INTRODUCTION

This project is carried out to understand different aspects of a distribution channel. For this we

selected a certain company and two products under the same group. The selected company is

Ruchi Soya and the brand is Nutrela. We are currently discussing about two products under the

brand – Nutrela soya chunks and Nutrela oil.

ABOUT THE COMPANY

Ruchi Soya Industries is a part of the Ruchi Group of Industries. A FMCG company, Ruchi Soya is

one of the leading producers of vanaspati, soya foods, edible oils and bakery fats in India and is

also the biggest exporter of soya meal from India. It is also the highest exporter of soya meal,

lecithin and other food ingredients from India. It has become one of the leading companies in

the country on the basis of its strict standards of quality control, continual innovation and

invention, and superior trading skills. Social initiatives of Ruchi Soya with a focus on healthcare,

education and women’s empowerment, help in creating sustainable value for society as well as

the organisation.

It has a very wide and extensive distribution network that comprises over 7 lakh retail stores,

over 100 company depots, and around 6,000 distributors. Ruchi Soya has attempted opened

new markets with its emphasis on providing value goods to consumers in popular and premium

range. It has a strong base in modern retail and prestigious hotel chains.

MAJOR BRANDS UNDER RUCHI SOYA

Nutrela

Ruchi Gold

Sunrich sunflower oil

Mahakosh

Soyumm

PRODUCT PORTFOLIO OF RUCHI SOYA

Nutrela has instant soya, ready to cook soya mixes, refined oils and table spread under its brand

offerings. The edible oil range holds a number of brands including Mahakosh, which is an

umbrella brand containing Soyabean oil, Cottonseed oil, Groundnut oil: Ruchi Gold Palmolein

and Ruchi Gold Mustard oil; Nutrela oils, namely Nutrela Soyabean oil, Nutrela Mustrad oil,

Nutrela Sunflower oil, Nutrela Groundnut oil and Nutrela Rice Bran oil; and Sunrich sunflower

oil. Sunrich is a healthier, lighter and clearer super refined sunflower oil brand. Ruchi No 1 is a

leading edible oil and Vanaspati brand. Ruchi Gold and Ruchi Star are mass edible oil brands.

The two vanaspati brands, Nutrigold and Ruchi No. 1 are regional leaders in their respective

categories. It also manufactures the soap brand Ruchi No. 1, available in four variants.

MANUFACTURING CAPABILITIES

Business Verticals Capacities per year Locations

Oilseed Extraction 3.72 million metric ton 10

Edible oil Refining 3.04 million metric ton 13

Palm Fruit Processing 0.90 million metric ton 2

Vanaspati & Bakery Fats 0.53 million metric ton 7

Soya meal Capacities 3.05 million metric ton 10

Wind Power Generation 85.3 MW 11

SWOT ANALYSIS OF RUCHI SOYA

Strength

India’s largest manufacturer of edible oil

Superior procurement, trading skills and tough quality control

standards

Continuous effort to meet consumer needs

Wide and extensive distribution network

First exporter of Soya bean meal to South East and Middle East

Crushing capacity of about 4 million tons annually in 14 plants,

extend over 11 locations

Ready-to-eat products on the Nutrela brand

Weakness

No control on raw material prices as product is agro based

Comparatively less brand awareness

Opportunity

Expansion into premium segments and global markets

Tie- up with restaurants and hotels

Strong industry portfolio

High growth prospects in the edible oil industry

Control over the price fluctuations

Ruchi Soya has recently teamed up with Japanese

multinational Kagome and Mitsui to enter processed tomato

business in India.

Joint venture with J-Oil Mills and Toyota Tsusho Corporation

to launch products like functional healthy cooking oils in India.

Joint venture with a Canadian Research company to offer high

yielding soya seed varieties in India

New initiatives like palm plantation and renewable energy

sources

Threats

Food market rules and regulations

Entry of more domestic and international players

Foreign incidents likely to impact the sunflower oil market

Rupee depreciation against foreign currencies has a negative

impact on the oil import trading

COMPETITION

K S E Ltd.

