Subhag MDA v7.0 — Complete Scenario Flowcharts

Subhag MDA v7.0 — Scenario Flowcharts

Visual guide to every key process in the Master Distribution Agreement

1. Distributor Onboarding Journey
From first contact to territory assignment Annexure III
New Distributor expresses interest in a Territory
Pays Rs. 50,000 non-refundable booking amount
Territory RESERVED for 15 days only
Not assigned — just held. Clock starts ticking.
Does distributor pay first instalment within 15 days?
YES
NO
MoU signed
Territory formally assigned
Probation begins
Rs. 50K adjusted against payment
Rs. 50,000 FORFEITED
Territory released
Subhag free to appoint another
No notice needed — automatic
Contract value?
Up to Rs. 5L100% at signing
No cheques needed
Rs. 5-10L50-70% at signing
+ PDC for balance
(max 3 months)
Rs. 10-20L30-50% at signing
+ PDC for balance
(max 6 months)
Product supply begins after: MoU signed + first payment received + cheques deposited
2. Payment Structure — Who Pays What
Complete money flow across all channels Annexure I, II, III
FromToWhatAmount / Rate
DistributorSubhagContract value (onboarding)Rs. 5-20 Lakh (as per contract)
DistributorSubhagRestock orders70% advance + 30% within 3 days of delivery
AffiliateSubhagDirect product purchaseAs per Affiliate agreement with Subhag
Doctor / ClinicDistributor or AffiliateProduct purchaseAt or above MSP (set by Subhag)
SubhagDistributorMargin on own sales30% on MSP
SubhagAffiliateMargin on affiliate sales15% (up to 5 units) / 20% (5+ units)
SubhagDistributorOverride on affiliate sales in territory7% (barter or cash, Subhag's discretion)
Key Rule:
All contracts are INDEPENDENT and directly with Subhag. Distributor does not pay Affiliate. Affiliate does not pay Distributor. Subhag is the central hub for all money flows.
3. Probation Period — What Distributor Can and Cannot Do
6 months OR full contract paid — whichever is LATER Clause 1.2
MoU Signed — Probation Begins
PROBATION = 6 months OR full contract value paid
whichever is LATER
CANNOT do during Probation: Remove affiliates
Modify affiliate arrangements
Make territory decisions
Interfere with affiliate's doctors
Demand changes to channel strategy
CAN do during Probation: Sell products in territory
Build doctor relationships
Earn 7% override on affiliate sales
Submit sales reports
Work cooperatively with affiliates
Has 6 months passed AND full contract paid?
YES — both conditions met
NO — either still pending
PROBATION ENDS
Distributor gains authority
Can now request affiliate removal
(subject to process in Annexure II)
PROBATION CONTINUES
Subhag retains all control
Distributor must keep performing
Example Scenarios:
Scenario A: Rs. 5L contract, paid in full at signing → Probation ends at 6 months
Scenario B: Rs. 20L contract, paid over 6 months (last cheque clears month 6) → Probation ends at 6 months
Scenario C: Rs. 20L contract, scheduled over 6 months but last cheque bounces in month 5, repaid in month 8 → Probation extends to month 8
4. Affiliate-Distributor Territory Scenarios
What happens when both exist in the same territory Annexure II — Sections A, C
Scenario 1: Affiliate is ALREADY in territory, then Distributor joins
Affiliate already serving doctors in Territory X
New Distributor signs MoU for Territory X
Subhag facilitates a Common Understanding document
Signed by both Distributor and Affiliate — Subhag decides terms
During Probation: Distributor CANNOT remove Affiliate
Both work in same territory | Both sell at MSP | Distributor earns 7% override on Affiliate sales
After Probation: Distributor has earned authority → can request Affiliate removal (see Tab 6)
Scenario 2: Distributor is ALREADY in territory, Subhag appoints Affiliate
Distributor already serving Territory X
Subhag decides to appoint Affiliate in same Territory
Subhag has sole discretion to appoint affiliates at any time (Annexure II, E.2)
Distributor earns 7% override on Affiliate's sales
Incentive to cooperate, not resist
Common Understanding signed — Subhag facilitates and decides terms
5. Price Conflict — Same Doctor, Different Prices
The most dangerous scenario for the brand Annexure II — Section B, Clause 2.4
Doctor receives DIFFERENT prices from Distributor and Affiliate
Who deviated from MSP?
Distributor
Affiliate
Both
Subhag INVESTIGATES and DECIDES penalty
Subhag is judge — not mediator
Penalty Options (at Subhag's sole discretion):
Level 1
Written Warning
Level 2
Financial Penalty
Level 3
Supply Suspended
Level 4
Agreement Terminated
The Golden Rule:
ALL pricing is set by Subhag (MSP). Neither Distributor nor Affiliate can go below MSP. Price undercutting = material breach of contract. The doctor must always see ONE price regardless of who approaches them.
6. Affiliate Removal — The 3-Step Mandatory Process
Only available AFTER probation ends Annexure II — Section D
Is Probation Period over?
(6 months passed AND full contract paid)
NO
YES
CANNOT remove Affiliate
All decisions rest with Subhag
Distributor may REQUEST removal
Subject to 3-step process below
Step 1 — Doctor Acknowledgment Required
Distributor provides Subhag a written acknowledgment listing ALL doctors/clinics currently being served by the Affiliate. This proves the Distributor knows what relationships they're taking over.
Step 2 — Transition Period (90 Days) Mandatory
For 90 days, Affiliate and Distributor share profits on all recurring orders from Affiliate-appointed doctors. Profit-sharing ratio is decided by Subhag. This protects the Affiliate's existing revenue and ensures a smooth handover.
