Case study · Investigations
Targets Met, Stock Unsold
A consumer goods company's regional sales team hit quarterly targets by pushing stock into distributors and booking secondary sales to retailers that did not exist.
- Distributor & channel abuse
- Fake sales & channel stuffing
- Sales, pricing & channel fraud
- Financial statement manipulation
- sales booked ahead of demand
- ₹25–35 Crsales booked ahead of demand
- scheme claims disallowed
- ₹2–3 Crscheme claims disallowed
- quarters reviewed
- 6quarters reviewed
- secondary sales basis for incentives
- Verifiedsecondary sales basis for incentives
01The situation
The quarter closed on target. The next quarter opened with returns.
A consumer goods company's eastern region consistently met targets, but returns, expiries and scheme claims rose after each quarter-end, and market share data did not support the reported growth.
How it came to us
Returns and scheme claims spiked in one region after every quarter-end, while retail offtake stayed flat.
02How it worked
- 01At quarter-end, the regional team pushed stock into distributors beyond their sell-through, on extended credit.
- 02Secondary sales were recorded against retailer IDs created in the distributor system, many of them inactive or fictitious.
- 03Trade scheme claims were raised on those fictitious secondary sales.
- 04Stock came back as returns or was dumped at discounts in other territories the following quarter.
- 05Sales incentives were paid on the inflated numbers.
Swipe sideways to see the whole diagram.
- Insiders involved
- Outside parties
- Channels & documents
- Where the money ended up
- The organisation
- Repeats / feeds back
How it was hidden
Retailer IDs that looked normal, returns spread across reasons such as damage and expiry, and distributors kept compliant through extra credit and schemes.
03The challenge
Distinguish aggressive selling from fabricated sales, quantify the effect on reported revenue and incentives, and identify who directed it.
What made it hard
- Large distributor network
- Data across company and distributor systems
- Distributors with mixed incentives
- Effect on reported revenue and incentives
Red flags that were there to see
- Quarter-end spikes followed by returns
- Retailer IDs with no repeat orders
- Scheme claims rising faster than offtake
- Stock appearing in other territories
04Our approach
- Workstream 01
Primary and secondary sales analytics
Sell-in against sell-through by distributor and month.
- Workstream 02
Retailer verification
Independent field checks on a sample of retailer IDs.
- Workstream 03
Scheme claims review
Claims tested against verified sales.
- Workstream 04
Distributor interviews
Structured conversations under confidentiality.
The breakthrough
Field checks found that a large share of retailers behind quarter-end secondary sales could not be located or had never bought, and the pattern traced back to instructions from regional management.
05What we found & did
- Quarter-end channel stuffing beyond distributor sell-through.
- Fictitious retailer sales and scheme claims.
- Incentives paid on inflated sales.
- The practice was directed by regional leadership.
- Distributors were not acting alone.
- Month 1
- 100
- Month 2
- 105
- Month 3
- 190
- Next month
- 60
Illustrative
06The impact
The company corrected its revenue recognition for the affected quarters, recovered incentives, acted against the regional leadership and moved incentives to verified secondary sales.
- sales booked ahead of demand
- ₹25–35 Crsales booked ahead of demand
- scheme claims disallowed
- ₹2–3 Crscheme claims disallowed
- quarters reviewed
- 6quarters reviewed
- secondary sales basis for incentives
- Verifiedsecondary sales basis for incentives
07Lessons for your business
The controls that would have stopped this, or caught it sooner:
- Pay incentives on verified sell-through, not sell-in.
- Monitor quarter-end spikes and next-quarter returns.
- Validate retailer IDs in distributor systems.
- Audit scheme claims against independent sales data.
~₹5 Crundue benefit quantified
The CEO's Three Vendors
A subsidiary CEO routed a rural retail rollout through vendors fronted by his own associates. The money trail led back to him.
- Procurement reconstruction
- Corporate and statutory records
- Ground intelligence
- Funds-flow tracing
US$4.7M+diversion traced to the founder
Zero Skin in the Game
An investor funded a road-construction contractor. Within months, the founder's own contribution had quietly gone to zero and the diversion had begun.
- Records digitisation
- Funds-flow reconstruction
- Personal wealth analysis
- Corporate and property records
~1Memails and documents reviewed
The Fortune That Wasn't There
Shareholders suspected their managing director of hiding a fortune. On the data available, the money trail did not support that suspicion, and it surfaced employee frauds instead.
- Digital forensics
- Source and application of funds
- Related-party mapping
- Market intelligence
Client names and identifying details are withheld to protect confidentiality. Specific references and client experiences can be shared on request, with the client’s consent.
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