Case Study

1. Presented by (Group-’E’) :-
 Shubham Rishav
 Shubham Chaudhary
 Kamal Veeslay
 Satyabrata Sahu
 Shweta Jha
 Sumit Khadse
 Deepak Kumar
 Vipul Panwar
MBA- Power Management
University of Petroleum and Energy Studies.
Assigned by-
Dr. A.K. Jain
Date of Submission- 23rd August 2016.
Case Analysis presentation on-

2.  Company’s timeline
 Case briefing
 APL’s Proposal
 KPCL’s Problems
 KPCL’s Objectives
 Options to achieve their objectives
 Detailed analysis of options available
 Our recommendations
 Action plan to be followed
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1945
KCPL Founded by Mr. Mohan Kumar Gupta in Jaipur dealing mainly in Sugar
Candies under brand "MKG".
1946 First Candy Production Unit in Jaipur
1950
30 production units in the unorganized sector in Rajasthan to sell variety of
candies.
1954 New candy making units shifted to Kanpur.
1970 Diversify into making glucose biscuits and selling them under the same brand.
1973-74 Reached No. 2 position in the northern biscuit market.
1980-81 Capacity doubled from 120tonn/month to 240tonn/month.
1982 Mohan Kumar handed over the leadership of KCPL to Alok Kumar.
1985 Candy production line discontinued.
1986 Agreement with Pearson
1987 Offer from APL

4.  Kanpur Confectioneries Private Limited (KCPL), founded by Mohan
Kumar Gupta with the dealership of candies under the brand name
‘MKG’.
 By 1970 he had emerged as a leader in candy business his region. He
decided to invest his surplus cash to diversify into making glucose biscuits
and selling them under the same brand.
 In 1982, Mohan Kumar handed over the leadership of KCPL to his eldest
son Alok.
 The candy business become unattractive and uncompetitive. The family
members decided to close the candy line in 1985.
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5.  However in biscuits business, A-One Confectionaries Private Limited
(APL) and International biscuits dominated the market and these new
entrants made the market more competitive.
 Between 1983-84 and 86-87 KCPL’s sales declined and it incurred heavy
losses.
 In 1986, the agreement with Pearson was signed, however It did not see
Pearson as a competitor to KCPL.
 APL, mentioned in the meeting of CMAI the company was interested in
augmenting its supplying capacity by promoting contract manufacturing
units (CMU).
 KCPL was interested in this offer, but the offer had its own constraints.
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6.  It would inspect the production processes of KCPL and recommend changes in
processes and equipments, if needed. The changes had to be carried out by KCPL
at its own cost.
 It would also supply the ‘APL secret ingredient’ but KCPL would be required to
buy the other ingredients like sugar, maida, and vanaspathi oil from one of the
authorized suppliers of APL.
 It offered to reimburse the raw material expenses as per its norms of consumption
and pay a conversion charge of Rs. `1.50 per kilogram to cover the expenses on
labour, overheads, and depreciation.
 In terms of control, KCPL would be required to send daily production and raw
material consumption report to APL.
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7. To regain its position as one of the biscuit
market leader and extent its market share to
premier customers.
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8. Objectives in accordance with their priority are:-
 To eliminate losses and bring profits
 To maintain the brand they have made over the years
 To abide by the principles laid down by the family
 To grow business and become no. 1 company of India.
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9. Accept APL’s offer and become CMU
Increase efficiency of laborers and decrease absenteeism
Introduce new variant of biscuits for premier customers
Optimum utilization of the increased capacity
Focus on canteens of institutions (Mass consumers)
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ADVANTAGES DISADVANTAGES
 Assured return on investment
(ROI)
 Access to APL’s manufacturing
expertise
 No marketing, brand building
and distribution expense
 Help them to utilize the surplus
capacity
 Loss of independence in decision
making.
 Uncertainty of future relations
with APL.
 Dilution of ‘MKG’, company’s own
brand and family prestige.

12. Advantages: If workers will work efficiently it will
definitely increase the productivity eventually
decreasing the cost per ton of production.
Disadvantages: Workers may ask for higher wages. Also
we may have to become a bit strict which may break the
family principle of no labour exploitation.
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13. Advantages: New variant will give a diversity to the
company and options to the customers. Also it can be a
way to cater a new market which was untouched till
now.
Disadvantages: There is no guarantee of product being a
hit in market. Also it will require a lot of capital as new
assembly lines and machines will be required.
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14. Advantages: The Company will be able to utilize the
capacity to its full potential which will bring down the
cost encored per ton of production.
Disadvantage: More raw material will be required which
company cannot afford at present as they are already
making losses. For capital they can take loan but
increased production means more labor.
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15. Advantages: Profits will be low here but the risk
involved is also low. Also there’s not much promotional or
advertisement cost involved. As the sales will increase
the cost per ton of production will go down.
Disadvantages: Canteens usually are not bothered about
quality. They just want more quantity at low price. So we
have to really work upon our cost reduction to increase
our profit share.
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Options →
Objectives ↓
(Decreasing
Importance)
Accept APL’s offer
and become CMU
Increase
efficiency of
laborers &
decrease
absenteeism
Introduce new
variant of
biscuits for
premier
customers
Optimum
utilization of the
increased
capacity
Focus on
canteens of
institutions
(Mass
consumers)
To eliminate losses
and bring profits    
To maintain the
brand they have
made over the years
   
To abide by the
principles laid down
by the family
  
To grow business
and become no. 1
company of India


17.  As per the analysis option 4th and 5th both satisfy the same sets of
objectives. But still I think option 5th i.e. focus on canteens of
institution will be the best option. It will provide regular income and
we will produce according to the order which will help us avoiding
over production and inventory storage cost. Also total demand from
institutional canteens is around 2400 tons per month and KCPL has
only acquired only 1.25% (360 tons in a year i.e. 30 tons per month)
of the total demand. So there’s a huge scope of increasing the market
share here.
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18. KCPL will have to make good relations with the institutes.
Talk to premier institutes and take them into confidence
that we will provide good quality at lower price. Keep
profit margin less initially and as the customers increase
and production increases, cost per unit of product will go
down automatically increasing the profit margin.
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19. If this plan doesn’t works or is taking too long then we can
consider 4th option i.e. optimum utilization of increased
capacity.
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