A final report of sip on zydus wellness

A REPORT

ON

MARKET PENETRATION OF ZYDUS WELLNESS IN RETAIL OUTLETS OF

LUCKNOW

BY

RISHABH RAWAT

ENROLLMENT NO: 13BSP1326

AT

ZYDUS WELLNESS LTD.

A REPORT

ON

MARKET PENETRATION OF ZYDUS WELLNESS IN RETAIL OUTLETS OF LUCKNOW

BY

RISHABH RAWAT

13BSP1326

FOR

ZYDUS WELLNESS LTD.

A report submitted in partial fulfilment of the requirements of PGPM program of

The IBS Gurgaon

Distribution list:

1. Mr.Anchal Khare (ASM)

2. Dr.Anubhav A. Mishra

DATE OF SUBMISSION: 6/06/2015

AUTHORISATION

“The report is submitted as partial fulfilment of the requirement of PGPM program of IBS

Gurgaon.”

I Rishabh Rawat student of PGPM II SEMESTER of IBS BUSINESS SCHOOL GURGAON,

2013-2015, Roll No. 13BSP1326 hereby declare that this project report entitled “MARKET

PENETRATION OF ZYDUS WELLNESS IN RETAIL OUTLETS (LUCKNOW).” is

written and submitted by me under the external guidance of Mr ANCHAL KHARE, AREA

SALES MANAGER ZYDUS WELLNESS of, NUTRALITE DIVISION and under the

internal guidance of Dr. ANUBHAV A. MISHRA.

The findings and interpretations in the report are based on both primary and secondary data

collection. This project is not copied from any source or other project submitted for similar

purpose.

Date: Rishabh Rawat

13 BSP 1326

ACKNOWLEDGEMENTS

In order to accomplish any task there is always something or someone who pushes him and

motivate him till the end of the task and we should never fail to show our gratitude to them as

this the right way to give our “GURU DAKSHINA”.

When all work is done, it is a pleasant job to thank all those who were at every instant

supervising me and ensuring the completion of the decoded work.

In the Same way for the completion of my project work I am sincerely thankful to all those who

were with me to give right suggestion and showing me the correct path so that I can complete my

project work effectively and I would never forget their contribution ever.

I am extremely thankful to my external project guide Mr Anchal Khare (Area Sales Manager

of Lucknow) and internal project guide Dr. Anubhav A. Mishra for his or her outstanding

efforts and for being with me right from the beginning of my project and guiding me at every

step.

EXECUTIVE SUMMARY

Zydus wellness is one of the leading healthcare companies in India. The project I undertook is “Market Penetration of Zydus Wellness in Retail Outlets of Lucknow”. The study objectives were:

Understanding the functioning of sales and distribution channel and hence to increase the business of Nutralite.

The project includes an analysis of current Nutralite outlets in Lucknow to determine the current market situation.

The project was undertaken for the duration of 3 months as a part of the learning process during the summer training at Zydus Wellness Ltd.

The main objective of the project is to identify the loopholes that exists in the current distribution system in Lucknow.

To study the first part various general trade outlets were visited and their central distributor center were visited. Interviews were conducted to know the perception of the retailers. To solve the problems various suggestions have been made. Special motivation should be given through various benefits to the distributors, salesman and retailers to keep up Zydus product

In second part a survey was conducted in different general trade outlets. In total 150 retailers responded to the survey. It was an excellent experience while working with Zydus Wellness Ltd... I learnt about the environment and culture of the organization, distribution structure; which I feel will help me in my future endeavors in life.

ABSTRACT

This project is on MARKET PENETRATION OF ZYDUS WELLNESS IN RETAIL

OUTLETS (LUCKNOW).This project takes a look at the overall activities & performance of

the company, how the company marketed its products and strategy it has taken to penetrate in the

Lucknow region. It also makes a theoretical study of Customer’s Relationship Management

(CRM) of the company and takes a look on how it apply in practical form. Retailer satisfaction

survey has been made to know their views and problems. Finding gives a clear view of what the

retailer want. This project contain area wise analysis of Lucknow market to give clear picture

how the company is performing and what shortcoming are there which are needed to sorted out.

In this SWOT, analysis of the company has also been outlined and also few realistic suggestions

are given so that company can improve its market shares, profitability and finally attain the

retailer satisfaction.

TABLE OF CONTENTS

Authorisation i.

Acknowledgement ii.

Executive summary iii.

Abstract IV.

