METAL PRODUCTS INDIA LIMITED

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2/22/13

Metal Products India Limited (MPIL)

Metal Products India Limited (MPIL) established in 1987 is one of the leading manufacturers of MS (mild steel) metal sections MS is most commonly used in construction, furniture, rolling shutters and industrial sheds The factory is located at Whitefield, on the outskirts of Bangalore Set up by parent company Madhya Bharat Metal Sections Limited (MBMS) in Bhilai 2/22/13

Case Overview

MPIL was setup for improving the distribution in South MPIL is losing its market share in North Karnataka Solely dependent on Bangalore Metal Trader for distribution in Karnataka New entrants operated with the sub dealers of MPIL
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Metal Industry

Complete market size of 40,000 metric tones (MT) Annual growth rate of 6 percent Major Players

Karnataka Metal Sections (KMS) Adarsh Metals (AM) Mahavir Metal Sections (MMS)

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Comparison with others

On the basis of product quality On basis of pricing & discounting On the basis of distribution & availability On the basis of brand name & reputation of the company

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Characteristics Of Environment

Previously MPIL was market leader in south India Environment was favorable for MPIL Business was attractive New entrants increased the competition

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Distribution Channel of MPIL

MPIL has dealers at all the important locations in the South For Karnataka, has only one dealer-Bangalore Metal Traders (BMT) based at Bangalore Appointed new dealers at Vijayawada, Calicut and Erode The price to dealers is decided by MPIL Depending on the volume discount offered varied between 3 to 7 %

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Market Structure

Bangalore Metal Traders (BMT) was largest dealer in South India with off take of 2000 MT per annum BMT had more than 50% of market share in Karnataka Transactional Relationship/Mutual Understanding

MPIL didnt appoint dealers at other centers in Karnataka BMT didnt dealt with other

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Market Structure - Contd

Karnataka Metal Sections (KMS) operated Bangalore market through Kavery Agency More than 80% of market was shared by MPIL & KMS

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Strategy of new entrants

AM and MMS found it difficult to compete with BMT and Kavery Agencies, which were wellestablished in the market and had exclusive arrangements with their principals To penetrate the market, AM and MMS adopted a different strategy of offering material direct to customers in Bangalore 2/22/13

Present Problems for MPIL

Loosing sub dealers in north Karnataka Loss in market share new entrants captured more than 50% of the market in Hubli and Belgaum Strategies adopted by competitors i.e. new entrants Discount rate for the sub dealers
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Distribution network

Recommendation

MPIL should not solely depend on BMT MPIL should promote their product through hardware dealers to capture the market of north Karnataka Restructuring of discount in interest of sub dealers Applying condition to deal only with MPIL products

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Problems With Suggested Recommendations

Might lose business with BMT Cant offer high margin as AM and MMS Time constraint in appointing new sub dealers Cost involved in studying market by new sub dealers
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THANK YOU

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