Payments are getting delayed by more than 5 months on the market front. On the manufacturers' front cheap imports are squeezing margins so much that credit is invariably not possible. M Ponnuswamy, MD of Pure Chemicals a major chemical dealer with branches all over the Tamil Nadu, Hyderabad and Mumbai said `` Today the selling price of the chemicals isnot the real price fixed after doing costing - it is a price that is marked out of desperation after seeing imports which do not even meet variable expenses.''

Therefore dealers too are having a tough time. ``For the last 2 years the distributor's business has not been on a sound track and in the last one year, the deterioration is alarming,'' said Ponnuswamy. For banks do not believe in lending money to distributors and the latter in turn have to offer long credit.

Many of the dealers are becoming more professional, more system driven. They are adopting sound management practices. Organisations such as Pure Chemicals which have been run in a professional manner are finding that this is helping them in trying times.

To cite an example, Pure Chemicals has regular employees in its roles, with an efficient marketing outfit who goes to meet the customer at his place and offer his services. The only way to ensure that products move. The quality of service has also gone up. Chemicals are repacked in smallereasy to lift quantities and delivered just when the end user wants it. The end user is no longer interested in keeping inventory these days and is going for `just in time' and would prefer the dealer whose servicing is timely (taking back rejects, providing credit, funding).

If this is not enough Pure chemicals is onto some value added services. It is planning to set up a lab with Clariant India to offer technical services in Tirupur.

The diversification is necessary. For other risks are growing. Normally dealers can buy against what is known as a `C' form for goods coming outside the state. Likewise for purchases within the state the buyer (end user) can avail of a `Form 17' for sales tax concessions. Dealers normally book their sales with the tax concessions against the sales tax discount, whether offered by the centre or state. Woe betide the dealer if the manufacturer closes shop or something happens preventing the forms being filled properly. During income tax assessment the dealer has to pay 150 percent penalty for defaulting in sales tax.