Agro Tech Foods

Vimal Oil & Foods Ltd.

Vijay Solvex Ltd.

Anil Modi Oil Industries Ltd.

Gujarat Ambuja Exports Ltd.

Tirupati Industries (India) Ltd.

Gokul Refoils

Sanwaria Agro

Ruchinfra

Anik Industries

Rasoya protein

Raj Oil Mills

AVT Natural Products Ltd.

Natraj Proteins Ltd.

Indian Extractions Ltd.

NUTRELA

Nutrela was launched by Ruchi Soya Industries. Ruchi is the market leader in the soya food

segment with the ‘Nutrela’ brand having more than a 50 percent market share. The company

was initially interested in soya oil extraction with soya meal as a by-product. The company

identified soya meal as a protein rich food at low cost in India.

PRODUCTS

Nutrela soya chunks, granules and mini chinks

Nutrela, one of the most trusted, 100 % vegetarian Soya food brand in the country, offers Soya

granules, chunks and mini chunks, which are full of nutrition and are also easy to prepare.

Nutrela has enjoyed the trust of its consumers, both in India and overseas, for more than 25

years and continues to expand its range to give more offerings to the consumers.

Nutrela mustard oil

It is made from the first press of finest quality of mustard seeds. Containing Omega-3 and

Omega-6 it provides health benefits like, Helps avoid Coronary Heart Diseases, Helps Digestion

and Blood Circulation, Improves Immune System.

Nutrela soyabean oil

It is the number one low absorption refined Soyabean Oil in India. It also contains natural plant

sterols that helps in reducing cholesterol. It lasts 5 times more than regular Soyabean Oil and is

enriched with Vitamins A, D & E. Food cooked with Nutrela Soyabean Oil is 25% less oily. It gives

health benefits like, Healthy for Heart, Low absorption will lead to lower oil Intake. Low Absorb

Soyabean Oil is available in: 500 ml pouch, 1L bottle, 1L pouch, 5 L Jar, 15 L Jar. Health Benefits

provided are: up to 25% Lighter, less Oil per serving.

Nutrela sunflower oil

It is the number one low absorption refined Sunflower Oil in the country, and is enriched with

Vitamins A, D & E. It lasts 3 times more than regular Sunflower Oil and is 25% less oily when

food is cooked in it. Health benefits it produces are: Up to 25% Low Absorption, Up to 25%

Lighter, Less Oil per Serving, Contains Plant Sterols that Reduce Cholesterol. Low Absorb

Sunflower Oil is available in: 500 ml pouch, 1L bottle, 1L pouch, 5L Jar, 15 L Jar.

PROJECT OBJECTIVE

To study the effectiveness of distribution channel of Nutrela products (soya chinks and oil) in

Manipal and Udupi region

SCOPE AND LIMITATIONS

Our research is limited to the distribution channel of Nutrela Oil and Soya Chunks in Manipal

and Udupi region.

METHODOLOGY

The research work is being carried out in three phases. The same are described below.

Phase 1

Secondary research:

Literature Review, personal interview. Other information was collected from the websites and

news-papers.

Phase 2

Primary research:

Design a questionnaire from the parameters collected through secondary research.

Discussion with distributors of Nutrela products and retailers through a structured

questionnaire.

Phase 3:

Analysis of the findings and recommendations.

Discussion structure

Conduct an interview with the local retailers in Manipal /Udupi region.

In depth interview with the distributors of Nutrela products in Manipal/Udupi.

Meeting: Collected data regarding the distributor’s profile, distribution terms and policies,

distribution processes. Further interviews to collect data regarding the following: Revenue, Cost

structure (Opex), capex, working capital and channel ROI, redistribution resources and

manpower, number of outlets covered/beats/frequency of servicing. Any current problems

faced by distributor and any scope for improvements were also recorded through the

interviews.