1. Introduction 1

1.1 Consumer Production Division 3

1.2 Objective of the study 6

1.3 Scope 6

1.4 Limitation 7

1.5 Methodology 7

1.6 Research Instrument 8

1.7 Distributor in the industry 8

1.8 Competitors in the industry 8

2. Project Details 9

2.1 Market Survey and Analysis 9

3. Important Consideration 9

3.1 Location Of outlets 9

3.2 Services provided by the Distributer 10

3.3 Internal Commitments made by the company 10

4. Retailer Survey 10

4.1 Objective

4.2 Methodology

4.3 Limitations

4.4 Perception of retailor on behavior of the salesman 11

4.5 Price band of Nutralite 12

4.6 Margin on Nutralite 13

4.7 Distribution of Nutralite 14

4.8 Replacement policy 15

4.9 Promotional strategies 16

4.10 Packaging of Nutralite 17

5. Distribution to modern retail stores 18

5.1 Introduction

5.2 Traditional Formats

5.3 Modern Formats

6. Swot Analysis 19

6.1 Michal Porter Five Forces Analysis 20-21

6.2 Balance sheet 22-23

6.3 Profit and Loss statement 23-24

6.4 Financial analysis 24-25

6.5 Ratio analysis 26-27

6.6 Issues identified 28

7. Recommendation 29-30

8. Learnings 31

9. Annexure 32

9.1 Questionnaire 32-33

9.2 Outlet penetration data chart 34

INTRODUCTION OF THE COMPANY

Zydus Wellness Limited was incorporated as Carnation Nutra-Analogue Foods Limited. Initially the company was engaged in the business of manufacturing, buying and selling of all types of health food products, low fat, and low cholesterol including table margarine, cheese, butter and substitute products. The name of the company has been changed from 'Carnation Nutra-Analogue Foods Limited' to 'Zydus Wellness Limited' with effect from January 5, 2009.

On March 17, 2006, Zydus Cadila acquired 834,000 equity shares of Rs. 10 each representing about 14.96% of the fully paid up equity voting capital of the company at a price of Rs. 144.82 per share. Further Zydus Cadila came with a voluntary open offer to acquire up to 11,15,020 fully paid up equity shares of the face value Rs. 10 each representing 20% of the paid -up equity share capital of the company at a price of Rs .150 per share in March 2007.

The Consumer Division of Zydus Cadila was envisioned to promote ‘healthy living’ by anticipating emerging and day-to-day needs in dietetic/health foods, and personal care by offering healthier choices to the consumer. Health and wellness have been identified as emerging opportunity areas in consumer healthcare and a key focus area for the business. The consumer division aims to empower individuals to take increasing responsibility for one’s health by adopting healthy eating and living habits and lifestyles. The Division markets products under the name Nutralite.

The acquisition has strengthened the division’s offerings to the health-conscious consumers, as a pioneer in low calorie/dietetic products and functional/health foods.

With the convergence of healthcare, nutrition, wellness and cosmeceuticals, only those companies with the ability to innovate expand market reach and offer niche products in this domain will have a clear advantage in the marketplace. Zydus Wellness Ltd., has strong credentials and is best placed to make early inroads in this emerging market and add experiences that enrich life.

Zydus Wellness Ltd is a subsidiary of Cadila Healthcare Ltd. The company operates in one segment, the consumer products. Their products include table margarine and spreads, cosmeceuticals and sweet meat. Their brands include Nutralite, which is a table margarine; Sugar Free, which is a low calorie sweetener, and EverYuth, which includes skincare products. They sell their products in India. They have a plant located in Gujarat. Zydus Wellness Ltd was incorporated on November 1, 1994 as a public limited company with the name Carnation Health Foods Ltd. The company set up a unit to manufacture Low fat, Zero cholesterol Margarine as a Butter substitute and Low fat, Zero Cholesterol Cheese and casienate and milk fat. The name of the company was changed from Carnation Health Foods Ltd to Carnation Nutra-Analogue Foods Ltd. In December 15, 1996, the company started trial runs in their manufacturing unit and in January 1997, they started commercial production activity. During the

