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By
G Abhishek Rao
Roll No- 14S602
Tapmi
Executive Summary
Kanpur confectionaries private limited (KCPL) was established in 1945. KCPL was basically into candy
business. In 1970 KCPL started manufacturing biscuits and it performed really well. In 1975 KCPL started
facing severe competition from various units in the unorganized structure. The candy business was also
on decline and so the business was closed down by the family.
In 1985 Pearson Health Drinks Limited (Pearson) decided to diversify into health biscuits. Pearson wanted
to outsource its manufacturing process. And they chose KCPL for the job. The response to the biscuits
were not very good. It seemed that the biscuits were too highly priced.
In September 1987 APL (A-one Confectioneries Pvt. Ltd) offered to subcontract manufacturing to KCPL.
APL wanted to expand its supply to the market by subcontracting orders to other manufacturers.
However, APL wanted to retain full control over the quality and production processes.
1945
KCPL was established. Started
selling sugar candies under the
MKG brand.
1946
KCPL setup a production unit
in Jaipur. 30 more units were
setup in the next 4 years.
1954
To reduce operational costs
KCPL moved its production
facilities to Kanpur in UP.
Late 1960's
KCPL became the leader in
the candy business in
northern region.
1980-81
KCPL net profits stood at Rs.
20 lakhs. A 12 % increase
over the previous year. The
capacity of production was
also 240 tons/month.
1970
KCPL ventured into production of
glucose biscuits. The demand for
these was growing at 15% p.a.
Also, extended the range of
products offered under MKG like
cream, salt and Marie biscuits.
1983-84
The sales increased to Rs. 3
crores. The net profit stood at
Rs. 25 lakhs.
1973-74
KCPL reached 2nd position in the
market with a sale volume of 110
tons/month.
1986-87
KCPL average monthly
production 120 tons.
Monthly salary bill Rs 2.75
lakhs.
MKG brand was very well advertised by KCPL using newspapers, hoardings at cross roads etc.
But it wasnt marketed properly.
During the 1970s though the business was profitable but it was constrained by the scarcity of
ingredients. Here again the company could have tried brining in the ingredients from other
sources.
During the period 1975-1980s KCPL faced severe competition from both organized as well as
unorganized players. The unorganized units avoided paying taxes as well as imitated leading
brands in name and packaging style. This led to decline in market share of KCPL. KCPL could
have responded to this in a better way if the company could have been branded properly.
The company should have looked for greater visibility among the customers when it was doing
well.
In 1985 Pearson subcontracted its newly ventured health biscuits manufacturing process to
KCPL. The biscuits were not that successful as it seemed to be highly priced. KCPL should have
foreseen this and should have tried to cut down the manufacturing costs.
Also KCPL didnt do anything about bringing in a change in the employees attitude due to which
there was uneven production.
The candy line was closed by 1986-87 because of declining market. This could have also led to
negative impact for the company among its customers.
On September 8, 1987 APL (A-One Confectioneries Private Limited), a leading national biscuit
manufacturer, in order to reduce its cost of manufacturing and increase its supply wanted to go
for CMUs (Contract Manufacturing Units). But they wanted to retain the manufacturing process
and quality checks as per their norms.
On September 10, 1987 Mr. Alok Kumar Gupta chairman and MD of KCPL and his 2 brothers
held a meeting to discuss whether or not to become a contract manufacturer for APL.
Problem Statement
KCPL is in a dilemma of whether to accept the offer of being a subcontract manufacturer to APL or not
Strategies Implied
Strengths
Weakness
Scarcity of ingredients
Workers absenteeism
Threats
Opportunities
HIGH
Market
Attractiveness
KCPL continues to
manufacture Good
Health Biscuits.
Canteens of institutions
estimated
demand
around 2400 tons and
KCPL sold only 360 to
these.
Many more players or
competitors coming into
the market which will
lead to better way of
producing goods at lower
costs.
KCPL doesnt take the
subcontract.
Presently incurring
losses.
LOW
LOW
HIGH
KCPLs
Competitiveness/ Strength
So here, KCPL has the following options:1. Accept APLs subcontract manufacturer proposal.
2. Continue in the same way and try to revive its own brand.
3. KCPL can also try to revive the venture ship with Pearson.
So KCPL must look to take one of these options and clearly understand the implications and costs as
mentioned, involved in each before going on with the implementation.