Tata Chemicals, the fertiliser and chemicals major, has revamped the distribution set-up for its salt business, in which it is India's largest player.

The restructuring was done on the basis of recommendations by management consultants Business Consulting Group, and is expected to result in costs savings of up to Rs 5 crore annually.

Kapil Mehan, vice-president - sales and marketing, Tata Chemicals, told Business Standard: "We will be dis-intermediating our distribution levels by one layer. The basic idea is to make the distribution network more efficient and to function on the lines of a fast-moving consumer goods business."

Tata Chemicals manufactures the brand 'Tata Salt', which is a market leader with 37 per cent share.

Sales of the brand have been growing at about 10 per cent per annum over the last few years, but emerging competition made the company to have a relook at its distribution setup.

"The new set up will address all areas of control issues as well as providing a platform for future expansion," Mehan added.
The Business Consulting Group will be involved in the implementation of most of the measures suggested and which would be in place over the next six months.

Tata Chemicals earlier sold its product through a single agency, which in turn sold it to a set of 33 distributors acting as clearing and forwarding (C&F) agents and as 'super distributors'. The distributors in turn sold the product to over 2,500 stockists, who then sold it to 7 lakh retailers across the country.

The chemicals major will now have one layer less in the chain, with the company now directly dealing with distributors. All C&F functions and distribution functions have been separated and will be dealt by distinct entities.

The company is also in the process of identifying suitable distributors in locations where it is not represented, or where distributors failed to perform their desired role.

Tata Chemicals has also put in place a new sales setup with a responsibility to ensure high visibility as well as to expand and develop markets with the aim of increasing sales to a higher level.

It will also be IT-enabling its distribution network with the pilot scheduled to go onstream soon and would involve all C&F and distributors by the year-end.