year 1997-98, they set up their marketing channel for the state of Gujarat. During the year 2005-06, the company increased the production capacity of Margarine from 3,928 MT to 5,500 MT. Cadila Healthcare Ltd, a listed public limited company acquired 3,432,138 equity shares through market purchase and open offer. Pursuant to acquisition of 61.56% shareholding, the company became a subsidiary of Cadila Healthcare Ltd with effect from June 8, 2006. During the year 2006-07, the company launched a variant of Nutralite in retail under the brand 'Nutralite Premium'. During the year 2007-08, the company increased the production capacity of Margarine from 5500 MT to 8500 MT. During the year 2008-09, as per the scheme of arrangement, the consumer products division of Cadila Healthcare Ltd, the holding company was de-merged and transferred to the company with effect from April 1, 2008. In January 5, 2009 the name of the company was changed from Carnation Nutra-Analogue Foods Ltd to Zydus Wellness Ltd, in order to recognize them as 'Zydus Cadila' Group Company. During the year, the company increased the production of Nutraceuticals from 8500 tonnes to 14600 tonnes. They launched a power brand 'Natura Diet Sugar' to bring convenience to the consumer. During the year 2009-10, the equity shares of the company were listed on National Stock Exchange of India Ltd with effect from November 13, 2009. They launched Sugar Free Natura Flavoured sachets in Lemon Mint and Ginger Masala flavours to enhance the consumer experience and offer a wider choice to the customers. In September 2010, the company extended their niche product basket with the launch of Sugar Free Mints. The company is planning to launch various value added products to provide the consumers, the Sugar Free experience in various forms. The company is setting up a manufacturing facility in Sikkim to cater to the growing demand of Sugar Free and EverYuth, which are outsourced at present. This unit is expected to be commissioned in 2010-11.

CONSUMER PRODUCT DIVISION:

This is a healthcare division that has brands like Sugar Free, Nutralite and Everyuth. Its Sugar-Free has range of Sugar substitutes; Nutralite is cholesterol-free bread spread and Everyuth has range of skincare products.

ABOUT NUTRALITE

The affluent laid back lifestyle of the urban Indian consumer has given way to many lifestyle diseases and prompted the consumer to become more health conscious. The increasing incidence of heart problems and diabetes has paved the way for emergence of health foods. Keeping in line the idea of promising health along with fitness, Zydus Wellness offers Nutralite, which is a healthy alternative to butter. Nutralite is a premium table spread which is cholesterol free and does not contain hydrogenated fats. It also has PUFA (poly unsaturated fatty acids) and MUFA (mono unsaturated fatty acids) which are known cholesterol fighters. So, while Nutralite tastes like butter, all of these advantages make its profile healthier. Today, it is widely accepted as a healthier substitute to butter.

PACKAGING OF NUTRALITE:-

100 gm, 200 gm, 500 gm, 10*100 gm, 5*100 gm.

OBJECTIVE OF THE STUDY:

The main objective of the project lies in understanding the functioning of sales and distribution channel and hence to increase the business of Nutralite. The project includes an analysis of current Nutralite outlets in Lucknow to determine the current market situation .it also includes:

Creating brand awareness of Nutralite. Studying the current market scenario and identifying better ways to increase the market

share of Nutralite. Identifying and analyzing the reasons for closed outlets of Nutralite and providing

solutions. Creating awareness among the retailers about the Zydus products. To know about the factors which affects consumer’s buying behavior. To know about the preference of Nutralite in comparison with other competitive brands. To study the various strategy of Zydus Wellness used to increase the penetration of

Nutralite in various markets. Factors influencing retailer buying behavior. Expectations of retailers from Nutralite. To collect the detailed data by asking the from the various outlets like grocery, bakery,

wholesalers. Understanding the 4 P’s (product, price, place, promotion) of marketing in relation to

Nutralite.

SCOPE OF THE STUDY:

There is neck to neck competition in the market. The work in Zydus Wellness can be useful in following ways:

Knowing the retailers satisfaction level towards the delivery and distribution of Nutralite. Assessment of Nutralite’s position in comparison to competitors. To understand the distribution flaws and complaints of the retailers and try to improve

them or provide suggestions. To further grab the market share, which in turn will help in enhancing business by

increasing the sales volume.

LIMITATIONS OF THE STUDY:

The study limits to region of Lucknow.

Sample size is very small and this can’t help to know all about the butter market. It may be possible that in a particular area the company is having a good team of salesman or the disposable income of the residents of that area is comparatively more than others. This reason can’t come into picture until and unless a big survey is done.

Some discrepancies may occur due to random sample undertaken.

The tendency to give wrong information by some retailers may be misguiding.

Being a perishable product no product sample could be shown as demanded by many prospects like hotel and restaurant clients.

METHODOLOGY:

RESEARCH DESIGN:

The research design was prepared with great care keeping in mind the research objective: the

project was divided into two parts: Part A, Part B.

RESEARCH APPROACH:

IN PART A:

Existing Nutralite outlets were visited. They were interacted to know about things like

replacement of unsold and expired stock, services provided by distributors, quality, taste, and

customer preference of Nutralite. Non existing outlets including competitor’s outlets were

visited, interacted to know about competitor strategies and then Nutralite products and schemes

were explained to convert that prospect into Nutralite retailer.

RESEARCH METHOD:

Primary data was collected through detailed market survey by means of structured questionnaire

as well as unstructured interaction. Secondary data from internet also referred.

