Metal products India limited

By :- Ashok Rana Churchill Mishra Chandan Kumar Kuldeep Katiyar

Case Overview

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

Metal Products India Limited (MPIL)

Established in 1987 at the out skirts of Bangalore. Set up by parent company Madhya Bharat Metal Sections Limited (MBMS) in Bhilai Manufacturers of mild steel mostly used in construction, furniture, rolling shutters and industrial sheds.

Metal Industry

Complete market size was 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)

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

Characteristics Of Environment

Previously MPIL was market leader in south India environment was favorable for MPIL Business was quite attractive Later on new entrant increased the competition

Distribution Channel of MPIL

Distribution through existing dealers of MBMS Appointed new dealers at Vijayawada, Calicut and Erode MPIL decided prices for its dealers Manufacturer gave discount of 3% to 7% depending on volume Dealers further marked up the prices by 7% to 8% Direct dealing with OEMs and

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 manufacturers

Market Structure Cont

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

Strategies adopted by competitors new entrants

To penetrate the market AM and MMS adopted a different strategy Offering material direct to customers in Bangalore. They identified potential dealers dealing with steel and hardware . Offered same discounts as offered by MPIL and KMS to their dealers. New entrants started offering discounts of 6 to 7 % to upcountry subdealers.

Apparent Problem

Loosing sub dealers in north Karnataka Loss in market share Strategies adopted by competitors i.e. new entrants Discount rate for the sub dealers Distribution network

Recommendation

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

Problems With Suggested Recommendation

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

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