INDIAN NUTRELA MARKET OVERVIEW

Ruchi Soya has entered the ready-to-cook (RTC) category under its flagship brand Nutrela. The

new products launched would include Nutrela Instant Soya and Nutrela Ready Mixes. It is

planning a 10% market share in this segment by 2019.

Sunflower oil market in India has been growing at a fast pace owing to the high growth of

income levels, increasing trend towards spending, better living standards and growing health

consciousness among Indian consumers. The current sunflower oil market in India is over INR

180 Billion of which South India is the major contributor (almost 70%). This trend is expected to

grow with a CAGR of around 9.5% during 2013-14 to 2016-17.

REFERENCES

http://business.mapsofindia.com/food-industry/processing/ruchi-soya.html

http://www.mbaskool.com/brandguide/food-and-beverages/2870-ruchi-soya-industries.html

http://www.ruchisoya.com/profile.htm

http://www.indiamart.com/ruchisoya-industries/nutrela-oils.html

Nutrela Distribution Channel Analysis

The companies policies towards recruiting of a new distributor depends on the size of the

region they service and no. of retail outlets or wholesalers they distribute to. In tier 2 and tier 3

cities, the company has the same distributor for both the products- soya chunks and oil

products.

In the financial year 2014-15, Ruchi group added 283 new distributors for their products. Any

distributor is required to do the following

Meet sales targets

Promoting new products and any special deals of Ruchi Soya and oil products to his

customers

Advising customers about delivery schedules and after-sales service

Record orders and sending details to the sales office

Giving feedback on sales trends

When recruiting a new distributor the company looks at the distributor’s financial status,

capacity to maintain a large inventory of diverse product lines. Any new distributor should place

a deposit of Rs. 2 lakhs in tier 2 or 3 cities. The deposit amount depends on the size and the no.

of outlets they service. The deposit has to be made to the company through cheque.

Distributor Profile

The distributor is presently designated the position of Sales officer of Ruchi Soya industries. He

has been the distributor for the company for more than 8 years.

He is the Sole distributor for all the product lines under Ruchi Soya industries in the Udupi and

Manipal region. Distributes brand such as Nutrela, Ruchi Gold, Sunrich .The distributor has

access to oil refining, vanaspati and soya manufacturing facility located in Mangalore. All the

manufacturing facilities are located close to the post and Mangalore has easy access to port. So

the distributor is able to service his customers (retailers as well as wholesalers) in quick time as

the product is manufactured locally as well as they have a warehouse facility in Udupi for oil

products and C&F for soya products in Hubli,Karnataka.

The total turnover of the distributor is around Rs. 23 lakhs per month. Major share of this

revenue is through their edible oil segment. Ruchi Soya earns revenue of Rs. 3 lakhs per month

and edible oil earns revenue of Rs 20 lakhs per month. In edible oil segment,

edible oil87%

ruchi soya13%

turnover

Region-The distributor services only retailers as well as wholesalers and there is no direct

distribution to any institutes. The distributors spread of area is in Udupi district from Kota to

Udupi (hejbhettu) .This includes Manipal area. Total no. of retailer and wholesalers the

distributor services is around 450.

Mode of operation-He is in involved with only business to business selling, there is no direct

selling to the consumers. Even the company does not have any tie ups with other business

which are functioning as service providers such as educational institutes, hospital etc. There is a

huge scope for growth for the distributor in this segment, especially in Manipal region.

Product stock- The distributor keeps one week’s stocks in the warehouse. Around 150 cases of

oil and 15 boxes of soya chunk are the weekly requirement which will be kept in the

warehouse.

The various brand and their SKU’s is shown in the picture below

The various SKU under each edible oil category as well as soya products are mentioned below

The premium high quality sunflower oil is offered in 500 ml, 1 litre, 5 litre and 15 litre and 15 Kg. packs.

