PROJECT REPORT 2013

CHAPTER 1

INTRODUCTION

1. INTRODUCTION

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TITLE: “A STUDY OF EFFECTIVENESS OF DISTRIBUTION CHANNEL OF PARAGON STEELS PVT. LTD., KANJIKODE”

“A distribution channel means the chain of business or intermediaries through which a good or service passes until reaches the end consumer”

Success of each company lies on various aspects, among these the distribution channel is the most important one. Distribution channel is a chain of intermediaries; each passing the product down the chain to the next organization, before it finally reaches the consumer or end-user. This process is known as the ‘distribution chain’ or the channel’. Each of the elements in these chains will have their own specific needs, which the producer should consider, along with those of the all-important end-user or consumer. Each company had their own distribution channel for their product marketing, it differ from other companies. Every company wants to know effectiveness of distribution channel of its product. If the distribution channel is not effective, the company cannot perform very well in the market. For better sale of its product in the market, the company must formulate different strategies for the distribution channel. A company can coordinate and formulate different activities in the distribution channel.

PARAGON STEELS is a private company situated at Kanjikode, Palakkad. The head office is situated at Coimbatore. The Paragon Steels deals with the manufacture of cold twisted detailed bars and thermo mechanical twisted bars and which are mainly used for construction purposes.

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1.2 OBJECTIVES

The main object of this project is to find out the effectiveness of distribution channel in the organization.

1.3 SCOPE OF STUDY

The report contains a brief discussion of the various activities of the company and its Distribution channel process.

1.4 METHODOLOGY

The data collected for this project are both primary and secondary. Primary data collected from Paragon steels Pvt. Ltd and the secondary data collected from journals and websites

1.5 TOOLS USED FOR THE STUDY

Questionnaire method was chosen as the tool for collecting data and various charts are used for data analysis and interpretation like pie chart, bar diagram etc.

1.6 LIMITATIONS OF STUDY

The time frame was a major constraint Unavailability of information

1.7 CHAPTER SCHEMING

Chapter 1: INTRODUCTION

Chapter 2: COMPANY PROFILE

Chapter 3: REVIEW OF LITERATURE

Chapter 4: DATA ANALYSIS AND INTERPRETATION

Chapter 5: FINDINGS, SUGGESTIONS & CONCLUSION

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CHAPTER 2

COMPANY PROFILE

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2.COMPANY PROFILE

PARAGON STEELS Pvt Ltd Company situated at Kanjikode, Palakkad. The head office is situated at Coimbatore. The Paragon Steels deals with the manufacture of cold twisted bars and thermo mechanical twisted bars which are mainly used for construction purposes. PARAGON STEELS Pvt Ltd are registered under The Company’s Act 1956. The company functions under the leadership of M.Paramashivam who is Chairman and Director. There are around 300 staff employee working in Paragon Steels and technical staffs are recruited only through contract basis. These labours are mainly from Orissa and Bihar.

PARAGON STEELS is the one of the largest established private company in south India. It was established in 2001. They stand in the side of technology and in quality to bring the best over the years. It has evolved to become one of the most reliable and excellent rolling mills. Paragon promises and fulfills safety, quality, reliability and strength in the steels bars they are producing. The company runs with fully computerized networking system in its administration with latest technology facilities and machinery which hands up to an average of 450 tons in loading and uploading work. 20mm, 24mm, 28mm, 32mm of TMT. Above 85% of scraps are imported from outside India. The company has large structure has melting division and also handles production capacity up to 60000 per year

PARAGON STEELS achieved the certificate of ISI-1786 and ISO 900/2000. And also Paragon Steels received the prestigious DHAT NAYAK award, 2004 for excellent in performance and development work in steel industry in south India

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MISSION

Quality & Purity, Safety, Strength

GOAL

Providing good quality of steel bars Customer satisfaction

PROMOTERS

Chairman & Director Managing Director

POLICIES

Credit Policy

OBJECTIVES

Providing good quality products Create customer satisfaction To create healthy working environment Improvement of existing technology and adaption of new ideas Giving a good working conditions among the employees Conducting various activities in society Maintain quality leadership To detect and prevent problems in the organization Better communication in the management system

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MANUFACTURING CAPACITY

Manufacturing capacity of ingot unit depends on the induction

furnace and its melting rate. Based on industry standards supplier specification, the capacity calculation are as follows:

Power rating of induction furnace - 2750 KW

Capacity of crucible -19000 Kg

(19mt comprising of 6mt 7mt)

On 3 shift operation and 300 working days/year, it is assumed that 10 batches of 19 MT of molten can be tapped a day which will result in a total annual net output of 48000 Mt as given below (65 days per annum is deducted for maintenance of machines and national holidays).

