TOPICS TO BE STUDIED

Topic 1: Competitive positioning of „Mana Gromor‟ Retail store network in the same markets where the traditional dealer sales network is present without adversely affecting market dynamics

Propose a Plan to create and develop a competitive edge over the well established traditional network & study ways to establish synergy between two parallel channels i.e dealers and own retail network.

Agriculture is a seasonal business and the seasonality of the demand creates points of crests and troughs during the different months of the year. A bad season or monsoon failure will result in supply outstripping demand and Coromandel will have to rely back on dealer channels for meeting its sales budgets and hence cannot eliminate dealer channels altogether.

Since Coromandel‟s products are sold through their Retail outlets, the supply of fertilisers to traditional channels has come down which has adversely impacted the dealers and they have expressed their displeasure time and again, even working at times to erode credibility of MGC through using political clouts and negative publicity in media channels etc.

Farmers have bought their agri inputs requirements from the dealer channels, since beginning. Traditional channel are credit oriented where the dealer extends credit to farmers for the purchased products and recovers along with some interest post harvest. The orientation has to shift to cash and carry model.

Topic 2: Cultural Transition of existing employees from Old economy setup (commodity manufacturing & marketing company) to a New economy sectors

The Retail business is Coromandel‟s first foray into direct customer sales wherein Customer orientation and Business & commercial acumen are critical competencies whereas the current operations team has transitioned from traditional channel sales of fertilisers which focussed on Distribution efficiency & Government liaison as a competency

There is a potpourri of culture at the operations level as the store managers are freshers, young and hired from outside. But the team which is supervising the store team – Area Managers, Zonal Managers etc. – has shifted from the erstwhile fertilisers business. There is a major cultural change for the supervisors who over the years have been ingrained in dealer channel sales with very limited scope of customer orientation & subordinate management.

Most of the team is finding it difficult to manage the sudden transition given the age gap & completely new business model. A lot of training intervention has been provided but there is a long way to go before the desired skill sets are honed at supervisory level. Due to cultural differences between supervisors and store managers, attrition rate is high at Store manager level. Even if they were to be replaced by externally, there are no similar business models in industry from where employees can be taken. The gestation period for grooming new incumbents is high which will lead to further dip in business performance in the short term.

Topic 3: Establishing the concept of Relationship Marketing as a key business strategy for enhancing customer experience leading to customer retention/customer loyalty

Literacy levels are low among farming community and therefore there is huge resistance to change from deep-rooted beliefs in traditional methods and practices of agriculture which have outlived their utility

Coromandel has a very strong brand presence in Andhra Pradesh and has built a large database of farmers in Andhra Pradesh over the years. The challenge lies in leveraging this database to build & position the value proposition for the Retail business so that the first mover advantage can be converted into competitive strength & customer lock-in.

Rural retailing, especially Agri inputs retailing is all about relationship marketing i.e. the connect that farmers have with the brand and the person who is seen as the face of the brand. The gestation period for bringing about the change in rural consumer behaviour to adapt to organized retailing is relatively high and requires a lot of effort at grass root level when compared to urban retailing. Given the high attrition rates in the business at both store & field support teams, the chances of this relationship getting severed prematurely are quite high and the new person needs to start from square one.

The social dynamics in rural settings/villages are also important considerations which impact the relationship marketing. Social status, caste dynamics, political inclinations, opinion leaders etc are important considerations while framing any CRM strategy. How can technology be leveraged to enhance effectiveness of relationship marketing and to bring down person dependence for the same. What new and path breaking CRM approaches can be established for retaining rural customers.

Topic 4: Should Coromandel stick to Agri retailing or should it continue with both Agri & LifeStyle Products retailing?

If latter, then how to leverage the Retail infrastructure & position the LSP business to reach out to non farming customer base in rural markets & create a sustainable & competitive business advantage for Agri & Lifestyle Products retailing

If Coromandel decides to drop LSP business, there is almost 650,000 sq. ft of unutilized space for which the company is incurring fixed cost which can pull down the profitability substantially. However, if Coromandel is continuing the LSP portfolio, then the sales are not happening as the Rural customers perception of MGC is an Agri Inputs store and is getting confused with the positioning of the store.