Soyabean oil Available in 500 ml, 1lt, 5 litre and 15 litre and 15 Kg. packs. Filtered groundnut oil Available in 1 Litre. & 5

Litre. And 15 Litre and 15 Kg

Total of 2500 cases of edible oil and 60 cases of soya chunks are distributed every month by this

distributor. 2500 cases amount to 25 tonne of oil. Around 500 cases out of the total 2500 cases

oil are for mustard oil. Sunflower oil is the most sold product whereas the demand for mustard

oil is comparatively less in Udupi and Manipal region .It sells more in eastern part of India.

Each case consists of around 12 boxes. So the total SKU of oil sold is 30,000 whereas the total

SKU of soya product sold is around 720 boxes per month. Most selling product is 1 litre pouch in

edible oil segment. 200 gm. and 90 gm. is the most selling SKU in soya products.

The Palmolein oil is offered in 200 ml, 500 ml, 1 litre, 5 litre and 15 litre and 15 Kg. packs.

A value for money mustard oil brand from Ruchi, available in 200 ml, 500ml, 1 litre, 15 litre.

Low Absorb Soyabean Oil is available in: 500 ml pouch, 1L bottle, 1L pouch, 5 L Jar, 15 L Jar.

Low Absorb Sunflower Oil is available in: 500 ml pouch,

Healthy Kacchi Ghani Mustard Oil is Available in the following sizes: 

200 ml bottle, 500 ml bottle, 1 lt bottle, 1 lt pouch, 5L Jar.1L bottle, 1L pouch, 5L Jar, 15 L Jar .

Available in 3 formsChunks : 75 gms, 100 gms, 200 gms and 1 kg packsGranules : 200 gms and 1 kg packsMini chunks :75 gms, 200 gms pack

Other business interest/Future Plans – The distributor is mainly involved in ruche group

products .In future, he plans to expand his presence in both Udupi as well as in Mangalore by

scaling up the infrastructure and improving the warehouse facility. The distributor is interested

in servicing the education institutes directly, especially in Manipal region as presently all the

institutes are having business with major retail outlets present ion Manipal.

Distribution Structure

The various channel member in ruche Soya industries channel. The company does not have any

stockist/super stockist. The distributor get the products delivered to him from manufacturing

facility located closest to him. All oil manufacturing facilities are located near ports. The

company has 2-3 distributor in Mangalore region and 1 distributor in Udupi district. This is

dependent on the size of order they place with the company.

Location of factory/production unit - The Company has extensive distribution reach in PAN

India. It has strategically located manufacturing facilities striking the right balance between

proximity to raw materials (cultivating states and ports) and proximity to markets, with an

aggregate daily crushing capacity of 13,694 MT of oilseeds and aggregate refining capacity of

7,570 MT of oil.

It has Manufacturing facilities across 19 locations in India, giving access to markets across India.

92 company depots (with storage and other logistical facilities) which serve 4,230

distributors across the country reaching 510,000 retail outlets

warehouse, distributor retailer/ wholesalers

end customer

All refining plants located near ports, providing easier access to imported edible oil

Distribution through pipes at ports saves transport cost and time. Mangalore is one

such location which has access to port and hence there is a manufacturing facility for

vanaspati, soya product and refining of oil here.

Hence the distributor requires one day booking by the retail stores/wholesalers which are

located urban, semi urban depending on their order size. If the retail outlet/wholesalers make a

onetime bill of Rs. 5000 then the distributor delivers to them the next day after making the

order. Also these outlets need to be present in urban or semi urban area. For outlets located in

rural areas order is delivered a week after the order is made .If the order size is small enough to

be delivered in a bike ,then they deliver to the outlets located in rural areas in 2-3 days.

The stocks despatched is flexible as there is no fixed time or the quantity and depends in the

retailers. Oil market is a daily market and it fluctuates by Rs. 1 or Rs. 2 on a daily basis. So the

distributor visits all major outlets once a week to collect any order or collect payments. So, the

retailer is charged the price for that particular day and hence the rate of oil varies on every

order whereas the soya chunks rate remains almost fixed.

The distributor visits retail outlets in rural areas once a month, to inform him about the latest

oil price and also to collect any orders.