19mt *10/days *300 days=48000MT per annum

Annual manufacturing capacity is taken as 48000 Mt with six crucibles for three panels, melting can be done alternatively allowing time or relining patching and sintering of crucible. With this arrangement, we can save a lot of time and increase productivity.

SITE LOCATION AND LAND

The ingot unit and hot rolled strip unit mill is ideally set up in an industrial area in Kanjikkode New Industrial Development Area (NIDA) promoted by District Industries Center (DIC) Kanjikkode, Kerala. The plants are operating in a land area of 20.24 acres. Power substation is available nearby, making it ideally suitable for plant location.

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FEATURES OF PARAGON STEEL

1) Sole Entrepreneur with a land structure of 25 acres.2) Well qualified and experienced staff and management with timeless

effort and services.3) Stock yard cell with storing capacity up to 10000 Tones (one of its

mega kind in the districts).4) Delivering the material on time by distributors with 100% accuracy.

MARKETING DEPARTMENT

This department involves four managers for smooth marketing functions. Sales manager helps to co-ordinate and control the activities of sales department and he reports to the MD. Deputy Manager, monitor the dispatch of steel and evaluate the performance of dealers and submit the report to the sales manager. They are also in charge of evaluating the advertising strategies. Assistant Sales Manager helps to monitor depot offices in respect to district assigned to firm and co-ordinate the activities of depot. Assistant Sales officer is responsible for the arrangement of dispatch of final product through rail and roads and also control and co-ordinate the work of clerical staffs in the dispatch of steel.

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CHAPTER 3

REVIEW OF LITERATURE

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3. REVIEW OF LITERATURE

The Distribution Channel is the chain of intermediaries, each of them passing on the product or service to another intermediary until it reaches the consumer. It defines that,

"The route by which a product or service is moved from a producer or supplier to customers. A distribution channel usually consists of a chain of intermediaries, including wholesalers, retailers, and distributors, that is designed to transport goods from the point of production to the point of consumption in the most efficient way"

More specifically, a distribution channel is: The transfer of goods from manufacturer to the end user. Route of a company for distributing the goods. The process of moving goods from the manufacturer to the consumer. A supply chain consisting of all parties in between production to the

end user.

Types of channel members

The activities in the distribution channel can be carried out by the marketer himself or it can be carried out by specialist organizations. The specialist organizations and the channel members can be categorized into two types. Resellers Specialty Service Firms.Resellers are the companies which usually buy and take the ownership of the products from the manufacturer with the intention of selling to end consumers. An organization can have one or more than one reseller in the chain. The network or chain of resellers is known as reseller network. The resellers can be further classified into:Retailers: A retailer sells the product directly to the end customer.

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Marketing - Distribution channels

A distribution channel can have several stages depending on how many organizations are involved in it:

Channel 1 contains two stages between producer and consumer - a wholesaler and a retailer. A wholesaler typically buys and stores large quantities of several producers’ goods and then breaks into bulk deliveries to supply retailers with smaller quantities. For small retailers with limited order quantities, the use of wholesalers makes economic sense. 

Channel 2 contains one intermediary. In consumer markets, this is typically a retailer. The consumer electrical goods market in the UK is typical of this arrangement whereby producers such as Sony, Panasonic, Canon etc. sell their goods directly to large retailers such as Comet, Tesco and Amazon which then sell onto the final consumers.

Channel 3 is called a "direct-marketing" channel, since it has no intermediary levels. In this case the manufacturer sells directly to customers. An example of a direct marketing channel would be a factory outlet store. Many holiday companies also market direct to consumers, bypassing a traditional retail intermediary - the travel agent.

