rmcl diary in sequence 08-02-12 - part 3 · 2016. 1. 5. · • packers and movers 2. where the...

FAQSFAQS FAQS

We are an established player in the business of manufacturing and supplying packaging material for the

last 20 years. From 2005 onwards we have invested heavily in developing manufacturing infra-structure as

we got listed and raised substantial Capital from the market.

We have bought in various technologies and established close to 250 products in the market. Most of the

products being offered are manufactured in house. Our asset size is approximately `320 crores which is

installed to produce large range of products. We have Technological Expertise with our MD being Polymer

Technologist and one of the director Serge Lapointe being from the Polymer Field.

Q1. How long has the business been in operation?

We have 3 types of Clients:

1. People who would be coming and buying across the counter

• Small Traders ( Textiles/Grocery/Sweets/Hardware )

• Small Manufacturers

• Professionals like Plumbers, Carpenters, Painters

• Small Cottage industries owners like Sweetmeat manufacturers, Pickles, Papadam

• Restaurant owners and Fast Food Hawkers

• Caterers and Housekeeping Companies

• Packers and Movers

2. Where the supplies would be made directly and commission would be earned on the supplies.

• Approximately 110 different industries where we offer consolidated product portfolio.

3. Housewives/Corporates

• Gift Wrapping

• Cleaning Material

4. Internet Marketing

• Material booked on the internet through portal will be supplied through nearest Franchise gaining

substantial commission.

For each of our Target Client, we have a range of products to cover the entire scope of application.

Pricing is highly competitive in each of the categories. We have ensured that the gross margin earned on

the entire basket will be highly lucrative for both the company and the Franchisee.

Q2. Kindly elaborate the product/service. Preferred would be pricing for all the products/services. Also include the average ticket size (average order size) in the given market.

Your Queries Answered -A few important FAQ's that will help you understand our business model

and the way forward more clearly and assist immensely in decision making

to take up the RMCL Retail Franchisee

THE TECHNOLOGY STORE

FAQSFAQS FAQSTHE TECHNOLOGY STORE

Adherence to Specifications: RMCL manufactures and delivers the product as per specification.

We ensure optimum yield and performance. We have standard Specification Sheet on the portal and the

material is delivered as per the specifications being promised on the portal.

Advanced Technology: We have recently invested close to `320 crores in infrastructure of highly

advanced Technology which is resulting in the best quality product at minimum operating costs.

Alternative Product offerings: We offer an entire gamut of products including alternatives and qualities

depending upon the budget and requirement of the client. It can be easily assumed that we end up

satisfying the customer by all means. May it be quality, price or the service matrix.

Q3. What is the USP of the product-mix offering?

Packaging is a vast multi-material, multi-technology, multi-process industry. Here the products vary in

complexity and applications. Simple looking product may also be highly technology intensive.

Challenge in the industry remains the usage of minimum material to achieve maximum performance.

However, customer preference also plays an important role. We need to modify our offerings with the

changing Times and Trends.

Challenges in the Packaging Business cannot be generalized as each product in packaging has its own set

of challenges and opportunities. However, increase in manpower cost is one of the biggest challenges in

packaging industry and corporates and manufacturing houses are shifting towards automatic packaging

machines to offset this. This creates new opportunity but technically challenging arena for packaging

consumable manufacturers.

Q4. What are the Weaknesses/Challenges in the business?

There is a substantial barrier to enter in this industry. This industry remains capital intensive for installation

of machinery and working capital. RMCL has invested `320 crores in the manufacturing block and it still

needs to do a lot more.

Customers do not trust new comers easily. Establishing brand names and corporate reputation takes time.

Continual improvement in technology is a must to maintain the edge.

Holistic offerings give alternatives to the customers and to offer holistic product range one needs to invest

heavily in the Capital Goods and Working Capital.

Many a times, performance of the packaging Films/Materials is never tested and people trust the

manufacturer for quality.

Q5. What are the Entry Barriers for this kind of business?


Business is highly systematic. There are well laid SOP (Standard Operating Practices) for each of the

function. Company is ISO 9001, ISO 22000 and works on SAP.

Raw Material varies from product to product and each product comprises of various raw materials. Close to

1000 different types of raw materials are sourced and stored. Raw material is generally sourced based on

market projections. Most of the raw material of the company is imported from various parts of the world.

Europe, Japan, USA remains one of the largest destination for our raw material. Material is also sourced

from Domestic Suppliers.

Processing time for most of our products is approximately15 to 20 days. So in a nutshell, raw material is

purchased and stored, processed and then shipped to various Dealers who in turn sell the product to the

end customer.

Q6. How systematic is the business? Also describe the current supply chain starting from procurement of raw material to selling the product to end-customer.

