hi the image is clear on my end. All you have to do is zoom in or out.

HIND OIL INDUSTRIES: DEMAND ANALYSIS Abhishek Pont Debat Poland Pradyume Dash wrote this case solely to provide material for class discussion. The authors de no intend to be thereffective or offective handing of a manager in the authors may have disguised certain and other istering information to protect confidentiality This publication may not be treated photocopied or other reproduced in any form or by anyone without the permain of the copyright holder. Reproduction of the material is not covered under authorization by any reproduction night organization. To order coples arregues permet reproduceras, contact very Paring. Ivey Bute School Westem University, London, Ontario Canada MEG ON 1978.661.120k/caregive.co www.cas.com Copyright 2017, Richard Ivey School of Business Foundation Version: 2017-04-20 The digital clock blinked 2:40 am as Abhishek Khemka, the manager of Hand Oil Industries (HOT), tossed and turned in his bed on a rainy September night in 2015. The next day at breakfast, he approached his father, Ashok Khemka the veteran businessman who had founded Hot an edible mustard oil manufacturing and selling unit based in the Indian city of Asansol Abhishek had joined Hot as an assistant in 2011 after eating a master of business administration degree with a focus on finance. After gaming an in-depth understanding of the business affairs, he took over from his father in March, 2014. Nevertheless, he continued to consult this father on every critical issue. "At this rate we will be running losses in a few weeks' time. Our price is too low." Abhishek blurted out. "The price of mustard seeds has skyrocketed. Our price cannot absorb the high production costs any longer Ashok looked at his son thoughtfully and remarked, "This is the third time in a week that you have brought this up. We have always sold our product at a price considerably lower than that of the market. That has been our strategy from the beginning Who will buy our product if we price it so close to that of major national brands? "We are priced too low," Abhishek repeated. Our brand has earned the reputation of being a quality product for all these years and it's time we leveraged that reputation in the present situation. I disagree that an increase in price will affect our revenue adversely." Abhishek paused for a moment and then concluded "I shall get back to you after some calculations." Ever since Abhishek had joined the business, he had meticulously maintained monthly records of all the business transactions in a spreadsheet. He regularly used this along with the tools and techniques he had leamed in college to take business decisions. However, the current dilemma was new to him and he wondered if he could combine some of the theories of microeconomies with demand-modelling techniques to resolve the issue Page 2 9817M054 HIND OIL INDUSTRIES HOI was incorporated in July 1992 with a single oil-processing machine. It sold its product, Maa mustard oil, to local consumers in Asansol. HOI focused solely on edible mustard oil, which was extensively used as a cooking medium in eastern India. Owing to its focus on providing high-quality mustard oil. HOI established a seputation for purity with time. This allowed the company to steadily grow and expand the scale of its operations. In 2001, it became the first mill in Asansol to produce small sachets of edible oil and this strengthened its foothold in the retail segment. Thereafter, the company operated with three processing machines and gradually established its presence in the entire Asansol market and nearby suburban areas Maa mustard oil was primarily sold through setail outlets to household consumers. Bulk consumers including restaurants, food service companies and caterers, either contacted the company directly for discounted deals or negotiated through brokers. Abhishek explained Around 60 per cent of our sales are drough retail stores. Households do not switch brands frequently in this product category as the taste and signature pungent smell of mustard oil varies to brands. The same does not hold true for bulk consumers, who are always looking for discounted deals. The sales were seasonal in nature as well. There was a significant hike in the sales in certain montis owing to festivals and marriage ceremonies.' EDIBLE OIL MARKET IN INDIA The edible oil market in India was very diverse and fragmented. The consumption pattem of edible oil across the country varied depending on the oilseeds that were cultivated in each particular pro-climatic zone. The indigenous edible oil industry in India was primarily dependent on the production of soybeans, groundnuts, and rapeseeds, which accounted for 88 per cent of the total oil seeds produced. However, the cultivation of oil seeds and the manufacturing of indigenous edible cals bagged for behind the demand for edible oil. This demand gap was met by imports, which rose from 38.95 per cent of edible oil consumption in 2004-2005 to 67.33 per cent in 2014-2015. More importantly, cheap palm oil and palm oil blends accounted for about 54 per cent of the crude edible oil imported in India India was the largest importer of palm oil and soybean oil in the world in 2015 In terms of market share palm oil, soybean oil, and mustard oil sepesented 42 per cent. 17 per ceat, and 13 per cent of the edible oil market in India, sespectively. Imported palm oil dominated the edible oil market because of its cheap price, which was supported by a falling cost, insurance, and freight price and a reduction in import duties (see Exhibit 1). This had stiffened the competition in the price-sensitive market and had made small localized oil manufacturers unprofitable New varieties of col, including cottonseed oil, sunflower oil, nice bran oil and olive oil, had also entered the market in recent years. While the market for the edible oil industry in India was heavily fragmented with competitors struggling to grab marginal shares, it was always exposed to threats from new entrants as Page 3 9817M054 it was underpenetrated. The level of per capita edible oil consumption in India was 144 kilograms (ka) per year-Ear lower than the global average of 24 kg per year Population expansion and a rise in per capita income were fuelling an increasing demand for edible oil, making it a lucrative industry. Consumers' rising income levels led to a gradual shift in preference toward healthier refined oil and healthier imported oils like canola, olive, and castor oils, and this affected the market shares of various edible oils. The edible oil industry in India had two main categories: an organized branded segment, which sold packaged oil, and an unorganised segment, which sold loose oil. The organized segment was dominant and represented around 75 per cent of the total market. However, a rise in income levels and fears of adulteration-blending of edible oils in undesirable proportions meant that consumers were gradually shifting their preferences toward packaged branded