Step 3 — Removal Final
Only after 90-day transition is complete: (a) 30 days' written notice to Affiliate; (b) written approval from Subhag; (c) confirmation that all doctor relationships have been successfully transitioned. If Distributor fails to service those doctors afterward, Subhag can reappoint the Affiliate.
Total timeline from request to removal: ~120 days minimum
90 days transition + 30 days notice = Affiliate has at least 4 months of protected revenue before removal takes effect.
7. B2C Discount Campaign — How It Flows
When Subhag runs seasonal/festival discounts Clause 7.13
Subhag announces X% seasonal/festival discount
Full discretion on timing, %, duration | 7 days advance notice
Doctor / Clinic
Gets X% off MRP
e.g. Androwash at Rs. 99,000 instead of Rs. 1,10,000
Distributor & Affiliate
Get SAME X% off on restock orders
e.g. restock at discounted transfer price
MANDATORY: Distributor and Affiliate MUST pass full discount to doctors
Cannot keep old MRP while buying at discounted restock price
Does Distributor/Affiliate pass through the discount?
YES
NO — pockets the difference
All good
Doctors happy, brand protected
Volume goes up for everyone
PRICE MANIPULATION
Material breach of contract
Same penalties as price undercutting
(See Tab 5)
Normal PeriodDuring 10% Discount
MRP to DoctorRs. 1,10,000Rs. 99,000
Distributor margin (30%)Rs. 33,000/unitRs. 29,700/unit
Distributor restock priceRs. 77,000Rs. 69,300
Net impact—Lower per-unit margin BUT higher volume opportunity
8. Payment Default — Escalation Ladder
What happens when the distributor doesn't pay Clause 2.6, 2.7, Annexure III — Section C
Day 0 — Payment Due Date
Payment is due as per agreed schedule (signing instalment, post-dated cheque date, or restock terms).
Day 7 — Reminder + Interest Starts Warning
Automatic reminder notice sent. Interest begins accruing at 1.5% per month (18% per annum) on outstanding amount.
Day 15 — Supply Freeze Escalation
All further product supply is SUSPENDED. Written warning issued. Distributor cannot place new orders until all dues are cleared.
Day 30 — Termination Right Critical
Subhag may terminate the Agreement immediately. All outstanding amounts become due. Territory freed for reassignment. All amounts already paid are NON-REFUNDABLE. Subhag can appoint affiliates or replacement distributor.
Special Case: Post-Dated Cheque Bounces
Cheque dishonoured / bounced
Subhag issues legal notice under Section 138, NI Act within 30 days
This is a CRIMINAL offence, not just a civil matter
Does Distributor pay within 15 days of notice?
YES
NO
Matter resolved
Probation reinstated
Supply may resume
Criminal complaint filed
Agreement terminated
Territory reassigned
The Vijay Gupta Prevention:
Under this system, Vijay Gupta's Rs. 50,000 would have been auto-forfeited after 15 days. No chasing. No territory lockup. The contract does the enforcement, not Subhag's sales team.
9. Dispute Resolution — 2-Step Process
Mediation first, then Arbitration Clause 7.3
Dispute arises between Subhag and Distributor
STEP 1 — MEDIATION
Single mediator, mutually agreed | Raipur, English
Must complete within 30 days | If no mediator agreed in 7 days → skip to Step 2
Settled in mediation?
YES
NO (within 30 days)
Settlement Agreement signed
Fast, cheap (Rs. 10K-50K)
STEP 2 — ARBITRATION
Arbitration ParameterWhat the MoU Says
ArbitratorSole arbitrator, mutually appointed. If no agreement in 15 days → Principal Civil Judge, Raipur appoints.
Seat & VenueRaipur, Chhattisgarh (home turf for Subhag)
LanguageEnglish
TimelineAward within 12 months. No extension beyond 18 months without mutual consent.
FeesFourth Schedule of A&C Act (Rs. 45K-97K for Rs. 5-20L disputes)
Who pays?LOSER pays all costs — arbitrator fees + legal fees of winner
Interim reliefEither party can approach court under Section 9 for urgent injunctions
ConfidentialityProceedings and award are strictly confidential
Why this favours Subhag:
Raipur as seat = home advantage. Loser-pays-all = discourages frivolous claims. For a Rs. 5-20L dispute, the cost of arbitration (Rs. 2-5L) is a significant chunk of what the distributor stands to gain, but a routine cost for Subhag across many distributor relationships.
10. Termination Scenarios — Who Can Terminate and When
All the ways the agreement can end Clause 6.1, 6.2, 6.3
Normal Termination (Either Party)
Either party gives 45 days' written notice → Agreement ends
Immediate Termination by Subhag (7 Grounds)
#GroundClause
1Minimum Purchase Target missed for 2 consecutive quarters1.9
2Non-compete breach (distributor deals in competing products)3.1.7
3Brand disrepute caused by distributor's actions6.1(c)
4Sales reports not submitted for 2 consecutive months3.1.8
5Selling below MSP (price undercutting)2.4
6Payment default exceeding 30 days2.7
7Poor performance during Probation (Subhag's judgment)1.2
What Happens After Termination
Immediately
Distributor pays all outstanding invoices. Returns all confidential information. Non-compete kicks in (12 months).
60-Day Sell-Off Window
Distributor can sell remaining inventory at MSP or above. Must continue following all pricing rules.
After 60 Days
ALL use of Subhag trademarks, marketing materials, brand identity must STOP. Unsold stock may be bought back by Subhag at 70% of transfer price (Subhag's discretion). Territory fully open for reassignment.