Generally all the offered material can be dispatched from the factory in a lead time of 10 days. We generally

have supply projections for each month which can be very handy while ordering is concerned.

Q7. What are the stock supply cycles and what is the frequency of the same?

Generally speaking there is a price difference of 20-30% between the price of the manufacturer and prices

that the dealers sell.

Packaging business comprises of various Products and Technologies. And this industry in India has

been dominated by single product manufacturers. These single product manufacturers have their

distribution Channel like C & F, Distributor and Commission Agents. Margin in the distribution Channel

ranges from 15-50 % depending on the complexity of the product, size of the order and negotiation power

of the customers.

Q8. What are the price margins in the current supply chain network, i.e. the cost of delivery to sales?

General profit Enhancement potential by working through Franchisee model can be tabulated as below:

Technology Intensity High Medium Low

High

Medium

Low

Demand Intensity

15-18% increase insales price










It will take us around 7 days to give training to the Franchise to run the business.

Q9. How long would it take to teach someone how to operate and run this business?

Every company wishing to enter Retail Market needs to invest heavily in following areas. Some people

spend heavily on Advertisement and forget to bring value proposition to the End-Customer.

• Free Sampling

• Conducting Seminars

• Aggressive prices

• Extended Credit Periods

• Sharing Operating losses in the beginning of the business.

Based on above, Company made a loss of close to `100 Crore in the last 2 years. However, company is

doing well now and it has started generating EBIT profits from 3rd Quarter 2011-2012.

Q10. What percentage of commercial success is projected to be achieved through franchising in the next 2 years? What is the company’s performance in the current market?

This has to work in Hub and Spoke model.

• The outlet has to sell Standardised merchandise/products to the customers coming to their shop.

• They have to keep marketing people to cater to nearby industries and end-users. This material could be

shipped from the shop or from the warehouse directly depending on the quantity required.

• RMCL Retail Corporate body will bring in opportunities for the Franchisee to share profits in

contract packaging.

• Franchisee will do gift wrapping for corporates or other events from the designs being elaborated on the

website/brochure. Packaging material for the same would be supplied by RMCL Retail Warehouse.

Proper Training would also be provided for the same.

• It is also proposed that very low investment machineries will be installed on the Franchisee Campus to

customize the product.

Area Set up:

Investment in the space or rental outflow is the biggest advantage of RMCL Retail Franchise. Area can be

split into Godown and the showroom/discussion office or it can be integrated.

RMCL Retail Franchise can also be opened in a Flat or office which is not on ground floor. In Hub and Spoke

model, Intensity of Walk in customers will only be affected by the location of the Franchise. Corporate

Sales/Servicing of clients will only depend on pro-activeness of the Franchisee and its Financial Strength.

Q11. What is the business model of the current Centre/Outlet set-up? What are the space requirement and other requirements like?


• Centre would be Semi Premium with good sitting and lighting arrangement.

• There needs to be enough space for atleast 2 customers to sit and discuss the requirements. This area

should be marginally isolated to accommodate Ladies and Corporate Customers.

• Cutlery and Tea/Coffee dispensing machine is a must.

• Internet and Printer is a must.

• A large counter to make transactions for walk in customers like Carpenters, Plumbers, Purchase boys,

Painters, Packers, Resellers. This should not get crowded and corporate walk in customers and ladies

should not feel uncomfortable.

• Offering Water in clean Glass to all walk in customer is a must.

• Average Dealing Time with walk in customer will be 15 Mins and Corporate Clients/Ladies/Gift Wrapping

Clients will be 20 mins.

• Atleast one peon is required.

Q12. How is the look and feel, operation of the Centre/Outlet planned? Will they carry a very premium, semi premium or affordable look?

RMCL is a public listed company. Name of the directors and organisation chart can be given on request.

Q13. What is the current Organisation Structure of the holding company? What are the Names and Designation of each member/partner?

We have 3 types of Franchise Models:

• Small

• Medium

• Large

Each of the Franchise will be unique depending upon the demand of products in that area. Investment in

working capital will be totally dependent on the business being generated and executed.

Example: In a Typical medium sized town, per day counter will range between 50,000-1,50,000. One needs to have

stock at least for 20 days. So typical investment in goods could be between 15-20 lacs.

For Direct supplies, 30% margin needs to be deposited with the company, such supplies would be typically

in the range of 30-50 lacs per month. Assume 10 lac for the same also.

Investment in Shop/Office would be around 8-12 lacs depending on the location and area.

Investment in shop/office will only be fixed cost; Rest will depend on the business and will vary with time.