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A channel of distribution or trade channel is defined as the path or route along which goods move from producers or manufacturers to ultimate consumers or industrial users. In other words, it is a distribution network through which producer puts his products in the market and passes it to the actual users. This channel consists of: - producers, consumers or users and the various middlemen like wholesalers, selling agents and retailers (dealers) who intervene between the producers and consumers. Therefore, the channel serves to bridge the gap between the point of production and the point of consumption thereby creating time, place and possession utilities.

A channel of distribution consists of three types of flows:-

Downward flow of goods from producers to consumers

Upward flow of cash payments for goods from consumers to producers

Flow of marketing information in both downward and upward direction i.e. Flow of information on new products, new uses of existing products, etc from producers to consumers. And flow of information in the form of feedback on the wants, suggestions, complaints, etc from consumers/users to producers.

An entrepreneur has a number of alternative channels available to him for distributing his products. These channels vary in the number and types of middlemen involved. Some channels are short and directly link producers with customers. Whereas other channels are long and indirectly link the two through one or more middleman.

These channels of distribution are broadly divided into four types:-

Producer-Customer: - This is the simplest and shortest channel in which no middlemen is involved and producers directly sell their products to the consumers. It is fast and economical channel of distribution. Under it, the producer or entrepreneur performs all the marketing activities himself and has full control over distribution. A producer may sell directly to consumers through door-to-door

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salesmen, direct mail or through his own retail stores. Big firms adopt this channel to cut distribution costs and to sell industrial products of high value. Small producers also sell directly to local consumers.

Producer-Retailer-Customer:- This channel of distribution involves only one middlemen called 'retailer'. Under it, the producer sells his product to big retailers (or retailers who buy goods in large quantities) who in turn sell to the ultimate consumers. This channel relieves the manufacturer from burden of selling the goods himself and at the same time gives him control over the process of distribution. This is often suited for distribution of consumer durables and products of high value.

Producer-Wholesaler-Retailer-Customer:- This is the most common and traditional channel of distribution. Under it, two middlemen i.e. wholesalers and retailers are involved. Here, the producer sells his product to wholesalers, who in turn sell it to retailers. And retailers finally sell the product to the ultimate consumers. This channel is suitable for the producers having limited finance, narrow product line and who needed expert services and promotional support of wholesalers. This is mostly used for the products with widely scattered market.

Producer-Agent-Wholesaler-Retailer-Customer:- This is the longest channel of distribution in which three middlemen are involved. This is used when the producer wants to be fully relieved of the problem of distribution and thus hands over his entire output to the selling agents. The agents distribute the product among a few wholesalers. Each wholesaler distributes the product among a number of retailers who finally sell it to the ultimate consumers. This channel is suitable for wider distribution of various industrial products.

An entrepreneur has to choose a suitable channel of distribution for his product such that the channel chosen is flexible, effective and consistent with the declared marketing policies and programmes of the firm. While selecting a distribution channel, the entrepreneur should compare the costs, sales volume and profits expected from alternative channels of distribution and take into account the following factors:-

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Product Consideration: - The type and the nature of products manufactured is one of the important elements in choosing the distribution channel. The major product related factors are:- 

Products of low unit value and of common use are generally sold through middlemen. Whereas, expensive consumer goods and industrial products are sold directly by the producer himself.

Perishable products; products subjected to frequent changes in fashion or style as well as heavy and bulky products follow relatively shorter routes and are generally distributed directly to minimize costs.

Industrial products requiring demonstration, installation and after sale service are often sold directly to the consumers. While the consumer products of technical nature are generally sold through retailers.

An entrepreneur producing a wide range of products may find it economical to set up his own retail outlets and sell directly to the consumers. On the other hand, firms producing a narrow range of products may their products distribute through wholesalers and retailers.

A new product needs greater promotional efforts in the initial stages and hence few middlemen may be required. 

Market Consideration: - Another important factor influencing the choice of distribution channel is the nature of the target market. Some of the important features in this respect are:- 

If the market for the product is meant for industrial users, the channel of distribution will not need any middlemen because they buy the product in large quantities. short one and may as they buy in a large quantity. While in the case of the goods meant for domestic consumers, middlemen may have to be involved.

If the number of prospective customers is small or the market for the product is geographically located in a limited area, direct selling is more suitable. While in case of a large number of potential customers, use of middlemen becomes necessary.

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If the customers place order for the product in big lots, direct selling is preferred. But, if the product is sold in small quantities, middlemen are used to distribute such products. 

