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Facts of the case
Kanpur confectioneries Private Limited (KCPL) was started by Mohan Kumar Gupta in 1945 to sell candies under the brand ‘MKG’. However, in the heavy competitive environment he could not compete on costs and in 1954, he set up a candy-making unit at Kanpur, the first in UP. He established dealership, promoted and advertised in vernacular newspapers and on hoardings located at crossroads. By end of 1960s he was able to establish a good dealer network in Bihar and MP and thus became market leader in northern region.
Surplus cash, huge growth in biscuits demand(15% p.a.) and attractive margins he decided to diversify himself into glucose and later on in cream, salt and marie biscuits. Business accelerated but was constrained by scarcity of raw materials like maida, sugar and vanaspathi.
In 1973-74, Prince Biscuits was the market leader in northern region with 130 tonnes sales followed by KCPL with 110 tonnes sales followed by International Biscuits with 100 tonnes sales. A-One Confectioneries Ltd. (ACPL) was national leader with 900 tonnes sales. However in northern region it was at fourth position. At this point of time only 6 players were present, two national and 4 regional.
In 1975-80 unorganized sector also came in the market and enjoyed tax evasion. This made it quite competitive and KCPL got stuck in middle. It could not increase its prices whereas raw materials and labour cost rose and it did not have the national scale to reduce costs considerably. Between 1983-84and 86-87 its sales declined and it incurred heavy losses. By now ACPL had become a leading player with monthly sales of 200 tonnes. KCPL was reduced to fourth position with sales of 120 tonnes.
Candy business w ...