IN PART B:

Consumer survey was done in order to know the consumer perception regarding Nutralite.

RESEARCH INSTRUMENT:

Consumer survey was done through structured questionnaire.

SAMPLING PROCEDURE:

Simple random sampling and judgemental sampling procedure was used.

DISTRIBUTORS OF NUTRALITE IN LUCKNOW:

BALAJI TRADERS

DISHA MARKETING

SB ENTERPRISES

MAA DURGA TRADERS

COMPETITORS IN THE INDUSTRY :

AMUL

BRITANNIA

MARIGOLD

VEELITE

NUTDELIGHT

NUTRELLA

PROJECT DETAILS :

MARKET SURVEY AND SALES:

Initial part of the project was about induction in the CPD business. The project started with

visiting the existing Nutralite outlets with the company salesman. The main purpose was to

understand the distribution channel of Nutralite, storage facilities. Observe and learn how to

deal and interact with retailers, tackle their grievances, problem faced by the distributor, etc. all

this helped to get a clear picture of the ground reality of butter business, the basic of sales and

distribution, observe and learn as how to deal and interact with the retailer, understand their

problems and try to solve them or at least convince them. The behaviour of the salesman or any

company executive towards the retailers is very important in CPD industry. As any harsh or

negative attitude will compel the retailer to shift to next competitor. Then it is next to

impossible to bring back that lost customer.

Next the area wise list of existing Nutralite retailers under company distributor, Maa Durga

traders was handed over. The task was to visit these outlets and as well as competitor outlets.

The object of visiting Nutralite outlets was to know their satisfaction level and perception

towards Nutralite, its distribution, replacement policy, profit margin, etc. the data was collected

through a questionnaire. The list handed also included the closed outlets of Nutralite. These

outlets were visited to know the reason for closing the business, try to solve the issues and

finally convincing them to again start the business.

The competitor outlets were visited to know their perception towards the competitors, their

promotional schemes, distribution network, profit margin, etc... These competitors’ retailers

were made aware of Nutralite product range, profit margins, promotional schemes, and other

benefits. The object was to convince them to keep Nutralite along with other brands.

IMPORTANT CONSIDERATIONS:

1. LOCATION OF OUTLETS:

It is an important factor on which the sales of the product is depended because the outlet

should be reachable to the consumer so that the sale can be made.

2. SERVICES PROVIDED BY THE DISTRIBUTOR:

The other important factor is the how distributor is providing services to the retailer.

Number of visits to the outlets. The salesman is informing the retailer about the schemes

or not effects the sales of the product and brand loyalty of the customer.

3. INTERNAL COMMITMENTS MADE BY THE COMPANY:

The company has an internal policy of rewarding the best performing retailer with different

schemes and gifts. This motivates the retailer to achieve more and more target and to present

the outputs to the company.

RETAILER SURVEY:

OBJECTIVE:

The objective of the survey is to know about the perception of the retailer towards the

factors like behavior of the salesman, price band of Nutralite, margin on Nutralite,

distribution, replacement policy, promotional strategies, packing of Nutralite.

METHODOLOGY:

For carrying the survey a sample of 150 retailers was taken and questions were asked

through a structured questionnaire.

LIMITATIONS:

A. Sample size may not depict the view of the entire Lucknow city.

B. Sometimes the retailers do not give the exact responses.

C. A few retailers may have personal grudges against the distributor.

I. BEHAVIOUR OF THE SALESMAN:

RATING FREQUENCY PERCENTAGE C.FREQ.

BAD 2 1% 1%

POOR 4 3% 4%

AVERAGE 59 39% 44%

GOOD 62 41% 85%

EXCELLENT 23 15% 100%

BEHAVIOUR OF SALESMAN TOWARDS SALESMAN

BAD POOR AVERAGE GOOD EXCELLENT

It was observed that generally the behavior of the salesman was good towards the

retailers. Only 4% of retailers surveyed had complained about the behavior of the

salesman. These are the retailers to whom salesman did not visited regularly or those

who have given less orders. Sometimes salesman neglects those retailers who used to

give less orders and always have complaints.

II. PRICE BAND OF NUTRALITE:

RATING FREQUENCY PERCENTAGE C.FREQ

BAD 0 0% 0%

POOR 0 0% 0%

AVERAGE 8 5% 5%

GOOD 100 67% 72%


PRICE BAND OF NUTRALITE


The price band of Nutralite got a good response from the retailers.

III. MARGIN OF NUTRALITE:

RATING FREQ. PERCENTAGE C.FREQ.

