Things seemed hunky dory when MNC Ecolab tied up with the industrial sales channel of a successful Indian company. But this "marriage made in heaven" soured within 2 years. Why the successful sales force - selling existing products to the in-house laundries in 5 Star Hotels - could not sell this world class products to the same customers?

1. Prof S K Palekar wrote this case for academic discussions and limited circulation only / July 2014
Ecolab Laundry Chemicals Case
On a sunny morning of May 2004, Peter Selvaraj , the Manager of the industrial sales division
of Archimedes Ventures Limited (AVL), did not know how to react to the e mail he had just
received from his Managing Director. The forwarded e mail came from Ecolab - the new
technology, training and supply partner of AVL - and was written by Timothy Edberg of who
was in charge of the Asia Pacific region of the company. He had written;
“ Ecolab is extremely concerned that AVL has been missing the sales targets by a wide
margin ever since our partnership came into effect 2 years ago. These targets were jointly
agreed and we do not understand why we continue to be far from them. Impressed with
your customer relationships, your sales force and the potential of India, we expanded our
supply chain capacities in the area of manufacturing, storage and shipment at both the
ports feeding India : Singapore and Dubai. Internally I get questioned in every monthly
meeting about these unutilized capacities. Unless we quickly see some light at the end of
the tunnel, I am afraid we will need to terminate our existing arrangement and look for a
new partner or probably set up our own operation in India.”
The same Timothy Edberg was in a different mood in 2002. AVL had become an exclusive
national distributor of Ecolab and for the territory of India and was very enthusiastic when the
distributorship arrangement was signed in 2002. Giving a guest interview to the Economic Times
of India in 2002 he had exulted;
“This is a marriage made in heaven. Ecolab is a technology giant based in Frankfurt
focused on the growing areas of providing products and services in the categories of water,
hygiene and energy. Ecolab helps itsB2B customers become more sustainable by helping
them keep their environments clean, safe and energy-efficient. Industries like foodservice,
food processing, hospitality, healthcare, industrial, and oil and gas form a major part of the
global sales of Ecolab. We have been thinking of entering a major country like India for
some time and looking for a partner who already knows the customers and is used to
customized solutions consisting of equipment and services.”
“Finally, when we found Archimedes Ventures Limited, we were absolutely delighted.
There was a synergy between us and them from top to bottom. Their vision statement is
“Creating a happy, healthy, safe and pollution free world for our customers through
creating long lasting relationships”. They were selling water purification equipment and

2. Prof S K Palekar wrote this case for academic discussions and limited circulation only / July 2014
surface cleaning equipment to both B2C and B2B markets. We were immediately attracted
to their industrial division business which sold these products and services to various
factories, offices, hotels, hospitals and other workplaces. They have supplied to around 2500
B2B customers over a period of the last 15 years of the existence of the division.”
“Our global experience in technology and AVL’s local experience of dealing with all these
customers will enable us to reach the potential market quickly. And AVL should be happy
that they have tied up with a major technology partner. Their customers will never be
found wanting products to fulfill even highly specialized needs.”
Peter Selvaraj made a plan to enter the Indian market . He decided to enter with a specific
product line aimed at a specific customer segment. He decided to enter with detergents and other
chemicals to the hotels which operated their own commercial laundries. He explained his
rationale for the plan as follows.
“All the 5 Star hotel laundries are having a tough problem. The quality of cleanliness,
softness and aroma of the linen for the hotel use- as well as of guest clothes - needs to be
very high. They cannot give the laundry out to dhobis since their quality of work is visibly
shoddy. But when they do the laundry in house, they seem to waste a lot of expensive real
estate for machinery and storage areas. The water consumption is also high for which they
have to get expensive tanker water. The wash water has a lot of unrecovered detergent
which needs to be put through an affluent treatment plant. And of course the cost of
electricity is high for 5 star hotels. When domestic users pay Rs 12 per unit, they pay Rs
20.”
“ Ecolab has a terrific solution. Their high technology combines cleaning with softness, its
machines requirs less machine footprint, less water, less cycle time and the wash water is
environmental friendly and can be released in the municipal drains with virtually no
effluent treatment. Lastly, my team that services the hotels for our other products (like
water purifiers and cleaning equipment) has strong relationships with all the 5 star hotels.
I think we have selected the right product and my plan is foolproof.”
By 2004 the circumstances had changed (as mentioned at the beginning of the case) and the plan
seemed to be full of holes. Although the Ecolab products had many plus points and was really

