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Mahalaxmi Stores Distributor's Dilemma
Tanahun is a district with good road connection situated on the way connecting the country’s capital and the Terai with Pokhara, one of the major business hubs of the country. But there is no major FMCG manufacturing unit located in this district despite raw material for many agro-based manufacturing available.
So, the only major business activity in the district is the distribution of the manufactured goods from other parts of the country. That explains why the only business of the person who is the president of the district chamber is the distributorship.
Started circa 1990, the Tanahun Oil Distributor has a petrol pump in the district headquarter Damauli and its owner Shanti Raman Wagle who also runs a distributorship through the firm Mahalaxmi Stores jointly with his brother. Started as a retail shop some two decades ago, Mahalaxmi Stores began distributorship circa 1997. Though the volume of business is small, the challenges are daunting, according to Wagle, who is the incumbent president of the district chamber.
The sales of the petrol pump are about 40,000-50,000 litres per month while that of the distributorship it is less than Rs. 2 million per month. “The vehicles prefer to fill their tanks in bigger towns,” he says explaining the low volume in petroleum business. In distributorship the competition is fierce.
“In the old days, the distributors were much better off as they could ask cash payment from the retailers. But now, with the competing brands in each category, we have to sell everything on credit,” he adds, indicating to the losses due to moral hazards on the part of the retailers many of whom may be located in remote parts of the district.
The competition has forced to increase the manpower strength of the firm so that more frequent visits can be made to the retailers to collect money and refill the shelves. That has also necessitated having distribution vehicles. So, the firm has two mini trucks. As all the expenses on the staff and vehicles are to be borne by the firm itself out of the about 4 percent margin, it is really a difficult task, he views.
That is compounded by the problem in paying the government revenue. The firm is registered with VAT and to pay that and the income tax, one has to travel 50 kms to Pokhara. “It would be easier for us if the VAT collection counter is in Damauli itself,” he says.
Being in the business of selling goods, it should have given opportunity to Wagle identify prospects for manufacturing some of the items on his own. But Wagle says it is not that easy. The main hurdle is the lack of technical knowhow. “Though it should be possible to produce orange and other citrus fruits and ginger based products, for example, we don’t venture into it as we cannot get the labour trained in this job,” he says. Also the availability of ordinary labour is difficult these days as most of the males are going aboard for job and the females don’t like to work outside the household.
So, what is the plan for the future? “Add more brands to the distribution portfolio and expand in that direction,” concludes Wagle.
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