Q14. What is the investment needed for setting up a Centre/Outlet, not including the franchise fees? What is the overall cost with the investment break-up for the current set-up? What is the estimated construction cost per sq. ft. for this?


In a typical Medium sized enterprise, one needs to have two Sales executives, one peon and 2 Delivery

boys. Small Van is required for delivery purpose.

Q15. What are the operational costs needed to run a Centre/Outlet? What is the manpower (no. of employees) needed and what is the job profile? What is the expense break-up for the current set-up?

We are 20 year old company with operations in almost each and every part of the country. However, the

business needs to be done in the Franchisee model and there are ongoing Trials with approximately

50 Traders who wish to become Franchisees.

Q16. Where all are a Centre/Outlet currently operational? What is the Target group at these places?

Such shops ( as we are proposing ) exists in every town. Sadar Bazaar/Chawdi in Delhi, Musjid Bunder,

Mulund, Sakinaka in Mumbai, Begumpet in Hyderabad etc are example of small clusters in each city. In last

15 years isolated offices have opened which are not in the markets. Our competition is with various

Consulting Firms/Wholesalers/Indenters/Unorganized suppliers. We would also be competing with

Housewives and Gift Shops who are doing Gift Wrapping business

Q17. To what degree is this business distinctive from its competitors?

S WO T


SWOT analysis of each of our competitor is as follows.

Strength Weakness Opportunity Threat

Polished/Qualifiedpeople

Expensive They get goodEnterprenuers who arenew to their business

Once business isestablished, beingexpensive they arenot continued long.

Consultants

They are financiallystrong

Carry lot of risk likeprice fluctuations.

Expensives.

Generally seen in Rawmaterial supplies and not packaging andsimilar material

Corporates havingworking capitallimitation generallyuse these people.

They are generallyused as stop Gaparrangement

Indentors

They have range ofproducts

Mostly the productsare technically poor

Convenience Once a customer becomes qualityconscience. He startsto look for betteroptions

UnorganizedShops

They have their personal relationships

They are not efficient,reliable & economical.

With personalrelationships, theymanage to get giftWrapping orders

Generally speakingpersonal relationsare never the basisfor business.Inefficiencies hamperrepeat businesses

Housewives

This is possible for fewlow technologyproducts.

They have high overhead costs whencatering smaller orders.Technology wise theyare quite lagged behind.

They are generallyexpensive as they arenot integerated.

Its owner to ownerrelationship that directsuppliers harp upon.

They are confinedto local area.

Direct Suppliers

RMCL Retail Advantage

Very Sound Technical Staff and Credibility of RMCL makes RMCL Retail Franchise technically more superior thanlocal consultants. Case studies of similar industry else where in the country can be shared and proper advice canbe provided.


Channel Financing & discounting of PDCs bring lot of liquidity in the system & such indentors can be replaced.


We have a larger offering and would be an excellent alternative for all packaging/adhesives/ sealants/industrial Safety products. Customer will have more options with RMCL Retail Franchise than any of theunorganized shop


We offer larger choice of packaging with complete Raw Material Supply. Franchise is trained to do Gift Wrapping.

It will be economical and larger quantities can be relied upon.


RMCL Retail model provides excellent alternative to the customer replacing direct suppliers.By merit of integrated manufacturing facility, there is substantial price advantage than small manufacturers.Over riding commissions of the Franchise is small enough to remain competitive.Products offered are much superior.

FAQSFAQS FAQS

We are coming up with highly descriptive and easy to use portal called www.rmclretail.com

We use various other communication mode like Technical Bulletin etc to create awareness and market.

It can be safely assumed that there is no exact competitor for our Franchisees but it has to compete

with four different type of competitors to get business.

Technical supremacy, consistent supplies and reasonable prices would be our USP to run the

business. RMCL Corporate body will constantly try to bring in other products having lucrative

margins for itself and its Franchisees.

Q18. What are the current branding and communication plans? What media is currently used?

Target customer is medium end and low end who cannot afford to buy from direct manufacturers.

Q19. Why is the target customer base for the business defined as: High End, Medium End and Low End?

Corporate Identity of RMCL is well established in the Indian market. Being industrial goods manufacturer,

brand recalls cannot be compared to that of any FMCG company or product.

We have more than 20 brands and they have good recall value in the market. However more needs to be

done in this context.

Q20. Is the brand considered a destination brand in the current market? How much recall does it have in current market or elsewhere?

Typical Sales MixOver the Counter

Direct Supplies

Packaging Contracts

Gift Wrapping

Internet Booking Supplies

Packaging Machineries

THE TECHNOLOGY STORE


There are various single product manufacturers and distributors competing in each product category.