BAD 0 0% 0%

POOR 4 3% 3%

AVERAGE 72 48% 51%

GOOD 60 40% 91%


MARGIN OF NUTRALITE


IV. DISTRIBUTION OF NUTRALITE:

DISTRIBUTION OF NUTRALITE


V. REPLACEMENT POLICY :


BAD 8 5 5

POOR 40 27 32

AVERAGE 59 39 71

GOOD 31 21 92

EXCELLENT 12 8 100

VI. PROMOTIONAL STRATEGIES:


REPLACEMENT POLICY



BAD 51 34 34

POOR 45 30 64

AVERAGE 43 29 93

GOOD 11 7 100

EXCELLENT 0 0 100

BAD 15 10% 10%

POOR 49 33% 43%

AVERAGE 51 34% 77%

GOOD 27 18% 95%

EXCELLENT 8 5% 100%

PROMOTIONAL STRATEGIES


VII. PACKING OF NUTRALITE:

PACKAGING OF NUTRALITE



BAD 0 0 0

POOR 8 5 5

AVERAGE 51 34 39

GOOD 84 56 95

EXCELLENT 7 5 100

DISTRIBUTION TO MODERN RETAIL STORES:

INTRODUCTION: Modern Retailing in India

In a sharp contrast to the Retail sector in developed economics, retailing in India though large in terms of size is highly fragmented and unorganized. With close to 12 million retail outlets the country has one of the highest retail densities worldwide. Retailers include street vendors, supermarkets, department stores, restaurants, hotels .Where the ownership and management rest with one person are classified as traditional or unorganized retail outlets. These formats typically require employees with low skills and account for around two-third sectors output.

TRADITIONAL FORMATS:

Kirana stores Grocery Exclusive/Multiple Brand outlet Bakery shops

MODERN FORMATS:

Supermarkets Hypermarkets Departmental Stores

SWOT ANALYSIS:

STRENGTH:-

Zydus wellness has a well-built image of excellence and innovation. It has a well logistics and distribution channel network. High brand image of Zydus in the market. Offering new products to the customers continuously.

WEEKNESS:-

Trade schemes and margin of some competitors are better. No regular audit of the distributors. No training schedules for training of distributors salesman. Equal importance is not given by distributors to all retailors. Lagging much behind in advertisements and promotional activities.

OPPORTUNITIES:-

There is a phenomenal scope for value addition in innovations in product development, packaging and presentation.

By solving the replacement problem they can maximize the attention of retailors about selling the product.

THREATS:-

Cut throat competition in the market. Amul focuses more on advertisement, as ads can be seen often. Customer are brand loyal , Customer are not well informed.

MICHAEL PORTER FIVE FORCES ANALYSIS:-

1) ENTRY BARRIER: high Threat of entry of new competitors will be high.

2) COMPETITION: high

Competition will be high because threat of new enterers is high. So there will be neck to neck competition.

3) BARGAINING POWER OF CUSTOMERS: high

As the competition is neck to neck so the bargaining power of the customer’s will be also high.

4) THREAT OF SUBSTITUTE PRODUCT: mixed

As there are number of competitors in the market so there will be a mixed possibility of substitute products in the market.

5) BARGAINING POWER OF SUPPLIERS: low

As there are number of competitors in the market so there will be a low possibility of bargaining power of suppliers of the products in the market to rise.

Mar '13 Mar '12 Mar '11 Mar '10

12 mths 12 mths 12 mths 12 mths

Sources Of FundsTotal Share Capital 39.07 39.07 39.07 39.07Equity Share Capital 39.07 39.07 39.07 39.07

Balance Sheet of Zydus Wellness

------------------- in Rs. Cr. -------------------

Share Application Money 0.00 0.00 0.00 0.00Preference Share Capital 0.00 0.00 0.00 0.00Reserves 217.47 147.79 102.82 61.51Revaluation Reserves 0.00 0.00 0.00 0.00Net worth 256.54 186.86 141.89 100.58Secured Loans 0.00 0.00 0.00 0.00Unsecured Loans 0.00 0.00 0.00 0.00Total Debt 0.00 0.00 0.00 0.00Total Liabilities 256.54 186.86 141.89 100.58

Mar '13 Mar '12 Mar '11 Mar '10

12 mths 12 mths 12 mths 12 mths

Application Of FundsGross Block 63.58 62.74 61.14 48.74Less: Accum. Depreciation 12.20 9.97 7.94 6.45Net Block 51.38 52.77 53.20 42.29Capital Work in Progress 0.00 0.08 0.31 2.03Investments 95.73 47.71 39.70 0.00Inventories 6.74 6.04 17.49 12.88Sundry Debtors 0.46 0.36 1.17 1.37Cash and Bank Balance 146.15 127.17 7.80 0.11Total Current Assets 153.35 133.57 26.46 14.36Loans and Advances 5.08 84.53 9.65 20.28Fixed Deposits 0.00 0.00 78.65 100.37Total CA, Loans & Advances 158.43 218.10 114.76 135.01Deferred Credit 0.00 0.00 0.00 0.00Current Liabilities 21.26 31.33 46.46 60.92Provisions 27.74 100.47 19.62 17.83Total CL & Provisions 49.00 131.80 66.08 78.75Net Current Assets 109.43 86.30 48.68 56.26Miscellaneous Expenses 0.00 0.00 0.00 0.00Total Assets 256.54 186.86 141.89 100.58