cal. This had drawn several large new companies into the organized branded market in the recent years. The consumers of edible oil included a household retail segment-those whose monthly consumption was under 5 kg-and bulk consumers, who purchased and consumed edible oil in bulk Consumers in the household retail segment had diverse tastes and preferences, which were influenced by peopraphical location and income level Location was important as consumers became accustomed to the taste of the edible oils that were primarily produced in their region. For example, coconut was extensively cultivated and easily available in the southern part of India, and this was responsible for the use of coconut oil as the primary edible oil in the region. Similarly, mustard seeds were cultivated in the north, and mustard oil was primarily consumed in the easter and northem parts of the country However, income levels also had an important role to play. Consumers in higher income groups preferred healthier als with a high smoke point like refined oils. Even if they consumed indigenously produced edible oils, consumers preferred premium brands. Consumers with lower income levels preferred loose edible oils or non-premium packaged brands that were manufactured locally because of the price benefits. In the last few years, easy availability of cheaper imported culs such as palm cal had hurt the market share of local non premium packaged brands such as Hot, as lower income consumers were shifting away from non-premium packaged indigenous oils to packaged palm oils, which were quite cheap MUSTARD OIL MARKET IN INDIA Mustard seeds were grown only in the rabi (winter) season and were harvested between February and April every year. Thus, the market received its fresh stock in those months. Mustard oil was extensively consumed in northem. eastem, and north-eastem India as an edible oil for daily consumption and making pickles, and as a skin and hair oil. Mustado consumption in India was growing at a rate of wound 20 per cent every year Mustard oil processing in India was mainly an organized business: there were around 7.000-9.000 manufacturing units, and only 20 per cent of these units were registered. However, the number of Page 4 9817M054 processing wants had gone down over the years. Many small manufacturers had been pushed out of the market due to profitability caused by the emergence of large companies, increasing competition from cheaper imported palm oil and changing tastes and preferences among consumers. Small mustard oil manufacturers used mechanical crushing processors to extract oil from oilseeds. This was an inefficient process that led to a loss of around 10 per cent of the edible oil dumg extraction. The by-products of mustard oil production were used as canle feed. Larger companies, which spent heavily on technological imevation and modernization of their extraction process, were sta considerable advantage The mustard oil industry as a whole was not significantly threatened by the factors that affected other edible oil varieties. This was because of the strong affinity of consumers toward the pungency of mustard oil. which was greatly appreciated as a taste enhancer and an appetite stimulant and could not be substituted by other edible oils. Its use for multiple other purposes also made it difficult to substitute. However, the expansion of mustard al consumption remained limited to certain areas of the country as its pungency made it unacceptable in various other areas. Mustard oil was not suitable as an export because its high content of enacic acid was found to have an adverse impact on health" (The US Food and Drug Administration required all mustard oil to be labelled "for extemal use only. India's National Institute of Agricultural Marketing created a strategy to reduce the erucic acid content and viscosity of the oil in order to make it more acceptable to consumers around the country and worldwide. However, the mustard oil industry remained a largely unorganized business serving consumers with low income levels in rural and semi-urban areas. Mustard oil thus remained positioned as a poor person's oil THE MUSTARD OIL MARKET IN ASANSOL In Asansol, the number of active mustard oil processing mills had been on a steep decline since 2005. HOI was one of the 20-25 mustard oil mills operating in Asansol that sold packaged mustard oil and were able to survive the ever-increasing competition. The West Bengal state of India, where Asansol was located accounted for a third of the entire 13 billion mustard oil market in the country because mistard oil was indispensable for Bengali cuisine. Therefore, the threats from other edible oils were not to pronounced in Assol However, the mistard oil industry had strong internal competition. The significant rise in per capita income in West Bengal (see Exchibit 2) was reshaping consumers preferences, there was a shift in demand away from loose oils and toward packaged oils and away from son premium local varieties toward premium varieties. Another important factor in this shift was the rampant adulteration that was prevalent in the loose mustard oil segment Such a shift was less conspicuous for bulk consumers, who were lured by the cheaper price of loose mustard oil. HOT had closed its operations in the loose oil segment and had shifted completely to selling packaged Maa mustardol since 2009. This helped the company protect its reputation in Asansol as a pure quality mustard oil brand, but it had hurt its bulk sales significantly, as loose oil was priced around 8-10 per cent lower than the packaged variety. However, household retail consumers welcomed this move. and overall sales did not drop mch. Page 5 9817M054 This sole focus on the packaged and branded oil sepment proved to be a double-edged sword for HOL Not only did it lower the demand from the bulk consumers, it also exposed HOT to intense competition from the large companies that dominated the branded and packaged segment and reaped extensive benefits from economies of scale. These companies were highly efficient in oil extraction, used advanced technologies for oil processing, and extensively promoted their brands through television and other media. They also charged a premium price for their brands (see Exhibit 3) compared to the prices of small local manufacturers like HOL Small companies like HOL, which had limited resources, spent meagre amounts on promotion (see Exchubit 4) in the form of small printed posters, which were attached to the walls of ration shops in semi-wban and rural areas. This was an affordable option for HOL and it seemed helpful in retaining existing consumers and penetrating deeper into newer real markets Problems were significantly aggravated after 2011, when new mustard oil manufacturers from other Indian states, such as Rajasthan and Uttar Pradesh, entered the West Bengal market. These manufacturers had the advantage of being from some of the largest mustard-seed-producing states in the country New large companies with an established national