Product margin and turnover:

On an average, the distributor makes a margin of 5% and the Retailer margin is 10 % on oil

products. In soya products retailers makes a margin of 15%. In a month around 18 tonne of

sunflower oil is distributed by him towards retailers and wholesalers. This amounts to around

1800 cases. Mustard oil is 5 tonne, i.e., 500 cases and soya products is 2 tonnes.

72%

20%

8%

product cases sold

sunflower oil mustard oil other oil products

Financial and other Support from Ruchi Soya Industries:

The company sometimes offers promotional activity to push their products. If a distributor

placed an order for 500 cases, then 25 cases will be provided for free. The distributor can then

pass on this incentive to his retailers depending upon the order they place with the distributor.

Also the distributor is charged daily rate for the oil products, and sometimes there is a certain

percentage of discount offered when distributor places an order for bulk profit.

Oil products sell more during summer season and there is a minute decrease in the demand for

oil products during winter. Hence it is a very seasonal product. Also, the demand for different

oil product varies across all the states with eastern region having a much higher demand for

mustard oil in eastern India such as west Bengal, Orissa than in southern Indian states. Hence

the demand for mustard oil in Udupi district is low.

Market operation The market operation of a distributor enlists all the functions that he has to perform as a part of his duties and responsibilities. In the case of our product the distribution channel is as follows: - First the company keeps the goods in its warehouse from where the product is taken by the distributor to supply it to the retailers and wholesalers. Nutrela doesn’t has any stockist or super stockist deployed for its distribution. While having a personal interview with the distributor of nutrela, following aspects of market operation carried out by him were noted down.

1. Order booking or ready stock The distributor books the order given by retailer and supplies the good on a weekly basis. In urban area, order booking by the retailer has to be done one prior to the delivery date whereas in rural areas retailers need to book 2 or 3 days in advance for an on-time delivery. In both regions if the quantity demanded is less, then the distribution is carried on a two wheeler otherwise a car is deployed. This is done to ensure cost effectiveness.

2. Number of retailers by outlet type/classificationCurrently the distributor serves to only retailers and wholesellers. The total number is around 450 retailers and wholesellers. They do not supply to the institutions as of now.

3. Indicative sales dispersion across different outlet type/classDistributors most of the sales comes from supplying the goods to the retailers. From retailers alone the sales is around 70 – 80% while remaining coming from the wholesellers.

4. Market coverage servicing frequency and process – backward from warehouse and forward to retailersThe distributor covers the wide-ranging area from Kota to Udupi – Manipal region covering around 30 Kms in the state. Distributor supplies once a week to its customers. The process followed by him is that first the company keeps the goods in its warehouse from where the product is taken by the distributor to supply it to the retailers and wholesalers.

Market development

Market development are the activities carried out by both the retailers and the distributors in order to

push the products into the market. This is also done by providing certain schemes/incentives or offers by

the company itself to maintain good working terms with the distributor.

Currently if the product is near expiry (i.e. 1 month) then company takes back the product without any

charge to retailers. If more than 2 3 months then they push the retailers to sell the products, if the

product still remains then they take it back when it nears expiry.

Also at times the company offers promotions like providing free 25 cases to the retailers on the order

amount of more than ------------ cases.

No events or programs are being conducted as of now both from the company’s side as well as from the

retailer’s side.

Customer segments

The distributor is involved in B2B Sales. His monthly target is 18 ton (1800 cases) for sunflower oil and 2

ton for soya chunks. Each case has 12 boxes. Currently the sales dispersion of the two products is as

follows:-

1. Sunflower oil – 20 lakhs/month

2. Soya chunks – 3 lakhs/month

Currently following are the different SKUs supplies by the distributor.

3. Sunflower Oil - In measures of 5 litter, 1 litter and 1/2 litter. Among these 1 litter package sells

the most.

4. Soya products – In measures of 1 kg, 500 gm, 200 gm and 90 gm pouch. Among these 200 gm

and 90 gm sells the most.