Academic journal article Journal of the International Academy for Case Studies

Panacea Specialty Chemicals: Why the New Corrosion Inhibitor Is Corroding Us?

Academic journal article Journal of the International Academy for Case Studies

Panacea Specialty Chemicals: Why the New Corrosion Inhibitor Is Corroding Us?

Article excerpt

Having worked ceaselessly for last 14 hours, Sandarbh Sharma looked up from his laptop and gave a weary sigh. As the recently appointed Head for Small Operations and Retail Clients, he was responsible for marketing the new corrosion inhibitor (Coroguard-101) for use in MSMEs and Institutional Clients in defined niche sectors. Panacea Specialty Chemicals launched Corrosion Inhibitor for the market in 2014 with great expectations and believed it as superior product with unmatchable advantages with other competitors having the same product in the market, but the results so far was discouraging. Sandarbh knew that he would be very busy trying to improve the disappointing performance and also proving his worthiness for the first assignment as his first job recently graduating from premier business school. The importance of this concern was highlighted by the constant stream of calls, meetings and email that he had been attending since he joined the company two months back. The urgency and critical nature of problem was summarized by a recent email from his boss, Pradeep Pathak, Country head for water treatment division of Panacea Specialty Chemicals.

From:      Pradeep Pathak
To:        Sandarbh Sharma
Subject:   2015 Performance
Send:      Tue, Apr 28, 2015 at 1:19 PM

I have looked at the sales report for 2015 and I was very concerned. We have been pioneer in water treatment chemical markets for more than last two decades. Our Corochem-101 corrosion inhibitor has been a successful product among big water treatment plants for Oil and Gas, Power etc. and generated INR 37 Crores revenue for the company in 2015 with almost reaching the expectation of 7% growth in year 2014. As very small amount of Corochem-101 was required for treatment; it becomes unsuitable for smaller scale application in small water treatment plants conditions of for Small Operations and Retail Clients. Thus, In order to gain momentum in this segment across small and niche market we re-engineered our existing product (Corochem-101) to suit with the need of Small Operations & Retail Clients and Coroguard-101 was an outcome of this vision.

Volume target for Coroguard-101 was 1.2 lakh liters (60,000 units) for the first year of sales. However through the first year of selling for water treatment chemicals, our company managed to sell just 8400 liters (4200 Units). Against the expected revenue of INR 900 lakh the new product was just able to reap INR 66.6 lakh.

I realize that you inherited a bit of mess, but it is critical that you get your arms around this situation and fix this with some sustainable solution.We appear to be digging our self deeper into bad situation with every passing quarter. Please have a proposal till next week on recommendations on how we could turn the situation around.

NOTE: 1 Lakh INR = 1491.54 USD (Assuming 1 INR = 0.015 USD)

When Sandarbh was in business school, he had solved hundreds of problem cases, as part of curriculum. Now Sandarbh knows that he has to apply the concepts and techniques he has learned to real business challenge in hand.

Company Background

Panacea Specialty Chemicals having been established in the year 1983, has been one of the prominent organizations engaged in formulating and supplying a wide assortment of Water Treatment, Surface Treatment and Oil Field Chemicals. Panacea Specialty Chemicals brand was very well known to the very small niche of specialty chemical Industry. Company has small but growing number of Global clients. In year 2015, the Panacea Chemicals product line included over 200 products and company revenues were INR 270 crores (Exhibit 01).

Extensive marketing function was historically unappreciated at company, as most of the big orders were based on personal relationship or tender process. The company concentrated on B2B sales and placed little awareness on creating consumer segment awareness for the product. …

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