presence in the food and edible oil industry also entered the mustard oil market in the branded and packaged segment, which was dominated by 10 to 12 companies. Prominent brands included Dhara (manufactured by Mother Daury Fruit & Vegetable Pvt. Led.). Engine (Shree Hari Industries). Nutrela (Ruchi Soya Industries Limited). Fortune and Bullet brands (Adani Wilmar Limited) Patanjali (Patanjali Ayurved), and Kalash (K.S. Oil). These oil manufactures and their mustard oil brands were the leaders in the mustard oil industry The majority of these large edible oil manufacturers sold a large variety of edible oils to capture the diverse preferences of edible cal consumers across the country. For instance, Adani Wilmar Limuted had well- known brands in almost every edible oil category, including refused soybean oil under the brand name of Fortune, mustard oil under the brand name of Bullet, coconut oil under the brand name of Ivory, and refined palmelein oil under the brand name of Raag Gold. This was in sharp contrast to small manufacturers like HOT, which did not have mamfacturing and processing capacity for more than one kind of edible oil. This strongly limited HOI's ability to serve diverse consumer preferences. However. HOI managed to compete with these large companies to a modest extent because of its positioning in Asansol as a supplier of pure mustard oil and its commitment to maintaining prices around 10 per cent lower than those of the large companies The remaining one-fifth of the market in Asansol was captured by small oil manufacturers, who competed strongly for minuscule market shares. Ho had dominated this category for decades, and this had helped it to maintain sales in a row and stable range of around 10,000 kg to 14.000 kg every month (see Exhibit 5). CHALLENGES IN 2015 The year 2015 brought a set of unprecedented challenges for Abhishek. Lack of rainfall meant that mustard seed production in 2014-15 had dropped to 6.3 million tonnes five-year low (see Exhibet 6). This led to a steep rise in the procurement price of mustard seeds for the oil mills. To cover the increased cost of production, almost all companies liked the price of the mustard oil, and the retail price of mustard oil Soared as a result. Smaller companies had no choice but to fully pass on the increased costs to their Page 6 9817M054 consumers, while the larger companies could absorb this price shock because of economies of scale and efficient inventory management. Abhishek elaborated Larger companies have bargaining power in terms of procurement, have large storage capacities for mustard seeds, and also use forward contracts. They had procured seeds in bulk in the previous season when the price was low and had also utilized forward to hedge oilseeds price risks. On the other hand, our mill had smaller storage capacity for oilseeds, which could support only 15 to 20 days of production of mustard oil. We also did not have any experience with forwards. Thus, we were nakedly exposed to the high price of mustard seeds. Hor had never experimented with raising the price of Mas mastard oil closer to the prices of the large companies out of fear of losing its market share. However, the present situation compelled HOT to increase its price to cover increased costs. It was doubtful that Hor's larger competitors would also increase the price of their products by such a large amount. To get some idea about the expected increase in the competitors' prices, Abhishek held numerous discussions with the brokers and commission spetits operating in the edible oil business. They expected that the competitors might increase their prices by around 6 per cent on average. However, the situation was fraught with uncertainties and demanded an analysis of the price-quantity relationship of Maa mustard oil with respect to the competitors' prices Such pricing dilemmas were not new to HOI because oil manufacturing operations were dependent on the production of oilseeds, which fluctuated depending on the quality of monsoons. However, this was the first time that stach a situation had cropped up since Ablushek had take control of the business operations. He did not want to continue with his father's strategy of maintaining the price differential even in such stressful conditions. The agricultural crop year of July 2011 to June 2012, when mustard seed production had fallen quite low, had exposed Hot to a similar plight. The final say in the decision-making at that point had been Ashok's, and he did not venture into pricing strategies. Instead, he had kept the prices almost static from July 2012 to March 2013, thereby maintaining his self-imposed price gap. As a result, HOI had to absorb high production costs, which significantly reduced its profits in the corresponding financial year Abhishek was not in the mood to give up this time. He wanted to leverage Hors established reputation to increase the price, irrespective of what the competitors did THE TASK AHEAD Abhishek had to identify several factors that influenced the demand for Maa mustard oil and then incorporate the effects of all these factors to assess the demand for his product. His ultimate objective was to identify an optimum price for Maa mustard oil in these troubled times. He reflected on what he had leamed in his managerial economics class and wondered if he could use some of those theories to resolve las present pricing dilemma. Could the price be raised without hurting revenues? Ablushe knew that the price hikes of competitors could not be perfectly estimated. What was the optimum price he could charge under various probable scenaries of competitors price hikes? Abhishek stared ahead without seeing a way forward. Although the future seemed grim, he was not about to give up. He set his jaw, rolled up hus sleeves, and got down to work. Page 7 9817M054 Apt 1 EXHIBIT 1: IMPORT DUTY ON RBD PALMOLEIN OIL WITH EFFECTIVE DATE Effective Aug. 11 Jan 2 Apr 13 Jl. 23 Mar 21, Date Jan 20 Jan 24 Sep. 17. 2006 2007 2007 2007 2008 2008 2014 2014 2015 import 80.0% 67.54 57.5 Duty 52.5 27.5 7.5% 100N 150N 20.09 Source Created by the authors based on "Sugar & Vegetable Ois," Government of India. Department of Food and Public Distribution, accessed February 25, 2016, ppd nie.ino-division EXHIBIT 2 MONTHLY PER CAPITA NET STATE DOMESTIC PRODUCT (NSDP) OF WEST BENGAL Month and Year Per capita NSDP in 2) Month and Year Per capita NSDP in 2 April 2011 4.343.17 July 2013 5,691.44 May 2011 4.347 09 August 2013 5.757.90 une 2011 4.355 44 September 2013 5.821.98 JULY 2011 4,369.71 October 2013 5,883.52 August 2011 4.387.40 November 2013 5,942.57 September 2011 4.409.51 December 2013 5,999.14 October 2011 4,436 05 January 2014 6,053 22 November 2011 4.467.01 February 2014 6,104.82 December 2011 4.502.40 March 2014 6,153 90 January 2012 4.542 20 April 2014 6,200 56 February 2012 4.586 43 May 2014 6.252.15 March 2012 4,635,08 June 2014 6.308.70 April 2012 4680.16 July 2014 6,370.21 May 2012 4.743.18 August 2014 6.436.68 June 2012 4.800.15 September 2014 6.508.11 y 2012 4,859.07 October 2014 6,584 51 August 2012 4.919.94 November 2014 6,665.86 September 2012 4.982.76 December 2014 6,752.18 October 2012 5.047 52 January 2015 6,843.45 November 2012 5.114 23 February 2015 6,939.69 December 2012 5.182.89 March 2015 7,040.89 January 2013 5.250 50 April 2015 7,14706 February 2013 5.32605 May 2015 7244 36 March 2013 5,400.55 June 2015 7,332.83 April 2013 5,477.00 July 2015 7412 45 May 2013 5.550.97 August 2015 7,483 22 June 2013 5.622.45 September 2015 7.545.15 Note: Monthly per capita NSDP was calculated using the Denton Cholette method of temporal disaggregation on annual per capita NSOP data of West Bengal INR Indian rupee US$100-285 on September 30, 2015 Source: Created by the case authors based on Christoph Sax and Peter Stener, Temporal Disaggregation of Time Series The R Journal 5, no. 2 2013): 80-87, accessed March 7. 