Kanpur Confectioneries
Indian Institute of Management
Ahmedabad
IIMA/BP0268(A)
Kanpur Confectioneries Private Limited (A)
On September 10, 1987, Mr. Alok Kumar Gupta, 47, Chairman and Managing Director of Kanpur Confectioneries Private Limited (KCPL), was in a meeting with his brothers, Vivek, 42, and Sanjay, 33, to decide their response to the proposal of A-One Confectioneries Private Limited (APL) that KCPL might consider becoming its contract manufacturer. APL was a leading national player in the confectionery industry. It had desired to expand its supply to the market by subcontracting orders to other manufacturers. It had also desired to retain full control over the quality and production processes. It had promised to the sub contractors that it would compensate them adequately in terms of volume of business and conversion charges. To KCPL the advantages were in getting assured return on its investment and access to APL's manufacturing expertise but the disadvantages were in the possible loss of independence in decision making, dilution of company’s own brand, ‘MKG’, and family prestige. KCPL and its Background KCPL was started in 1945 by Mohan Kumar Gupta, then 28, in Jaipur, Rajasthan State, to sell sugar candies under the brand `MKG’. Earlier, he was a worker in a candy unit in Jaipur. He started his own business with the dealership of candies produced by others. With the experience gained he set up a production unit in Jaipur in 1946. Between 1946 and 1950 thirty units were set up in the unorganised sector in Rajasthan to sell a variety of candies. As competition increased the margins came down. KCPL could not compete on costs as its costs were higher than the other manufacturers. Mohan Kumar faced a financial crisis. He decided to shift the production to another state and reduce costs. In 1954, he bought one and a half acres plot in Radha Industrial Estate, Kanpur, Uttar Pradesh (UP) and set up a candy making unit. He became the first entrepreneur to set up a candy
Ahmedabad
IIMA/BP0268(A)
Kanpur Confectioneries Private Limited (A)
On September 10, 1987, Mr. Alok Kumar Gupta, 47, Chairman and Managing Director of Kanpur Confectioneries Private Limited (KCPL), was in a meeting with his brothers, Vivek, 42, and Sanjay, 33, to decide their response to the proposal of A-One Confectioneries Private Limited (APL) that KCPL might consider becoming its contract manufacturer. APL was a leading national player in the confectionery industry. It had desired to expand its supply to the market by subcontracting orders to other manufacturers. It had also desired to retain full control over the quality and production processes. It had promised to the sub contractors that it would compensate them adequately in terms of volume of business and conversion charges. To KCPL the advantages were in getting assured return on its investment and access to APL's manufacturing expertise but the disadvantages were in the possible loss of independence in decision making, dilution of company’s own brand, ‘MKG’, and family prestige. KCPL and its Background KCPL was started in 1945 by Mohan Kumar Gupta, then 28, in Jaipur, Rajasthan State, to sell sugar candies under the brand `MKG’. Earlier, he was a worker in a candy unit in Jaipur. He started his own business with the dealership of candies produced by others. With the experience gained he set up a production unit in Jaipur in 1946. Between 1946 and 1950 thirty units were set up in the unorganised sector in Rajasthan to sell a variety of candies. As competition increased the margins came down. KCPL could not compete on costs as its costs were higher than the other manufacturers. Mohan Kumar faced a financial crisis. He decided to shift the production to another state and reduce costs. In 1954, he bought one and a half acres plot in Radha Industrial Estate, Kanpur, Uttar Pradesh (UP) and set up a candy making unit. He became the first entrepreneur to set up a candy