3. Prof S K Palekar wrote this case for academic discussions and limited circulation only / July 2014
good, it was found to be too expensive by the purchase departments of the hotels. When AVL
sales force called, they found that the purchase departments were given a budget of Rs 40 / kg
for buying detergents and there were many willing suppliers to supply at this price or even below
it. Ecolab’s product was priced three times higher at Rs 130/ kg. AVL could not give a discount
of more than Rs 20 / kg which was obviously insufficient.
As a result of this, the sales force could not achieve any breakthrough in the market in the first 6
months. After that the confidence and interest of the sales force waned in Ecolab product and
everyone went back to achieving their targets through the products which they were used to
selling : water purifiers and the cleaning equipment. The product manager who used to report to
Peter Selvaraj and handled the Ecolab business got demotivated and left the organization. In
short, the burden of achieving the sales targets of Ecolab fell on Peter and, as a the manager of
the overall business, he found himself unable to find time to give attention to the Ecolab
business.
Peter himself was now in a bind : he did not really know how to get out of the current negative
situation and how to show the “light at the end of the dark tunnel” quickly. The realization sank
on him that most probably Ecolab will take away the business and loss of the principal will
remain a black mark on his carn eer and reputation within the company and even outside.
Is there anything that can be done now ?
Was there something that should have been done earlier?
Note : Some information about both the companies is attached. .

4. Prof S K Palekar wrote this case for academic discussions and limited circulation only / July 2014
Information about Ecolab ( More on www.ecolab.com)
Ecolab is a 90 year old high technology company. It began the business by providing technology,
equipment and services to arrest the spread of infections in the following industries : foodservice,
food processing, hospitality, healthcare, industrial workplaces, and oil and gas installations.
Today it is a global company, operates in the areas of water, hygiene, energy and services, and
helps customer companies become more sustainable by helping them keep their environments
clean, safe and energy-efficient. It has brands like Ecosure, Ecolab, Kay, Nalco etc.
Its major businesses are (1) water conservation, reusing and recycling (2) Innovative ways of
storing, making and serving food so that it does not go bad and wasted (3) To help spend less
energy and yet achieve what they want to (4) create healthy environments by protecting the
places where people eat, sleep, work, play and heal.
Its wide range includes 13 solution areas
1. Customized and comprehensive onsite safety evaluations and training
2. Repair and maintenance of commercial kitchen equipment and appliances
3. Safety and quality solutions for food processors, dairies, pharma and Cosmetics.
4. Help in handling, processing and storing food
5. Healthcare solutions from acute care to emergency rooms
6. Products and programs for restaurants, hotels, schools, office buildings and facilities.
7. Food safety and sanitation requirements of Food Retail (supermarket and grocery) markets.
8. Water Processing Division helps reduce energy, water and natural resource consumption
9. Enhancing air quality
10. Minimize environmental releases
11. Energy division provides chemistry for upstream, midstream and downstream oil and gas
12. Pest Elimination
13. Textile Care
In the area of textile care and laundry its range includes
1. For commercial laundries in healthcare, hospitality, food and beverage linen and industrial
markets. Ecolab provides one-on-one personal service, expert advice and top-rated products
to help you get the best operational results.
2. In fact Ecolab has reinvented the way commercial laundries are managed and its promise is
to deliver unmatched personal service & consulting, continuous improvement to optimize
total plant performance, and superior cleaning solutions through innovative data-driven
cleaning technology for Food and Beverage Laundry, Healthcare Laundry, Hospitality
Laundry and Industrial Laundry

5. Prof S K Palekar wrote this case for academic discussions and limited circulation only / July 2014
Information about Archimedes Ventures Limited
AVL was floated in 1982 as a consumer product company selling water purifiers and vacuum
cleaners door to door under AquaGuard and EuroClean brand names. As its products got
accepted and people began using them at their homes, they started telling their office
administrators to provide the same level of water safety and hygiene even in their office. That is
how the demand began trickling in for “heavy duty” water purifiers and vacuum cleaners.
industrial products
To cater to this demand from factories, offices and workplaces, the company set up a separate
division in 1996 which focused on the needs of this segment, developing suitable products for
this segment and marketing and selling the products to such customers.
By 1998 the company realized it is not worth developing products for the industrial market
because the range required is wide but the volume per SKU (stock keeping unit) is very low. For
example, some “ride on machines” for factory cleaning sold only about 10 units in the whole
year. Therefore the company decided in 1998 to not invest in product development but to tie up
with foreign technology partners like Nilfisk of Denmark and Ecolab of Germany to import their
products and sell as their distributors but the company demanded exclusivity for the territory of
India. In return for the exclusivity the company had to also take the responsibility of accepting a
certain minimum sales revenue it would generate.
In 2004 the company was a Rs 400 Crore company. The consumer division sold 330 Crores and
the industrial division sold about Rs 70 Crores. The industrial division has a range of nearly 120
SKUs and a sales force of about 90 sales executives. The division sold directly to the customers
and there were no distributors or retailers involved in its operation.