2016. https:/joumal project.orgchive/2013-2sassteiner pdf Per Capita NSDP Outreet Prices (200405 to 2014-15. Government of India, National Institute for Transforming india And Mach 13 2018 metais. 2004.05.2014-15 Page 8 9817M054 EXHIBIT 3: COMPETITORS AVERAGE PRICE OF EDIBLE MUSTARD OIL FROM APRIL 2011 TO SEPTEMBER 2015 Month and Year Price per kg Month and Year Price per kg in fin April 2011 6922 July 2013 95 00 May 2011 707 August 2015 9272 June 2011 74.77 September 2013 95.00 July 2011 7500 October 2013 9525 August 2011 75.00 November 2013 96.53 September 2011 77.29 December 2013 98.00 October 2011 79 06 January 2014 97 89 November 2011 81.37 February 2014 9847 December 2011 84.00 March 2014 95.30 January 2012 91.61 April 2014 9375 February 2012 91.11 May 2014 92 06 March 2012 86.79 June 2014 92.00 Apr 2012 99.13 July 2014 2700 May 2012 99.70 August 2014 9200 June 2012 98.44 September 2014 July 2012 104.62 October 2014 95 29 August 2012 105.42 November 2014 98.11 September 2012 10445 December 2014 100.00 October 2012 104.94 January 2015 10101 November 2012 105.96 February 2015 101.10 December 2012 106,00 March 2015 99.40 January 2013 106.00 April 2015 99 22 February 2013 1055 MY2011 10158 March 2013 10284 June 2015 107.95 April 2013 96.84 July 2015 108.52 May 2013 9426 August 2015 107 76 June 2013 94.00 September 2015 109.14 Note INR - Indian rupee:US$100 = 265.57 on September 30, 2015, kg = kilogram Source: "Monthly Average Retail Prices of Mustard Ol Pached Government of India, Department of consumer Affairs, database, accessed March 2016, tp canfoweb ricin SeportReport_Menu_web.aspx Page 9 9817M054 EXHIBIT 4: HISTORICAL DATA OF PROMOTIONAL EXPENDITURE INCURRED BY HIND OIL INDUSTRIES (IN INR) Promotional Month and Year Expenditure Month and Year fin April 2011 1.170.00 2013 May 2011 1,162 26 August 2013 June 2011 1,184.08 September 2013 July 2011 1.193.13 October 2013 August 2011 1.241.55 November 2013 September 2011 1.254.15 December 2013 October 2011 1,149.57 January 2014 November 2011 1.200 06 February 2014 December 2011 1220 40 March 2014 January 2012 1,082.70 April 2014 February 2012 1.092 06 May 2014 March 2012 98937 June 2014 April 2012 978.03) JULY 2014 May 2012 972.09 August 2014 June 2012 1,00494 September 2014 July 2012 1,081.71 October 2014 gust 2012 1.110.15 November 2014 September 2012 1.262 25 December 2014 October 2012 11223722 January 2015 November 2012 1.257.75 February 2015 December 2012 1.021.50 March 2015 January 2013 94392 April 2015 February 2013 1,043.46 May 2015 March 2013 1.125.90 June 2015 April 2013 1,090 08 July 2015 May 2013 1,087 20 August 2015 June 2011 1,105,92 September 2015 Voter INR - Indian Rupee US$1.00 = 105.57 on September 30, 2015 Source: Company files Promotional Expenditure in 1,084 50 1,096 1,000TS 1069 1,069.47 1,039 14 932704 106237 97011 943.47 1,043 37 1,060 03 1,066151 1,048.14 1,00422 961.38 869 13 81460 80199 8686 991-25 986 79 112320 1,202.13 1,24731 Page 10 9B17M054 EXHIBIT 5: SALES HISTORY OF MAA MUSTARD OIL FROM APRIL 2011 TO SEPTEMBER 2015 Month and Year Price per Quantity Month and Year Price per kg Quantity Sold kg in Sold inkl fin? (in kg April 2011 65.00 12.890 July 2013 79764 12.096 May 2011 65 90 12.850 August 2013 7800 11.908 June 2011 6540 13,180 September 2013 78 09 11,874 JULY 2011 13,785 October 2013 76.14 11880 August 2011 66 00 13.880 November 2013 81.54 11,636 September 2011 6900 12.680 December 2013 8127 1026 October 2011 69.00 13 290 January 2014 8001 11,680 November 2011 695 13 498 February 2014 80.00 10.768 December 2011 74 56 11.980 March 2014 80 81 10,457 January 2012 78.00 12085 April 2014 7090 11547 February 2012 84.00 10,980 May 2014 78.76 11615 March 2012 8700 10.820 June 2014 78 23 1.675 April 2012 90.00 10,768 2014 78 25 11,600 May 2012 9000 11,125 August 2014 10.900 June 2012 88 DO 11985 September 2014 7734 11092 July 2012 89100 12.248 October 2014 76.59 10667 August 2012 89.00 13,985 November 2014 8315 9,645 September 2012 90 00 13580 December 2014 9.026 October 2012 91.00 13.895 January 2015 90.72 8.875 November 2012 94.00 11270 February 2015 08.03 9,585 December 2012 95.00 10.485 March 2015 8563 10126 January 2013 91.00 11.545 April 2015 84.25 10485 February 2013 86.00 12.465 May 2015 87.90 10,542 March 2013 8600 12 025 June 2015 9001 127465 April 2013 85.00 11.985 uly 2015 90.00 13 275 may 2013 80.00 12.245 August 2015 88.89 13.780 June 2013 80 01 11.976 September 2015 91 13,256 Note: INR - Indian Rupee US$1.00 165.57 on September 30, 2015 kg = klogram Source: Company files EXHIBIT 6: ANNUAL PRODUCTION OF MUSTARD SEEDS FROM 2010-11 TO 2014-15 Year 2010-11 2011-12 2012-13 2013-14 2014-15 Mustard Seed Production 8.1 66 8.0 7.8 fin million tonnes) Source: Sandip Das. "Now Mustard Oil Prices Winess Sharp increase." The Financial Express October 30, 2015, accessed February 21, 2016, www.francialexpress.com market commoditieshow-mustard-of-prices-wtress-sharp increase/158701 Here's a reminder of the questions: 1. What are the relevant factors to be considered for modeling a demand function for Maa mustard oil?? 2. What model and functional form is appropriate to show the impact of each factor you have identified using OLS regression techniques and why? Write your demand mode! fequation). 3. Run the regression and submit output statistics 4. Use the estimated demand function to forecast the demand for Maa mustard oil. 5. How would a 1% increase in the independent variables impact the demand for Maa oil? i.e. interpret the coefficient estimates. 6. Analyze the model significance using the regression statistics: R-square, t-statistics. 7. Use the regression standard error to determine the range within which demand for the product will fall with a 95% confidence interval. 8. Calculate and interpret the following elasticities: Own price, cross price, income, and advertising and explain what these results suggest about the effects of changes in each of these variables on the demand for Maa mustard oil? 9. What will be the impact of a price change by the company on the total revenue of Maa mustard oil. (assuming other variables remain constant)? 