Star Material Handling Company Ltd

Star Material Handling Company Ltd.

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BY :LOKESH CHANDRA

Star Material Handling Company Ltd. SMHC was one of the major manufacturers of material handling equipment in India.

The range of equipment manufactured were used for in-plant material handling by almost all industries. Unit prices ranging from Rs.20000 to Rs. 90000 depending on type of equipment. Life of product 5-15 years depend equipment service and used.

Most of the equipment were non-standard, and were made as per customers' requirements. 2The

in-plant equipment manufactured by SMHC, in technical collaborations with

SALES AND SERVICES SMHC had its factory located near Hyderabad. The marketing head office and all other commercial and technical departments were located at the factory. The field sales and service operations were carried out through employeecontrolled branches (at Delhi, Mumbai, Baroda, Bangalore, Coimbatore, and Hyderabad) and agent-controlled offices (at Chandigarh, Lucknow, Calcutta, Indore, Pune, Vizag, and Chennai). The responsibilities of the branch sales persons were to :(i) Give effective pre-sales and post-sales service to customers (ii) Generate enquiries, submit offers, negotiate, and book orders (iii) Collect payments and sales tax forms (iv) Collect and send market information to head office

The customers needed technical information and guidance from the company's sales engineers. 3For

difficult problems, help from R&D department was sought to give solutions to material handling problems faced by the customers.

Cont. . .  The domestic sales contributed 90 per cent of Rs 10 crore sales in 1995-96 and

the balance 10 per cent was exported to UK, US, New Zealand, Russia, and Gulf countries.  The sales volume budgeted for the year 1996-97 was As 20 crore, out of which

exports were targeted at Rs two crore.

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External Environment  Mr. Kumar felt that the economic environment had changed in the past 6 months

or so, after finalization of the company's budget, since there was a slowing down of investment in new projects.  The change in political situation, with the installation of a new coalition

government in mid-1996, had contributed to the political uncertainty and slowing down of the economic environment.  The receivables from customers had gone up to 65 days from the previous

quarter performance of 35 days.  Tight money market as banks and financial institutions had become over-

cautious.  Many customers were facing financial stringency and were not paying overdue

bills. 5

Competition  There were two major competitors out of 12 players. Both the competitors had

higher market share than SMHC  The two major competitors also had foreign technical collaborations with

Germany and the UK, respectively.  The strengths of the competitors were that they had a wider product range which

enabled them to give complete solutions to material handling problems.  They were in the industry for a longer duration of time in comparison to about 10

years of SMHC.  Compared to the superior product features, and post-sales service of SMHC, the

competitors had lower prices and better quality as their strengths.

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Problems  Company had positioned its product correctly or not.  Drop in order receiving by company( 30%)  Unfavorable performance due to change in external marketing environment.  Debtors had gone up.  Competitor are performing better than the company  Customer not paying overdue bills.

 Banks and financial institution become overcautious

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Recommendations Should increase their product range and offerings to the customers. Increasing the targets of the “Employee-controlled branches” and “Agentcontrolled offices”. Emphasis on pre and post sales service.

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