Other Considerations: - There are several other factors that an entrepreneur must take into account while choosing a distribution channel. Some of these are as follows:- 

A new business firm may need to involve one or more middlemen in order to promote its product, while a well established firm with a good market standing may sell its product directly to the consumers.

A small firm which cannot invest in setting up its own distribution network has to depend on middlemen for selling its product. On the other hand, a large firm can establish its own retail outlets.

The distribution costs of each channel are also an important factor because it affects the price of the final product. Generally, a less expensive channel is preferred. But sometimes, a channel which is more convenient to the customers is preferred even if it is more expensive.

If the demand for the product is high, more number of channels may be used to profitably distribute the product to maximum number of customers. But, if the demand is low only a few channels would be sufficient.

The nature and the type of the middlemen required by the firm and its availability also affect the choice of the distribution channel. A company prefers middlemen who can maximize the volume of sales of their product and also offers other services like storage, promotion as well as after sale services. When the desired type of middlemen is not available, the manufacturer will have to establish his own distribution network.

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All these factors or considerations affecting the choice of a distribution channel are inter-related and interdependent. Hence, an entrepreneur must choose the most efficient and cost effective channel of distribution by taking into account all these factors as a whole in the light of the prevailing economic conditions. Such a decision is very important for a business to sustain long term profitability.

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CHAPTER 4

DATD ANALYSIS AND

INTERPRETATION

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4.DATA ANALYSIS AND

INTERPRETATION

QUALITY OF STEEL BARS HANDLING

TABLE NO:1

OPINION NO RESPONENTS

CUMULATIVE %

PERCENTAGE

high 12 12 60medium 7 19 35low 1 20 5Total 20 20 100

CHART NO:1 QUALITY OF STEEL BARS HANDLING

high medium low0

10

20

30

40

50

60

70

no responentscumulativepercentage

INTERPRETATIONIn the above table more of the dealers are handling high quality steels. So it shows the company has produced high quality steels.

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OTHER MAJOR SUPPLIERS

TABLE NO:2

Opinion No respondents Cumulative % PercentageKairali steels 6 6 30Agni steel 4 10 20Prince steels 5 15 25Others 5 20 25

CHART NO: 2 OTHER MAJOR SUPPLIERS

30%

20%25%

25%

no of respondents

Kairali steelsAgni steelPrince steelothers

INTERPRETATIONFrom the above chart it is clear that the dealers are selling other steels other than the Paragon Steels bars.

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TRANSPORTATION AND LOGISTICS FACILITY

TABLE NO:3

Opinion No respondents

Cumulative % Percentage

Always 0 0 0Sometimes 2 2 10Rarely 4 6 20Never 14 20 70

CHART NO:3 TRANSPORTATION AND LOGISTIC FACILITY

10%

20%

70%

SometimesRarelyNever

INTERPRETATION

From the above chart it is clear that 70% of the dealer say that Paragon Steels never provide transportation.

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EXPERIENCE OF THE RETAILER

TABLE NO:4

opinion No respondentsBelow 2 years 52-5 years 105-10 years 20More than 10 years 5

CHART NO:4 EXPERIENCE OF THE RETAILER

Below 2 years 2-5 years 5-10 years More than 10 years

0

2

4

6

8

10

12

14

16

18

20

INTERPRETATIONFrom the above diagram we can find out that more of the retailers are of 5-10 years experience.

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PROMPTNESS OF DEALER

TABLE:5

Opinion No of respondentsGood 19Moderate 15Bad 6

CHART NO:5 PROMTNESS OF DEALER

Good Moderate Bad0

2

4

6

8

10

12

14

16

18

20

INTERPRETATION

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From the above table it is clear that more of retailers say that promptness of dealer was good.

DELAY IN DELIVERY OF GOODS

TABLE NO:6

Opinion No of respondentsAlways 0Sometimes 3Rarely 7Never 30

CHART NO:6 DELAY IN DELIVERY OF GOODS

Always Sometimes Rarely Never0

5

10

15

20

25

30

INTERPRETATION

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From the above diagram it is clear that delay of delivering goods occur rarely.