10. What is the revenue maximizing price for Maa oil if the competitor's price does not increase in October 2015? HIND OIL INDUSTRIES: DEMAND ANALYSIS Abhishek Pont Debat Poland Pradyume Dash wrote this case solely to provide material for class discussion. The authors de no intend to be thereffective or offective handing of a manager in the authors may have disguised certain and other istering information to protect confidentiality This publication may not be treated photocopied or other reproduced in any form or by anyone without the permain of the copyright holder. Reproduction of the material is not covered under authorization by any reproduction night organization. To order coples arregues permet reproduceras, contact very Paring. Ivey Bute School Westem University, London, Ontario Canada MEG ON 1978.661.120k/caregive.co www.cas.com Copyright 2017, Richard Ivey School of Business Foundation Version: 2017-04-20 The digital clock blinked 2:40 am as Abhishek Khemka, the manager of Hand Oil Industries (HOT), tossed and turned in his bed on a rainy September night in 2015. The next day at breakfast, he approached his father, Ashok Khemka the veteran businessman who had founded Hot an edible mustard oil manufacturing and selling unit based in the Indian city of Asansol Abhishek had joined Hot as an assistant in 2011 after eating a master of business administration degree with a focus on finance. After gaming an in-depth understanding of the business affairs, he took over from his father in March, 2014. Nevertheless, he continued to consult this father on every critical issue. "At this rate we will be running losses in a few weeks' time. Our price is too low." Abhishek blurted out. "The price of mustard seeds has skyrocketed. Our price cannot absorb the high production costs any longer Ashok looked at his son thoughtfully and remarked, "This is the third time in a week that you have brought this up. We have always sold our product at a price considerably lower than that of the market. That has been our strategy from the beginning Who will buy our product if we price it so close to that of major national brands? "We are priced too low," Abhishek repeated. Our brand has earned the reputation of being a quality product for all these years and it's time we leveraged that reputation in the present situation. I disagree that an increase in price will affect our revenue adversely." Abhishek paused for a moment and then concluded "I shall get back to you after some calculations." Ever since Abhishek had joined the business, he had meticulously maintained monthly records of all the business transactions in a spreadsheet. He regularly used this along with the tools and techniques he had leamed in college to take business decisions. However, the current dilemma was new to him and he wondered if he could combine some of the theories of microeconomies with demand-modelling techniques to resolve the issue Page 2 9817M054 HIND OIL INDUSTRIES HOI was incorporated in July 1992 with a single oil-processing machine. It sold its product, Maa mustard oil, to local consumers in Asansol. HOI focused solely on edible mustard oil, which was extensively used as a cooking medium in eastern India. Owing to its focus on providing high-quality mustard oil. HOI established a seputation for purity with time. This allowed the company to steadily grow and expand the scale of its operations. In 2001, it became the first mill in Asansol to produce small sachets of edible oil and this strengthened its foothold in the retail segment. Thereafter, the company operated with three processing machines and gradually established its presence in the entire Asansol market and nearby suburban areas Maa mustard oil was primarily sold through setail outlets to household consumers. Bulk consumers including restaurants, food service companies and caterers, either contacted the company directly for discounted deals or negotiated through brokers. Abhishek explained Around 60 per cent of our sales are drough retail stores. Households do not switch brands frequently in this product category as the taste and signature pungent smell of mustard oil varies to brands. The same does not hold true for bulk consumers, who are always looking for discounted deals. The sales were seasonal in nature as well. There was a significant hike in the sales in certain montis owing to festivals and marriage ceremonies.' EDIBLE OIL MARKET IN INDIA The edible oil market in India was very diverse and fragmented. The consumption pattem of edible oil across the country varied depending on the oilseeds that were cultivated in each particular pro-climatic zone. The indigenous edible oil industry in India was primarily dependent on the production of soybeans, groundnuts, and rapeseeds, which accounted for 88 per cent of the total oil seeds produced. However, the cultivation of oil seeds and the manufacturing of indigenous edible cals bagged for behind the demand for edible oil. This demand gap was met by imports, which rose from 38.95 per cent of edible oil consumption in 2004-2005 to 67.33 per cent in 2014-2015. More importantly, cheap palm oil and palm oil blends accounted for about 54 per cent of the crude edible oil imported in India India was the largest importer of palm oil and soybean oil in the world in 2015 In terms of market share palm oil, soybean oil, and mustard oil sepesented 42 per cent. 17 per ceat, and 13 per cent of the edible oil market in India, sespectively. Imported palm oil dominated the edible oil market because of its cheap price, which was supported by a falling cost, insurance, and freight price and a reduction in import duties (see Exhibit 1). This had stiffened the competition in the price-sensitive market and had made small localized oil manufacturers unprofitable New varieties of col, including cottonseed oil, sunflower oil, nice bran oil and olive oil, had also entered the market in recent years. While the market for the edible oil industry in India was heavily fragmented with competitors struggling to grab marginal shares, it was always exposed to threats from new entrants as Page 3 9817M054 it was underpenetrated. The level of per capita edible oil consumption in India was 144 kilograms (ka) per year-Ear lower than the global average of 24 kg per year Population expansion and a rise in per capita income were fuelling an increasing demand for edible oil, making it a lucrative industry. Consumers' rising income levels led to a gradual shift in preference toward healthier refined oil and healthier imported oils like canola, olive, and castor oils, and this affected the market shares of various edible oils. The edible oil industry in India had two main categories: an organized branded segment, which sold packaged oil, and an unorganised segment, which sold loose oil. The organized segment was dominant and represented around 75 per cent of the total market. However, a rise in income levels and fears of adulteration-blending of edible oils in undesirable proportions meant that consumers were gradually shifting their preferences toward packaged branded cal. This had drawn several large