 kg) for Indian Fruits and imported apples. For imported fruits like kiwis and grapes they priced their services at Rs. 60 per month per box. Other cold storages charges Rs.10 per month per box for Indian fruits while they didnt charge any premium for the imported fruits. The operating cost of the upgraded facility was around Rs.7.50 per kg per box and the fixed cost were in the amount of 6 million rupees which would get double in case the utilization crossed 2500 MT. Due to this Sanjay had to price its services at a premium rate than its competitors. One of the main competitors of the IPCSL had also started giving round the clock services to cater to the suppliers of high value imported fruits such as red grapes, kiwi , Washington apples and Fuji apples. These fruits are mainly routed through the Mumbai port and are mainly kept in the cold storages in Mumbai itself while very small quantity of 150 MT is kept in the NSM, Azadpur . In the last fiscal year which ended on March 2002 IPCSL had doubled its revenue but it was not enough to cover the operational and financial costs of the upgraded facility. The main reason for this was that the market had not understood the long term benefits of storing the food in this facility. To cover the costs and to generate Mr. Sanjay was confuse that whether he should sell its services at 15 per month per box or should he diversify by buying the produce directly from the farmers and selling it directly to the retailers. Analysis In India almost all the produce is sold as early as possible after harvest due to the lack of proper storage and handling facilities. In US almost 80% of the fruits are used for making juices and other products while in INDIA it is less than 2% due to the stated problem. While all the other fruits are sold in their harvest seasons itself apple is the only fruit that is sold in the market during the entire year. Apples can be stored up to 2 months in the ordinary

cold storage , 4 months in the gas controlled storage and six months in the controlled atmosphere storage. The growers have to incur a lot of costs by the time the produce is sold in the market. The 1st is the transportation, packing and loading charges that are imposed on them by forwarding agencies. The produce is brought to the points like Delhis New Azadpur market. After this the produce is taken over by commissioning agents who pay for its unloading, storage and sale to the wholesalers. For these services they charge 6% of the sales amount. The wholesalers distribute it to the sub wholesalers located in different states of India who sell it to the retailers. The produce reaches to the consumer through these retailers. Due to these intermediate stages the produce is sold at very higher price than its production cost. The growers are not aware of the final prices of their produces . One of the main reason is the lack of proper education. They dispatch their produce by commissioning agent on whom they keep a blind faith as they are not aware of the prevailing market conditions. Very few of the growers visit the market while their produce is being sold due to which they are also not aware of off season pricing which is almost 100% higher in the case of apple. Due the increased income of middle and upper middle class families and also due to their health consciousness they fruit consumption had increased. But these consumers also preferred to purchase their fruits from the neighbourhood markets. There are mainly there philosophies behind this tendency. 1. Proximity of fruits. 2. They think that the fruits in these markets are fresh while in the organised retail outlets they might be few months old. 3. Prices in the organized retail stores are higher than the neighbourhood markets. There was also a lack of awareness in the commissioning agents. One of the commissioning agents Mr. Das opined that there was a minimal difference between the fruits stored in the ordinary cold storages and those stored in the GC or CA storages while the other agent stated that the controlling factor was the ambient temperature. During winter when ambient temperature was less the difference was not so visible but when the temperature shotup during the summer time there was a visible difference between the two. Looking at the above facts it is visible that IPCSL had made some strategic mistakes. One of them was that IPCSL should have updated its plant in a stage wise manner so that its existing customers do not go away. Another mistake was not aggressively marketing its new facility. Its evident that commissioning agents were not completely aware of the benefits of this new facility. IPCSL should also make them understand that if they stored the produces such as apple which were sold all over the country in off season sale. By storing them at this upgraded facility and selling them at almost 100% margins in the off season sale would have been truly beneficial to both the commissioning agents and growers as well. The best way would be to work with both the grower and agent parallel to create awareness. If this didnt work out too Mr. Sanjay should go ahead with diversifying by purchasing the produces directly from the farmer and selling it to the retailer. In this way IPCSL would have made huge profits. Also providing the services for 24x7 would not be a bad option . In this way they would be able to get a lot of business for the storage of imported products which was right now going to its competitors. They could have also marketed its services to the companies that are in the business of juice manufacturing. If they manage to make some

contracts with them they should start storing the fruits on their own and selling them to these companies at premium rates throughout the year.

Recommendation / inferences on major issues, analysis(quantitative & qualitative) supporting the recommendations 2nd 3rd page Analysis/calculations to support your recommendations