2018Case StudyState of Governance

Quality Edible Oil Ensures North-East’s Health: RSH Agro

RSH Agro has been a vital player in the edible oil sector catering to the entire North-Eastern region of India. RSH has started the manufacturing of mustard oil since its incorporation, which has been widely used for the consumption purpose. Mustard oil is one of the major oil seeds from which edible oil is produced. Due to consumption in household and in many other industries it appears to be good scope for establishing the mustard oil industry.

With the vision to develop the quality product for our customers at a competitive price while nurturing the nature and society. At the initial stage of operation the company started manufacturing of only Kachi Ghani mustard oil brand as “Prime Oil”, thereafter they entered into agreement for manufacturing of mustard oil for and on behalf of “Mother Dairy Fruits & Vegetable Pvt Ltd, in the brand name of “Dhara” and now entered into production of blended variety of edible oil branded as “Luit Star”,”Jio Health” having seen good market potential. It has built, nurtured and consistently improved its mustard oil brands. Each of its brands has a distinctive positioning catered to address a specific consumer need.

The company uses latest technology for processing of mustard seeds, showing its uncompromising commitment to quality, pureness and providing unadulterated edible oil. By viewing the growth of the company, RSH is planning to go for an IPO with an object to expand the production level on a higher graph, which will assist the company in marketing its products outside the NE Region.

Challenges

  1. Complexity increases when the Logistics and transportation issues arises. As the factory set up is in the remote area of North East, it has become difficult to supply the raw material to the factory site, which hampers the supply chain at economic price.
  2. Cost reduction to remain competitive in the market.
  3. Preserving the mustard seeds for a longer period, as it is the seasonal which is not available all the time.
  4. Improving the marketing of the product and its communication channels.
  5. High requirement of working capital for stock as the raw materials are seasonal.

Solution

  1. Company is heading to set up oil tankers at the nearby railway carriage for the storage of Imported Crude Oil, hereby cutting the transportation cost and as well as making it economical for the manufacturing and production process.
  2. It leverages advancement in the latest technology, enabling reduction in market prices compared to its competitors. The increase in volumes has resulted in increase in revenues for the company, which is one of the primary reasons of its growth.
  3. The entity has equipped the proper storage facility of its seasonal raw materials having extensive area covering for its godowns and warehouses leading to the reduction of wastages of raw materials.
  4. As the factory site is in the outskirts of the city area, RSH has built up a good supply chain by deploying highly experienced and qualified personnel to reach the product to its customers and also capture the nearby markets.
  5. By building an active relationship with the bankers and investor communities, the company was able to fulfill its criteria regarding the meeting of working capital requirements making it easier for the manufacturing and production unit of the Company.

Outcomes

  1. By setting the alternative transport modes and routes, it became possible for the company to fulfill the demand of the customers on time and also it is not a hindrance in the path of operational excellence.
  2. There has been a huge reduction in the cost by use of latest and distinctive technology, which increased the production and counting time has reduced by high percentage. This has made the product economical and cost-effective.
  3. Enabling the readily availability of the raw materials on time without an obstruction of seasonal crop.
  4. Widened scope of marketing leads to acquaintance of new expertise with regard to management, leading towards the achievement of high amount of turnover and having huge amount of profits.
  5. Building a healthy relation with Bank provides an ease of doing business with an environment friendly nature, bringing in better profitability and better customer relationship.
  6. However, the company finds the negative perception, which still persists among the investors outside the North Eastern Region, where the investor insists and wants the government and authorised bodies to take the first initiative towards the North Eastern Industry.
  7. This has resulted in providing the company a sound platform to go in for a quick and easy IPO.
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