new companies into the organized branded market in the recent years. The consumers of edible oil included a household retail segment-those whose monthly consumption was under 5 kg-and bulk consumers, who purchased and consumed edible oil in bulk Consumers in the household retail segment had diverse tastes and preferences, which were influenced by peopraphical location and income level Location was important as consumers became accustomed to the taste of the edible oils that were primarily produced in their region. For example, coconut was extensively cultivated and easily available in the southern part of India, and this was responsible for the use of coconut oil as the primary edible oil in the region. Similarly, mustard seeds were cultivated in the north, and mustard oil was primarily consumed in the easter and northem parts of the country However, income levels also had an important role to play. Consumers in higher income groups preferred healthier als with a high smoke point like refined oils. Even if they consumed indigenously produced edible oils, consumers preferred premium brands. Consumers with lower income levels preferred loose edible oils or non-premium packaged brands that were manufactured locally because of the price benefits. In the last few years, easy availability of cheaper imported culs such as palm cal had hurt the market share of local non premium packaged brands such as Hot, as lower income consumers were shifting away from non-premium packaged indigenous oils to packaged palm oils, which were quite cheap MUSTARD OIL MARKET IN INDIA Mustard seeds were grown only in the rabi (winter) season and were harvested between February and April every year. Thus, the market received its fresh stock in those months. Mustard oil was extensively consumed in northem. eastem, and north-eastem India as an edible oil for daily consumption and making pickles, and as a skin and hair oil. Mustado consumption in India was growing at a rate of wound 20 per cent every year Mustard oil processing in India was mainly an organized business: there were around 7.000-9.000 manufacturing units, and only 20 per cent of these units were registered. However, the number of Page 4 9817M054 processing wants had gone down over the years. Many small manufacturers had been pushed out of the market due to profitability caused by the emergence of large companies, increasing competition from cheaper imported palm oil and changing tastes and preferences among consumers. Small mustard oil manufacturers used mechanical crushing processors to extract oil from oilseeds. This was an inefficient process that led to a loss of around 10 per cent of the edible oil dumg extraction. The by-products of mustard oil production were used as canle feed. Larger companies, which spent heavily on technological imevation and modernization of their extraction process, were sta considerable advantage The mustard oil industry as a whole was not significantly threatened by the factors that affected other edible oil varieties. This was because of the strong affinity of consumers toward the pungency of mustard oil. which was greatly appreciated as a taste enhancer and an appetite stimulant and could not be substituted by other edible oils. Its use for multiple other purposes also made it difficult to substitute. However, the expansion of mustard al consumption remained limited to certain areas of the country as its pungency made it unacceptable in various other areas. Mustard oil was not suitable as an export because its high content of enacic acid was found to have an adverse impact on health" (The US Food and Drug Administration required all mustard oil to be labelled "for extemal use only. India's National Institute of Agricultural Marketing created a strategy to reduce the erucic acid content and viscosity of the oil in order to make it more acceptable to consumers around the country and worldwide. However, the mustard oil industry remained a largely unorganized business serving consumers with low income levels in rural and semi-urban areas. Mustard oil thus remained positioned as a poor person's oil THE MUSTARD OIL MARKET IN ASANSOL In Asansol, the number of active mustard oil processing mills had been on a steep decline since 2005. HOI was one of the 20-25 mustard oil mills operating in Asansol that sold packaged mustard oil and were able to survive the ever-increasing competition. The West Bengal state of India, where Asansol was located accounted for a third of the entire 13 billion mustard oil market in the country because mistard oil was indispensable for Bengali cuisine. Therefore, the threats from other edible oils were not to pronounced in Assol However, the mistard oil industry had strong internal competition. The significant rise in per capita income in West Bengal (see Exchibit 2) was reshaping consumers preferences, there was a shift in demand away from loose oils and toward packaged oils and away from son premium local varieties toward premium varieties. Another important factor in this shift was the rampant adulteration that was prevalent in the loose mustard oil segment Such a shift was less conspicuous for bulk consumers, who were lured by the cheaper price of loose mustard oil. HOT had closed its operations in the loose oil segment and had shifted completely to selling packaged Maa mustardol since 2009. This helped the company protect its reputation in Asansol as a pure quality mustard oil brand, but it had hurt its bulk sales significantly, as loose oil was priced around 8-10 per cent lower than the packaged variety. However, household retail consumers welcomed this move. and overall sales did not drop mch. Page 5 9817M054 This sole focus on the packaged and branded oil sepment proved to be a double-edged sword for HOL Not only did it lower the demand from the bulk consumers, it also exposed HOT to intense competition from the large companies that dominated the branded and packaged segment and reaped extensive benefits from economies of scale. These companies were highly efficient in oil extraction, used advanced technologies for oil processing, and extensively promoted their brands through television and other media. They also charged a premium price for their brands (see Exhibit 3) compared to the prices of small local manufacturers like HOL Small companies like HOL, which had limited resources, spent meagre amounts on promotion (see Exchubit 4) in the form of small printed posters, which were attached to the walls of ration shops in semi-wban and rural areas. This was an affordable option for HOL and it seemed helpful in retaining existing consumers and penetrating deeper into newer real markets Problems were significantly aggravated after 2011, when new mustard oil manufacturers from other Indian states, such as Rajasthan and Uttar Pradesh, entered the West Bengal market. These manufacturers had the advantage of being from some of the largest mustard-seed-producing states in the country New large companies with an established national presence in the food and edible