The primary customer for LSP business in the local town population which requires the MGC to be located in a residential catchment where as the customer for the Agri inputs section is the Farmer who prefers the MGC to be in commercial marketplace of the town.

The Agri portfolio has limited SKU‟s and the sales happen primarily through concept selling at farmer level through personal meetings with farmers, field demonstrations, continuous field work which requires the MGC team to travel to catchment area for the above meetings. LSP portfolio has a large number of SKU‟s and sales are driven by mass media campaigns and promotion methods and requires the MGC team to stay in the outlet to prevent stock shrinkages.

How do we position lifestyle products like Apparels, Footwear, Consumer Durables & Agri Products like Fertilizers, Pesticides,Seeds to the same customer.

Topic 5: Reconsider the operating model from company owned company operated stores to franchise options

A business option open for Coromandel to evaluate is to shift from a Company Owned, Company Operated (COCO) model to a franchise model. Both the mdels have their relative pros & cons.Coromandel can work out a fixed cum variable profit sharing model with various entrepreneurs who are willing to take up MGC franchisees.

Maintaining the entire retail network with company owned stores is quite a costly proposition as the fixed cost for a store are quite high and cost for field team also will go up for physically monitoring the stores given geographical spread. So the cost may become a limiting factor for expansion of business. By shifting to a franchise model, the ramp-up is can be quite fast and there can be better monitoring of stores by franchise. Coromandel can provide the product supplies, SOP‟s, POP displays and materials and field promotion support. This‟ll help in keep its operational costs low and facilitate speedy expansions

However, there are risks in shifting to a franchisee model as it may again lead to underselling of fertilisers (an essential commodity governed by Essential Commodities Act) which will land Coromandel in trouble with Government. Without supplying fertilisers, Coromandel will find it difficult to franchise out stores as the crowd-pull happens on account of fertiliser only. Also, franchisees may not adhere to prescribed standards of visual merchandising, product displays, in-store branding and promotions thereby risking MGC identity.

Coromandel International Limited – Corporate profile

Company Overview Coromandel International Limited incorporated in 1964, now belonging to the USD 3.4 bn Murugappa Group, is a leading company in India manufacturing a wide range of fertilisers, specialty nutrients and plant protection products (technical & formulations). Coromandel has multi-location production facilities and markets its products all over India and exports plant protection chemicals to various countries across the globe. It is managed by competent and committed professionals using advanced management practices.

Coromandel‟s Turnover 2009-10 : Rs 6527 crores

Purpose & Mission To enhance the prosperity of farmer through the supply of quality farm inputs and related services to ensure value for money

Products & Services Complex Fertilisers Crop Protection Chemicals Specialty Nutrients Organic Fertilisers Rural Retail stores – Mana Gromor Centres

Operating Locations  Fertiliser plants at: Kakinada & Visakhapatnam in Andhra Pradesh Ennore & Ranipet in Tamil Nadu.  Plant Protection Chemicals plants at: Ranipet in Tamil Nadu Navi Mumbai in Maharashtra Ankleshwar in Gujarat Jammu in J&K.  18 marketing branches spread across 12 states  426 retail outlets spread Andhra Pradesh

Alliances & Partnerships Business Assistance Agreement to be the strategic equity partner of Foskor Pty, South Africa one of the world's leading manufacturers of phosphoric acid, a critical raw material.

TIFFERT, a three way JV of Coromandel, Gujarat State Fertiliser Corporation (GSFC) and Groupe Chimique Tunisien (GCT) of Tunisia for manufacture of phosphoric acid

Coromandel Brasilia Limitada, a 100% subsidiary of Coromandel established in Brazil, with a view to give greater thrust in the Latin American Markets for PPC business

In 2007, after estimating the scope for business opportunity to provide end to end Agri solutions (products and services) to farming community and to take a step further in selling Agri inputs directly to end customers i.e. farmers, Coromandel decided to enter into retailing of Agri Inputs through setting up of own Rural retail outlets. By that time, the markets had matured relatively with increasing awareness levels towards balanced nutrition approach. Added to that, statistics indicated the consumption trends among rural population on the upswing owing to increasing aspirations and more disposable income

These outlets are set up in rural Andhra Pradesh (a Coromandel stronghold market) and operate on Company Owned, Company Operated (COCO) model. Boost to the business plan came in the form of approval from government of Andhra Pradesh to sell fertilizers through our retail stores

The outlets are called “Mana Gromor Centres” (MGC) which means „My Gromor Centre‟ to bank on the brand recall „Gromor‟ has within the farming community of the state. “Gromor” is Coromandel‟s fertiliser brand and has huge brand equity in AP.