However there is no retail chain similar to what we are proposing. Major difference in what we are

proposing is buying through internet, which will be quite a new concept in this industry. Single product

manufacturers have their stockist and dealers in market and they sell the product to the end-user. There is

approximately 20% price appreciation while selling product through such set-up.

Q21. What is the competition for the products sold in the current market? How is the experience of competition in India been for the brand? Who are the top 5 competitors in the current market?

In each of the industry, there is varying competition:

TYPICAL PRODUCT MIX FOR THE FRANCHISE

Primary and printed material for the local industry

Secondary and High end packaging material for local industry

Secondary products for Traders/Shops/Sweets/Packers

Packaging material for contract packers

Packaging material for professionals like Carpenters/Painters/Plumbers

Safety products for industry

Lubricants/Adhesives/Sealants

Gift Wrapping

Services

Packaging material for Housewives

Construction Chemicals


Intensity of Competition

Very low

Very low

Very low

Low

High

Low

Low

Low

High

Low

Monopoly in some of the products

Low

Medium

Low

Medium

Medium

Low

Low

Low

Low

Very low

High

Very low

Very Low

Medium

High

Very Low

Very Low

Very Low

Low

Low

Low

Medium

Medium

Medium

Packaging Materials and Concepts for :

Dairy and Milk Products

Fruits and Vegetables

Snacks

Cereals

Flour and Ready Mix

Processed Foods

Spices

Tea and Coffee

Salt and Sugar

Edible Oil

Mouth Freshners and Pan Masala

Noodles

Bakery and Sweets

Chocolates and Confectionary

Dry Fruits

Whisky and Alcoholic Beverages

Catering and Take Away

Meat and Poultry

Frozen Foods

Seafood

Pickles and Ketch-ups

Drinking Water

Tablets and capsules

Jellies

Creams and Ointments

Liquids

Ayurvedic Medicines

Oral Rehydration Salts

Contraceptives

Disposable Syringes

Hand Gloves

Bathing

Hair Oil

Personal Hygiene

Oral Hygiene

INDUSTRY-WISE COMPETITION SCENARIO


Our business sales in comparision to our competitors is quite reasonable. Since we have put up all the

manufacturing capacity recently, reflection of the same in the sales would come very soon. We expect to do

`200 crore sales in the year 12-13 and then slowly ramp upto ̀ 500 crore/annum. Our facilities can produce

goods worth `500 crores and we plan to trade for approximately `300 crores in coming times.

Total Expected turn over after 3 years would be ̀ 800 crores/annum.

Q22. How is the business sales compared to those of other businesses in the industry?

Yes, sufficient funds have been earmarked and allocated for this.

Q23. Has a budget been set aside for franchise development? Is this budget in sync with the commercial success expected?

Very low

Low

Low

Low

Medium

Medium

Medium

Very low

Very low

Low

Medium

High

Very low

Very low

Primary and printed material for the local industry

Secondary and High end packaging material for local industry

Secondary products for Traders/Shops/Sweets/Packers

Packaging material for contract packers

Packaging material for professionals like Carpenters/Painters/Plumbers

Safety products for industry

Lubricants/Adhesives/Sealants

Gift Wrapping

Services

Packaging material for Housewives

Construction Chemicals

Household Product ware

Office Stationary products

Cleaning products

INDUSTRY-WISE COMPETITION SCENARIO


Q24. Is there a team to handle expansion plans in place?

Major Revenue for the Franchisee will come as commission for the supplies being made to the local

industry. RMCL corporate body will ensure to develop the market for Franchise in the minimum possible

time.

For this we have Specialized Marketing people for most of the industry having vast experience in the

particular industry.

Q25. What Services/Support will be provided to the franchisee?

We shall have best Service and Support to our Franchisees as the success of the Franchisee will be

completely dependent on our support. Deposit from Franchisee is in proportion to the business being

done through the Franchisee and hence our support will be of excellent level.

Q26. What is the roll-out plan schedule?

We are starting our pilot shop in Mumbai very soon. Similar shops will be opened in other parts of Mumbai

to understand the internal competition and over-laps. Post this we will roll out the Franchisee model in full

swing across the country.

Our Franchisee should posses following Qualities in descending order:

• Financial Strength to justify market potential. They should have enough Financial muscle to address

atleast 10% of the market size.

• Moderately Qualified

• Own Space would be preferred so as to save on Rental Outflows.

• Experience in this line is not required as we shall provide training and will do hand-holding in their

market.

• They should not be Defaulter in the market or with any of the Financial institute as we propose to

sanction Channel Financing for them.

Q27. Who is a target Franchisee? What is the expected profile?

rmcl diary in sequence 08-02-12 - part 3 · 2016. 1. 5. · • packers and movers 2. where the...

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