oil industry also entered the mustard oil market in the branded and packaged segment, which was dominated by 10 to 12 companies. Prominent brands included Dhara (manufactured by Mother Daury Fruit & Vegetable Pvt. Led.). Engine (Shree Hari Industries). Nutrela (Ruchi Soya Industries Limited). Fortune and Bullet brands (Adani Wilmar Limited) Patanjali (Patanjali Ayurved), and Kalash (K.S. Oil). These oil manufactures and their mustard oil brands were the leaders in the mustard oil industry The majority of these large edible oil manufacturers sold a large variety of edible oils to capture the diverse preferences of edible cal consumers across the country. For instance, Adani Wilmar Limuted had well- known brands in almost every edible oil category, including refused soybean oil under the brand name of Fortune, mustard oil under the brand name of Bullet, coconut oil under the brand name of Ivory, and refined palmelein oil under the brand name of Raag Gold. This was in sharp contrast to small manufacturers like HOT, which did not have mamfacturing and processing capacity for more than one kind of edible oil. This strongly limited HOI's ability to serve diverse consumer preferences. However. HOI managed to compete with these large companies to a modest extent because of its positioning in Asansol as a supplier of pure mustard oil and its commitment to maintaining prices around 10 per cent lower than those of the large companies The remaining one-fifth of the market in Asansol was captured by small oil manufacturers, who competed strongly for minuscule market shares. Ho had dominated this category for decades, and this had helped it to maintain sales in a row and stable range of around 10,000 kg to 14.000 kg every month (see Exhibit 5). CHALLENGES IN 2015 The year 2015 brought a set of unprecedented challenges for Abhishek. Lack of rainfall meant that mustard seed production in 2014-15 had dropped to 6.3 million tonnes five-year low (see Exhibet 6). This led to a steep rise in the procurement price of mustard seeds for the oil mills. To cover the increased cost of production, almost all companies liked the price of the mustard oil, and the retail price of mustard oil Soared as a result. Smaller companies had no choice but to fully pass on the increased costs to their Page 6 9817M054 consumers, while the larger companies could absorb this price shock because of economies of scale and efficient inventory management. Abhishek elaborated Larger companies have bargaining power in terms of procurement, have large storage capacities for mustard seeds, and also use forward contracts. They had procured seeds in bulk in the previous season when the price was low and had also utilized forward to hedge oilseeds price risks. On the other hand, our mill had smaller storage capacity for oilseeds, which could support only 15 to 20 days of production of mustard oil. We also did not have any experience with forwards. Thus, we were nakedly exposed to the high price of mustard seeds. Hor had never experimented with raising the price of Mas mastard oil closer to the prices of the large companies out of fear of losing its market share. However, the present situation compelled HOT to increase its price to cover increased costs. It was doubtful that Hor's larger competitors would also increase the price of their products by such a large amount. To get some idea about the expected increase in the competitors' prices, Abhishek held numerous discussions with the brokers and commission spetits operating in the edible oil business. They expected that the competitors might increase their prices by around 6 per cent on average. However, the situation was fraught with uncertainties and demanded an analysis of the price-quantity relationship of Maa mustard oil with respect to the competitors' prices Such pricing dilemmas were not new to HOI because oil manufacturing operations were dependent on the production of oilseeds, which fluctuated depending on the quality of monsoons. However, this was the first time that stach a situation had cropped up since Ablushek had take control of the business operations. He did not want to continue with his father's strategy of maintaining the price differential even in such stressful conditions. The agricultural crop year of July 2011 to June 2012, when mustard seed production had fallen quite low, had exposed Hot to a similar plight. The final say in the decision-making at that point had been Ashok's, and he did not venture into pricing strategies. Instead, he had kept the prices almost static from July 2012 to March 2013, thereby maintaining his self-imposed price gap. As a result, HOI had to absorb high production costs, which significantly reduced its profits in the corresponding financial year Abhishek was not in the mood to give up this time. He wanted to leverage Hors established reputation to increase the price, irrespective of what the competitors did THE TASK AHEAD Abhishek had to identify several factors that influenced the demand for Maa mustard oil and then incorporate the effects of all these factors to assess the demand for his product. His ultimate objective was to identify an optimum price for Maa mustard oil in these troubled times. He reflected on what he had leamed in his managerial economics class and wondered if he could use some of those theories to resolve las present pricing dilemma. Could the price be raised without hurting revenues? Ablushe knew that the price hikes of competitors could not be perfectly estimated. What was the optimum price he could charge under various probable scenaries of competitors price hikes? Abhishek stared ahead without seeing a way forward. Although the future seemed grim, he was not about to give up. He set his jaw, rolled up hus sleeves, and got down to work. Page 7 9817M054 Apt 1 EXHIBIT 1: IMPORT DUTY ON RBD PALMOLEIN OIL WITH EFFECTIVE DATE Effective Aug. 11 Jan 2 Apr 13 Jl. 23 Mar 21, Date Jan 20 Jan 24 Sep. 17. 2006 2007 2007 2007 2008 2008 2014 2014 2015 import 80.0% 67.54 57.5 Duty 52.5 27.5 7.5% 100N 150N 20.09 Source Created by the authors based on "Sugar & Vegetable Ois," Government of India. Department of Food and Public Distribution, accessed February 25, 2016, ppd nie.ino-division EXHIBIT 2 MONTHLY PER CAPITA NET STATE DOMESTIC PRODUCT (NSDP) OF WEST BENGAL Month and Year Per capita NSDP in 2) Month and Year Per capita NSDP in 2 April 2011 4.343.17 July 2013 5,691.44 May 2011 4.347 09 August 2013 5.757.90 une 2011 4.355 44 September 2013 5.821.98 JULY 2011 4,369.71 October 2013 5,883.52 August 2011 4.387.40 November 2013 5,942.57 September 2011 4.409.51 December 2013 5,999.14 October 2011 4,436 05 January 2014 6,053 22 November 2011 4.467.01 February 2014 6,104.82 December 2011 4.502.40 March 2014 6,153 90 January 2012 4.542 20 April 2014 6,200 56 February 2012 4.586 43 May 2014 6.252.15 March 2012 4,635,08 June 2014 6.308.70 April 2012 4680.16 July 2014 6,370.21 May 2012 4.743.18 August 2014 6.436.68 June 2012 4.800.15 September 2014 6.508.11 y 2012 4,859.07 October 2014 6,584 51 August 2012 4.919.94 November 2014 6,665.86 September 2012 4.982.76 December 2014 6,752.18 October 2012 5.047 52 January 2015 6,843.45 November 2012 5.114 23 February 2015 6,939.69 December 2012 5.182.89 March 2015 7,040.89 January 2013 5.250 50 April 2015 7,14706 February 2013 5.32605 May 2015 7244 36 March 2013 5,400.55 June 2015 7,332.83 April 2013 5,477.00 July 2015 7412 45 May 2013 5.550.97 August 2015 7,483 22 June 2013 5.622.45 September 2015 7.545.15 Note: Monthly per capita NSDP was calculated using the Denton Cholette method of temporal disaggregation on annual per capita NSOP data of West Bengal INR Indian rupee US$100-285 on September 30, 2015 Source: Created by the case authors based on Christoph Sax and Peter Stener, Temporal Disaggregation of Time Series The R Journal 5, no. 2 2013): 80-87, accessed March 7. 