DEGREE OF CUSTOMER PREFERANCE OF PARAGON STEELS

TABLE NO:7

Opinion No of respondentsBelow 10% 110-20% 1020-30% 20Above 30% 9

CHART NO:7 DEGREE OF CUSTOMER PREFERANCE OF PARAGON STEELS

3%

25%

50%

23%

No of respondents

Below 10%10-20%20-30%Above 30%

INTERPRETATION

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The customer preference of the paragon steels is more than 50% compared to others steels.

SALES OF PARAGON STEELS

TABLE NO:8

Opinion No of respondentsBelow 10% 210-30% 920-30% 20Above 30% 9

CHART NO:8 SALES OF PARAGON STEELS

Below 10% 10-30% 20-30% Above 30%0

5

10

15

20

25

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INTERPERTATION

The sale of paragon steels is moderate level.

DOES THE PROMOTIONAL ACTIVITES INCREASE THE SALES

TABLE NO:9

opinion No of respondentsAlways 21Sometimes 9Rarely 7Never 3

CHART NO:9 DOES THE PROMOTIONAL ACTIVITES INCREASE THE SALES

53%

23%

18%

8%

No of respondents

AlwaysSometimesRarelyNever

INTERPERTATION

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From the above chart it is clear that promotional activities increase the sales.

DELIVERY OF PRODUCTS

TABLE NO:10

Opinion No of respondentsAlways 0Sometimes 3Rarely 6Never 11

CHART NO:10 DELIVERY OF PRODUCTS

Always Sometimes Rarely Never0

2

4

6

8

10

12

INTERPERTATION

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From the above diagram we can understand that Paragon Steel deliver the goods at correct time.

PROFITABLE OR NOT

TABLE NO:11

Opinion No of respondentsYes 16No 4

CHART NO: 11 PROFITABLE OR NOT

Yes No0

2

4

6

8

10

12

14

16

18

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INTERPERTATION

From the above diagram we can understand company is profitable.

CREDIT FACILITY

TABLE NO:12

Opinion No of respondentsHighly satisfied 2Satisfied 14Dissatisfied 4Highly dissatisfied 0

CHART NO:12 CREDIT FACILITY

Highly satisfied Satisfied Dissatisfied Highly dissatisfied0

2

4

6

8

10

12

14

INTERPERTATION

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From the above table it is clear that more of the dealers satisfied with the current credit facility offered by Paragon Steels.

CHAPTER 5

FINDINGS, SUGGESTIONS &

CONCLUSION

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5.FINDINGS, SUGGESTIONS AND CONCLUSION

This study “Effectiveness of distribution channel with the reference to Paragon Steels Pvt. Ltd.” helps to find out the efficiency of the distribution channel followed at the organization. The findings as follows:

It was found that 60% of the dealers handling high quality steel bars.

We can find out that dealers are taking goods from different suppliers.

Findings can prove that dealers agreed the company never support in the transportation and logistics.

It was found that more of retailers having the experience.

It was found that more of the retailers agreed that the promptness of dealer is good.

It was found that the retailers agreed that there will be never delay in delivering the goods from the suppliers.

We can find out that the customer preference of Paragon Steel was high.

From the findings we know that sale of Paragon Steel was high.

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It was found that more of the retailers agreed that promotional activities increase the sale of Paragon Steels.

SUGGESTIONS The company should improve the advertisement programs. Provide more logistics facility. Make more effectiveness in the distribution channel. Improve transportation facility. Make a good cooperation with the dealers.

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CONCLUSION

The distribution channel means “The chain of businesses or intermediaries through which a good or service passes until it reaches the end consumer” A distribution channel can include wholesalers, retailers, distributors and even the internet. Channels are broken into direct and indirect forms, with a "direct" channel allowing the consumer to buy the good from the manufacturer and an "indirect" channel allowing the consumer to buy the good from a wholesaler. From the project we can conclude that a distribution channel is important factor for sales their product in a good way.

So, every company should maintain a good distribution channel. A company distribution channels decision directly affects every other marketing decision. The company sales force communication decision depends on how much training, motivation and support its channel partners need. A company develops or acquires certain new product and may depend on how well those products fit the capabilities of its channel members.

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BIBLIOGRAPHY

WEBSITE:www.google.comwww.wikipedia.comwww.bussinessinfo.com

BOOKS:Management principles, processes & practices - Anil Bhat and Arya Kumar

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