Contingent Liabilities 1.58 2.71 2.83 8.58

Book Value (Rs 65.66 47.82 36.31 25.74

Profit & Loss account of Zydus Wellness

------------------- in Rs. Cr. -------------------

Mar '13 Mar '12 Mar '11 Mar '10

12 mths 12 mths 12 mths 12 mthsIncomeSales Turnover 213.01 254.77 335.50 267.52Excise Duty 0.00 1.18 0.09 0.00Net Sales 213.01 253.59 335.41 267.52Other Income 13.89 8.64 7.15 4.00Stock Adjustments 0.07 -11.65 4.58 5.10Total Income 226.97 250.58 347.14 276.62ExpenditureRaw Materials 64.91 81.43 124.90 91.45Power & Fuel Cost 1.26 1.16 1.06 0.95Employee Cost 11.96 11.29 15.64 9.76Other Manufacturing Expenses 0.00 0.07 0.24 0.30Selling and Admin Expenses 0.00 67.90 105.97 100.82Miscellaneous Expenses 47.14 7.71 7.72 2.65Preoperative Exp Capitalised 0.00 0.00 0.00 0.00

Total Expenses 125.27 169.56 255.53 205.93

Mar '13 Mar '12 Mar '11 Mar '1012 mths 12 mths 12 mths 12 mths

Operating Profit 87.81 72.38 84.46 66.69PBDIT 101.70 81.02 91.61 70.69Interest 0.00 0.11 0.16 0.09PBDT 101.70 80.91 91.45 70.60Depreciation 2.37 2.30 1.49 1.59Other Written Off 0.00 0.00 0.00 0.00Profit Before Tax 99.33 78.61 89.96 69.01Extra-ordinary items 0.00 0.00 -0.24 0.25PBT (Post Extra-ord Items) 99.33 78.61 89.72 69.26Tax 2.22 10.93 30.24 23.99Reported Net Profit 97.11 67.68 59.48 45.27Total Value Addition 60.36 88.13 130.63 114.48Preference Dividend 0.00 0.00 0.00 0.00Equity Dividend 23.44 19.54 15.63 11.72Corporate Dividend Tax 3.99 3.17 2.54 1.95Per share data (annualised)Shares in issue (lakhs) 390.72 390.72 390.72 390.72Earnings Per Share (Rs) 24.85 17.32 15.22 11.59Equity Dividend (%) 60.00 50.00 40.00 30.00Book Value (Rs) 65.66 47.82 36.31 25.74

