Mr. John from ABC Ltd, Tanzania is an exclusive distributor of JJ India Ltd since last 20 years in Tanzania.
JJ India Ltd. is a well-known and established brand in the field of industrial consumables. Mr. John have been doing a decent business with JJ India Ltd, Importing industrial consumables from JJ India Ltd to Tanzania and selling it to his customers. His business with JJ India Ltd have been grown in decent pace, He has introduced various new products from JJ India Ltd to Tanzania market and grown the business successfully.
Mr. John is operating with a decent gross margin of 25% in his market since last few years (Till the year 2015), which is very lucrative to stay into the business.
Tanzanian Currency (TZS) have been devalued against US Dollar (USD) from year 2015 to 2016 by 30 %. (From 1700 TZS per USD in 2015 to 2200 TZS per USD in 2016) . Therefore Mr John’s import prices have gone up.
With higher manufacturing cost JJ India Ltd. was not able to pass on the extra discount to ABC Ltd to make Mr. John stable into the business.