2016. https:/joumal project.orgchive/2013-2sassteiner pdf Per Capita NSDP Outreet Prices (200405 to 2014-15. Government of India, National Institute for Transforming india And Mach 13 2018 metais. 2004.05.2014-15 Page 8 9817M054 EXHIBIT 3: COMPETITORS AVERAGE PRICE OF EDIBLE MUSTARD OIL FROM APRIL 2011 TO SEPTEMBER 2015 Month and Year Price per kg Month and Year Price per kg in fin April 2011 6922 July 2013 95 00 May 2011 707 August 2015 9272 June 2011 74.77 September 2013 95.00 July 2011 7500 October 2013 9525 August 2011 75.00 November 2013 96.53 September 2011 77.29 December 2013 98.00 October 2011 79 06 January 2014 97 89 November 2011 81.37 February 2014 9847 December 2011 84.00 March 2014 95.30 January 2012 91.61 April 2014 9375 February 2012 91.11 May 2014 92 06 March 2012 86.79 June 2014 92.00 Apr 2012 99.13 July 2014 2700 May 2012 99.70 August 2014 9200 June 2012 98.44 September 2014 July 2012 104.62 October 2014 95 29 August 2012 105.42 November 2014 98.11 September 2012 10445 December 2014 100.00 October 2012 104.94 January 2015 10101 November 2012 105.96 February 2015 101.10 December 2012 106,00 March 2015 99.40 January 2013 106.00 April 2015 99 22 February 2013 1055 MY2011 10158 March 2013 10284 June 2015 107.95 April 2013 96.84 July 2015 108.52 May 2013 9426 August 2015 107 76 June 2013 94.00 September 2015 109.14 Note INR - Indian rupee:US$100 = 265.57 on September 30, 2015, kg = kilogram Source: "Monthly Average Retail Prices of Mustard Ol Pached Government of India, Department of consumer Affairs, database, accessed March 2016, tp canfoweb ricin SeportReport_Menu_web.aspx Page 9 9817M054 EXHIBIT 4: HISTORICAL DATA OF PROMOTIONAL EXPENDITURE INCURRED BY HIND OIL INDUSTRIES (IN INR) Promotional Month and Year Expenditure Month and Year fin April 2011 1.170.00 2013 May 2011 1,162 26 August 2013 June 2011 1,184.08 September 2013 July 2011 1.193.13 October 2013 August 2011 1.241.55 November 2013 September 2011 1.254.15 December 2013 October 2011 1,149.57 January 2014 November 2011 1.200 06 February 2014 December 2011 1220 40 March 2014 January 2012 1,082.70 April 2014 February 2012 1.092 06 May 2014 March 2012 98937 June 2014 April 2012 978.03) JULY 2014 May 2012 972.09 August 2014 June 2012 1,00494 September 2014 July 2012 1,081.71 October 2014 gust 2012 1.110.15 November 2014 September 2012 1.262 25 December 2014 October 2012 11223722 January 2015 November 2012 1.257.75 February 2015 December 2012 1.021.50 March 2015 January 2013 94392 April 2015 February 2013 1,043.46 May 2015 March 2013 1.125.90 June 2015 April 2013 1,090 08 July 2015 May 2013 1,087 20 August 2015 June 2011 1,105,92 September 2015 Voter INR - Indian Rupee US$1.00 = 105.57 on September 30, 2015 Source: Company files Promotional Expenditure in 1,084 50 1,096 1,000TS 1069 1,069.47 1,039 14 932704 106237 97011 943.47 1,043 37 1,060 03 1,066151 1,048.14 1,00422 961.38 869 13 81460 80199 8686 991-25 986 79 112320 1,202.13 1,24731 Page 10 9B17M054 EXHIBIT 5: SALES HISTORY OF MAA MUSTARD OIL FROM APRIL 2011 TO SEPTEMBER 2015 Month and Year Price per Quantity Month and Year Price per kg Quantity Sold kg in Sold inkl fin? (in kg April 2011 65.00 12.890 July 2013 79764 12.096 May 2011 65 90 12.850 August 2013 7800 11.908 June 2011 6540 13,180 September 2013 78 09 11,874 JULY 2011 13,785 October 2013 76.14 11880 August 2011 66 00 13.880 November 2013 81.54 11,636 September 2011 6900 12.680 December 2013 8127 1026 October 2011 69.00 13 290 January 2014 8001 11,680 November 2011 695 13 498 February 2014 80.00 10.768 December 2011 74 56 11.980 March 2014 80 81 10,457 January 2012 78.00 12085 April 2014 7090 11547 February 2012 84.00 10,980 May 2014 78.76 11615 March 2012 8700 10.820 June 2014 78 23 1.675 April 2012 90.00 10,768 2014 78 25 11,600 May 2012 9000 11,125 August 2014 10.900 June 2012 88 DO 11985 September 2014 7734 11092 July 2012 89100 12.248 October 2014 76.59 10667 August 2012 89.00 13,985 November 2014 8315 9,645 September 2012 90 00 13580 December 2014 9.026 October 2012 91.00 13.895 January 2015 90.72 8.875 November 2012 94.00 11270 February 2015 08.03 9,585 December 2012 95.00 10.485 March 2015 8563 10126 January 2013 91.00 11.545 April 2015 84.25 10485 February 2013 86.00 12.465 May 2015 87.90 10,542 March 2013 8600 12 025 June 2015 9001 127465 April 2013 85.00 11.985 uly 2015 90.00 13 275 may 2013 80.00 12.245 August 2015 88.89 13.780 June 2013 80 01 11.976 September 2015 91 13,256 Note: INR - Indian Rupee US$1.00 165.57 on September 30, 2015 kg = klogram Source: Company files EXHIBIT 6: ANNUAL PRODUCTION OF MUSTARD SEEDS FROM 2010-11 TO 2014-15 Year 2010-11 2011-12 2012-13 2013-14 2014-15 Mustard Seed Production 8.1 66 8.0 7.8 fin million tonnes) Source: Sandip Das. "Now Mustard Oil Prices Winess Sharp increase." The Financial Express October 30, 2015, accessed February 21, 2016, www.francialexpress.com market commoditieshow-mustard-of-prices-wtress-sharp increase/158701 Here's a reminder of the questions: 1. What are the relevant factors to be considered for modeling a demand function for Maa mustard oil?? 2. What model and functional form is appropriate to show the impact of each factor you have identified using OLS regression techniques and why? Write your demand mode! fequation). 3. Run the regression and submit output statistics 4. Use the estimated demand function to forecast the demand for Maa mustard oil. 5. How would a 1% increase in the independent variables impact the demand for Maa oil? i.e. interpret the coefficient estimates. 6. Analyze the model significance using the regression statistics: R-square, t-statistics. 7. Use the regression standard error to determine the range within which demand for the product will fall with a 95% confidence interval. 8. Calculate and interpret the following elasticities: Own price, cross price, income, and advertising and explain what these results suggest about the effects of changes in each of these variables on the demand for Maa mustard oil? 9. What will be the impact of a price change by the company on the total revenue of Maa mustard oil. (assuming other variables remain constant)? 10. What is the revenue maximizing price for Maa oil if the competitor's price does not increase in October 2015