Financial Analysis

Mar '13 Mar12 Mar11

Investment Valuation Ratios

Face Value 5.00 5.00 5.00

Dividend Per Share 7.50 7.50 6.25

Operating Profit Per Share (Rs) 34.50 33.14 -1.63

Net Operating Profit Per Share (Rs) 179.52 153.95 106.43

Free Reserves Per Share (Rs) -- 107.91 86.33

Bonus in Equity Capital 71.26 71.26 71.26

Profitability Ratios

Operating Profit Margin (%) 19.21 21.52 -1.52

Profit Before Interest And Tax Margin (%) 15.81 16.84 -4.38

Gross Profit Margin (%) 16.03 18.09 -5.97

Cash Profit Margin (%) 16.50 24.53 22.82

Adjusted Cash Margin (%) 16.50 24.53 22.82

Net Profit Margin (%) 13.37 19.41 20.57

Adjusted Net Profit Margin (%) 13.37 19.41 20.57

Return On Capital Employed (%) 14.09 22.02 24.75

Return On Net Worth (%) 17.12 25.71 29.20

Adjusted Return on Net Worth (%) 17.12 28.25 27.75

Return on Assets Excluding Revaluations 142.20 124.89 102.07

Return on Assets Including Revaluations 142.20 124.89 102.07

Return on Long Term Funds (%) 17.33 24.82 25.22

Liquidity And Solvency Ratios

Current Ratio 1.03 1.22 1.63

Quick Ratio 1.73 1.31 1.23

Debt Equity Ratio 0.57 0.43 0.27

Long Term Debt Equity Ratio 0.27 0.27 0.25

Debt Coverage Ratios

Interest Cover 5.79 12.42 19.21

Total Debt to Owners Fund 0.57 0.43 0.27

Financial Charges Coverage Ratio 6.84 13.21 19.08

Financial Charges Coverage Ratio Post Tax 6.54 12.08 18.91

Management Efficiency Ratios

Inventory Turnover Ratio 6.26 6.99 5.17

Debtors Turnover Ratio 5.82 5.97 4.98

Investments Turnover Ratio 6.26 6.99 5.17

Fixed Assets Turnover Ratio 1.76 1.75 1.42

Total Assets Turnover Ratio 0.81 0.92 0.89

Asset Turnover Ratio 0.90 1.00 0.89

Average Raw Material Holding -- 96.53 131.55

Average Finished Goods Held -- 30.73 29.04

Number of Days In Working Capital 139.03 117.27 134.69

Profit & Loss Account Ratios

Material Cost Composition 36.66 36.72 42.89

Imported Composition of Raw Materials Consumed 21.96 26.42 28.54

Selling Distribution Cost Composition -- 9.82 16.62

Expenses as Composition of Total Sales 44.17 46.43 59.73

Cash Flow Indicator Ratios

Dividend Pay-out Ratio Net Profit 30.80 23.36 20.96

Dividend Pay-out Ratio Cash Profit 24.95 20.06 18.09

Earning Retention Ratio 69.20 78.75 77.94

Cash Earning Retention Ratio 75.05 81.52 81.10

Adjusted Cash Flow Times 2.67 1.32 0.83

Mar '13

Mar '12 Mar '11

Earnings Per Share 24.35 32.11 29.81

Book Value 142.20 124.89 102.07

RATIO ANALYSIS

CURRENT RATIO =CURRENT ASSESTS/CURRENT LIABILITIES

=159.43/49

=3.23

Current ratio is a financial ratio that measures whether or not a company has enough resources to pay its debt over the next business cycle [usually 12 months] by comparing firm’s current assets to its current liabilities. As company ratio is greater than 1 so it means that the company is in great position to pay off its debt.

QUICK RATIO= QUICK ASSETS/CURRENT LIABILITIES

=151.69/49

=3.10

A quick ratio higher than 1:1 indicates that the business can meet its current financial obligations with the available quick funds on hand. As company’s quick ratio is higher in comparison with the previous year it shows company have more current assets and liability is low.

NET PROFIT MARGIN=NET PROFIT/NET SALES *100

=97.11/213.01*100

= 45.58%

Net profit margin measures how much of each dollar earned by the company is translated into profits. A low profit margin indicates a low margin of safety: higher risk that a decline in sales will erase profits and results in a net loss. Net profit margin provides clues to the company’s pricing policies, cost structure and production efficiency.

OPERATING PROFIT RATIO=OPERATING PROFIT/NET SALES *100

=87.81/213.01*100

=47.22%

Operating margin or operating profit margin measures what proportion of a company's revenue is left over, after deducting direct costs and overhead and before taxes and other indirect costs such as interest. Operating margin is used to

measure company's pricing strategy and operating efficiency. It gives an idea of how much a company makes (before interest and taxes) on each sales

EPS COMPOUNDED GROWTH RATE:

=24.85/11.59^1/3-1

=28.95%

As companies earning per share is 28.95 which represent that company is growing. EPS figure is very important for actual and potential common stockholders because the payment of dividend and increase in the value of stock in future largely depends on the earnings of the company. EPS is the most widely quoted and relied figure by investors.

COMPOUND ANNUAL GROWTH RATE:

=97.11/45.27^1/3-1

=28.97%

Profit Margin ratios indicate how much company makes for sales at each level production, operation, and bottom line as company’s profit margin is 28.97 which is good for an enterprise and it help to grow company larger.

ISSUES IDENTIFIED:

Some of the retailers complained about the irregularities of the salesman. The salesman develops a tendency not to visit those outlets from where they got to hear grievances from the retailers and also the stores which rarely give orders.

There is not much motivation for the salesman. There is only small incentive .since this not enough to motivate him, he just tries to accomplish that amount of the work which let him to maintain his job.

Most of the retailers feel that Zydus Wellness does not advertise its products properly and creatively. Some of the people still have the image of Zydus as medicine selling company in their mind. In contrast to this competitors are promoting their brand.

According to the retailers the company does not provide promotional instruments like glow sign boards, card boards and stickers.

In Lucknow in some outlets it was found that duplicate product was selling with the packaging of Nutralite.

In the market there is no proper distribution of areas as a result of cross selling is done which directly effects the profit margin, sales of the distributor.