Thereafter the final business blueprint was prepared which focused on Rural Family as a buying unit i.e. the MGC‟s were setup as a „Destination Store‟ catering to the needs of entire rural household – Farm needs, Home needs, Livestock needs. Coromandel currently operates 423 Agri retail outlets with a retail space of 1 million sq ft spread across the length & breadth of the state of Andhra Pradesh. A brief description of the categories retailed from the outlets

Farm needs – build lock-in through provide complete range of products (manufactured / traded) catering to all stages of crop cultivation and services right from land preparation, Agri inputs incl seeds, fertilizers, crop protection chemicals, micronutrients etc, farm mechanization service and other value added services such as soil testing, field visits, field & product demonstrations etc.

Livestock needs – The cattle (livestock) population in Andhra Pradesh is around 57 mn with 100% of it concentrated in rural areas. However, there are limited organized player selling cattlefeed in rural markets as the concept of nutrient based feed for cattle has to be established. Customers are willing to spend on quality feed and feed supplements for cattle subject to availability and cost benefit advantages.

Home Needs – aspirations in rural markets and rural customer‟s preference for urban lifestyles are on the rise. Statistics indicate that 65% of rural wallet is spent on non-food items. Customers are willing to spend and demand wider range of quality products at reasonable prices.

Mana Gromor Centre (MGC) The flagship retail outlet of Coromandel with floor space ranging from 2500 to 4000 sft. Coromandel currently operates 423 Agri retail outlets with a retail space of 1 million sq ft. Each store serves a catchment of around 20-25 villages. The store is positioned as a Destination store offering convenience as all products under one roof, reliability of product & purchase experience as the differentiating factor.

Mitra Based on our experience of running Lifestyle product categories in 2008-09, we repositioned the Lifestyle vertical and relaunched it with a new look, feel and brand „Mitra‟. The idea was to reposition the store as a Multi Category Retail Format which would provide “total retail experience” to its customers and would hence be at par with other reputed retail brands. For fulfilling this purpose, it was necessary to erase the existing perception of the store being a farm

inputs store only and further creating awareness on Mitra as an exclusive LSP store. The ultimate aim was “to provide an exclusive retail supermarket experience in the neighborhood and to create a store which would be a landmark in the locality” Coromandel Mitra has been positioned as “A store full of surprises” – a store which offers surprises in terms of its product offerings, service offerings, offers and promotions as well as visual merchandising. Bhoomika Chawla has been signed up as the brand ambassador for Mitra to further emphasize of the value proposition offered. A total of 116 Mitra‟s are in operations across AP in all major rural towns and district headquarters. In terms of store layout, these 116 stores have two sections physically separated by glass partition. 40% of floor area is a designated Agri section containing products catering to Farm and Livestock needs and 60% of floor area is designated as Mitra. Of this, 40 Mitra‟s have an exclusive store manpower whereas other share the common team with Agri.

MGC Business categories

Currently Coromandel is operating 16 business verticals across Agri, Veterinary & Lifestyle segments with each of them having various product categories.

Business categories in MGC‟s

Specialty Farm New Fertiliser Pesticides Seeds Services Nutrients Equipment Technology • Own • Compost • Own • Cotton • Sprayers • Magik Bag • Ploughing • Traded • WSF • Traded • Maize • Implements • Tarpaulins • Nursery • Customized • G-Sulphur • Household • Vegetables Raising • Zinc pesticides • Transplanting • Boron • Membership • New PGRs

Business categories in Veterinary vertical: Feed (Cattle & Aquaculture), Feed supplements

Business categories in Mitra

General Home CDIT Apparels Footwear Services Merchandise furnishing • Home • Men • Men • Plastics • Bed Linen • Life & Health • Kitchen • Women • Women • Steel • Bath linen Insurance • General • Kids • Kids • Gifts & Toys electrical • Accessories • Stationary • Telecom • Luggage