Case Study

On
Eastern Condiments Pvt. Ltd.

Submitted By:
Group 7
Arka Bose 19PGDM215
Submitted To:
Karan Agarwal 19PGDM224
Rohan Sharma 19PGDM241
Prof. D.K. Batra
Shubham Agarwal 19PGDM256
Shubhit Gulathi 19PGDM257
Samarth Shrivastava 19PGDM246
Ques. 1 – What do you think of Eastern’s performance in Kerala? Give reasons for your opinions.

• Eastern’s Performance in Kerala was amazing which can be seen through theCAGR of 46.79% from 2002/03 to
2007/08. Eastern’s revenues grew steadily from INR 286million in 2003 to INR 1.95 billion in 2008

• Eastern had a whooping market share of 47% in Kerala. The company dominated the spicetrade in Kerala and had
begun expanding into other parts of the country

• It had three factories: Adimali, Okkal (Export oriented unit), Kavalangad (Tea) in Kerala whichshows the strong hold
of Eastern in Kerala

• 67% of companies revenue comes from Kerala itself

Ques. 2 – What metrics have you used to reach your judgement?

• Sales growth rate was 367% from 2002-03 to 2007-08 in Kerala whereas it was 792% from 2002-03 to 2007-08 for
Karnataka. Even the Salesman efficiency is increasing in both the regions over the years.

• Kerala has a large market with great customer loyalty also there is a low level of competition in the market and also
enjoys the first mover advantage for veg as well as non veg segment.

• Karnataka is a huge market with prospective customers in it, the drawback present in Karnataka is the high level of
competition from MTR. First mover advantage is present only in the non veg segment. Majority of the focus is on
Malyali outside Kerala.

• PBT in Kerala is growing but in Karnataka is is a contrary scenario.

Ques. 4 – Is Karnataka a good choice for expansion?

• Karnataka has the max concentration of malayalis outside of Kerala

• Closer proximity to Kerala, hence goods can reach sellers easily

• Most of the local spice traders are Malayali

• Similarity in food and cultural habits between Kerala and Karnataka

• Low competition in spice market

• MTR food was the only big rival, restricted to vegetarian spices only
Ques. 8 – Carry out the Economic comparison of results in Kerala and Karnataka to support their verdict on
Kerala/Karnataka performance.

• Sales growth rate was 367% from 2002-03 to 2007-08 in Kerala whereas it was 792% from 2002-03 to 2007-08 for
Karnataka. Even the Salesman efficiency is increasing in both the regions over the years.

• Kerala has a large market with great customer loyalty also there is a low level of competition in the market and also
enjoys the first mover advantage for veg as well as non veg segment.

• Karnataka is a huge market with prospective customers in it, the drawback present in Karnataka is the high level of
competition from MTR. First mover advantage is present only in the non veg segment. Majority of the focus is on
Malyali outside Kerala.

• PBT in Kerala is growing but in Karnataka is is a contrary scenario.

Ques. 9 – What are the Financial details for a comparison of the owned versus entrepreneur distribution models for
Karnataka. Support your response in the class with respect to the different options.

• Policies for Owned distribution system consists of push sales strategy with 3% commission. They have prioritised
company owned vans first and then focus lies on the Mahindra lease vehicles. Policies for Entrepreneur
distribution system consists of buy back option to promote the sales of new products. They also provide
recruitment bonus and EMI based vehicle facilities.

• The total compensation received by a salesperson for Owned distribution system (23420) is lesser than that of the
Entrepreneur distribution system (32333). Hence, the salesperson has more incentive to work in an Entrepreneur
distribution system as the incentive is 38% higher.

• Net income of the company has been increased by 1.33 times bye choosing Entrepreneur distribution system over
Owned distribution system.

• Distribution cost as the percentage of sales decreased from 11.4% to 10.5% in entrepreneur distribution model
than owned distribution
THANK YOU