Hawkers are highly active in the market as they are effecting the distributor’s sales and margin and also them creating partiality in price as they are selling at different prices.

Distributors do not get expenses for keeping extra sales staff so that market can be covered in less time and distribution gets improved and less time consuming. For that company has come up with an idea of grow 2x which will help distributors? As in this strategy subsidy is provided as well as expenses will also be provided.

RECOMMENDATIONS

Launch of Zydus Related Products :Zydus should launch more Nutralite butter and other products, since consumer want more butter related product.

Reward To Good Retailers: Zydus should give the rewards to the good retailers who are giving good sales. The small retailers who are not giving good sales, Achievable targets should be given and should be rewards in terms of gifts on achieving the targets.

Improvement in Supply :Improvement in supply is required as Distribution frequently get stock out from a particular type of butter which is having more sales. This should not be a repetitive condition. The company should send exactly that what is required by the Distributor. Sending some others flavours which are not demanded can reduce the sales of the popular brand lead to decrease in transparency between the Distributor and the Retailers as the Distributor is going to avail the same policy with the retailers as the company is availing with him. Sending proper supply can strengthen the relation of the company. Distributor and the Retailers.

Improvement in Packaging: Packing can be made more attractive by using cartoons to influence the person. As per the consumer survey, the packaging of product related the best.

Should adopt more flexible Replacement policies: The major reason of dissatisfaction among the other retailers was replacement policy of expired products. It was also the reason for many of the closed outlets. The Distributors gets replacement of 1.4% of total sales by the company. This percentage can be increased to provide more flexibility to the Distributor. The Distributer gets replacement from the company twice in a year. The Distributor should get the replacement monthly so that he can also replace expire products of retailers regularly.

Regular Audit of all the Distributors :A regular audit to all the Distributors should be made by the company officials to check the condition of all the supply vehicles so that proper delivery of butter is made to the

retailers. It was observed that some of the supply vehicles of the Distributor were not working properly and the supply was made in boxes.

Weekly Target to Distributors : The distributors are given monthly targets as per there market. These monthly targets should be converted to weekly targets and regular check should be kept on these targets.

LEARNINGS FROM THE PROJECT

The most important thing that was learnt during the project was the ground reality of business, its Sales and Distribution.

A lot was learnt while working under the Distributer. Especially the operational part of the Business. How the Distributer and the entire channel functioned gave valuable insight to channel management.

The retailers are the trickiest person. It is very difficult to convince them. Book keeping and marketing but know value for each rupee. They are the wisest teacher of business.

One can never be sure of a deal till the deal is closed by receiving the money from the concerned party.

On the way of getting practical exposure. It was learnt that it is most important to know the competitors well enough to have a competitive advantage.

If the entire project is to be summarized in few words then it can be said that the project gave an enormous exposure and experience. The amount of professionalism might be on low level but the experience gained was not less in anyway. Initial inhibitions were shed while approaching the Retailers and consumers.

ANNEXURE

QUESTIONNAIRE

I am a student of PGPM from ICFAI BUSINESS SCHOOL AND

MANAGEMENT, GURGAON conducting a survey on

“PANETRATION OF ZYDUS HELTH CARE IN LUCKNOW AND ITS

STRATEGIES”.

QUESTIONNAIRES FOR THE RETAILERS TO KNOW THEIR

PERCEPTION ABOUT DOING BUSINESS WITH NUTRALITE.

[1] Do you sell Zydus products?

Yes _________

No _________

If no then which company product do you sell and why?

Amul ______

Britannia ______

Parag ______

Marigold ______

Vimal lite ______

Veelite ______

Nutdelight ______

Reason for not selling Nutralite. Tick the below options;

a) Quality Factor

b) Service Factor

c) Brand Factor

d) Price factor

e) Freezer factor

f) Lack of availability of stocks

g) Delivery problem

h) Due to low demand

i) Amul butter.

If demand is low:

-

Then which brand has a high demand ___________

j) Got any kind of bad behavior from company

If yes then how long, you have been selling.

a) Below 6 months _______

b) 6-12 months _______

c) More than one year _____

[2] What changes do you think should be done in Nutralite to make it much better?

__________________________________________________________________

__________________________________________________________________

__________________________________________________________________

[3] What do you like about Zydus products?

___________________________________________________________________

___________________________________________________________________

[4] Would you like to deal with Zydus Wellness products in future also?

Yes _____

No _____

And why?

____________________________________________________________________

NAME:

SHOP NAME:

ADDRESS WITH PHONE NUMBER: DATE:

_______________________ SIGNATURE:

_______________________

A final report of sip on zydus wellness

Healthcare

Transcript of A final report of sip on zydus wellness