List and critically discuss Ajay's propositions for the presentation with the director. Ajay Sharma was the
Question:
List and critically discuss Ajay's propositions for the presentation with the director.
Ajay Sharma was the South Zone, Sales Engineer with ATP
Consultants, a Bangalore-based company that was in the
business of selling the WATMIZER system, an ultraviolet system
used in centrally air-conditioned environments. Even after a few
months of his joining, he was unable to make a sale. There were
times when the prospects showed interest in the product, but they
either delayed the purchase decision or did not buy at all. He was
worried about his performance, or lack of it, in selling the
WATMIZER system. In fact, he had not achieved a single sale on
his own since joining the company. The only sale he had achieved
was owing to the efforts ofMr. Vijay Singh andMs. Meeta Singh,
the Directors of the company. InMarch 2016, ATP Consultants
convened a meeting to analyze Ajay's performance. During the meeting, he had to explain why he had been unable to achieve his
sales target. Needless to say, Ajay was worried and looking for
options that could help him generate and convert leads into sales.
He wanted to discuss these options with Vijay to seek his support
and approval. He had only one week's time before that meeting
to explore his options and make his presentation for the directors.
The company AEROPURE: manufacturers of the
WATMIZER system
AEROPURE, an Indian company in operation since 2000, was
based in Pune. The company manufactured the WATMIZER
system, which was an ultraviolet system used in centrally airconditioned
environments. They had customers for their product
in the domestic market as well as overseas in countries such as
Africa, Singapore, Malaysia, US and the Middle East. In early
2000, AEROPURE was the only manufacturer of ultraviolet
(UV) lamps in India, which was a major component of the
WATMIZER system. Their manufacturing unit was located in a
four-acre plot in an export zone at Chakan, Pune. In the past,
AEROPURE and their competitors were importing ultraviolet
lamps from Terilair (USA), TUK (Canada) or the UK. These
lamps available in China and India were of inferior grade and
unsuitable for the ultraviolet germicidal irradiation (UVGI)
application required to manufacture the WATMIZER system.
AEROPURE began manufacturing its UV lamps, 80 per cent of
which they exported to the USA. The company had received
several awards including DSK Energy award 2011 for
outstanding contribution to energy saving; the ACREX award;
and the GREEN CERTIFICATION award. Besides, it has also
been awarded the ISO (International Organization for
Standardization) 9001 & 14000 certifications. AEROPURE
manufactured purification systems for effluent water and
drinking water.
ATP consultants was a Bangalore-based company with 10
years of experience in recruitment, training, marketing and sales
consultancy. In 2015, they partnered with AEROPURE Ltd to
sell their WATMIZER system. AEROPURE Ltd had similarly
partneredwith two other companies tomarket its product The WATMIZER system
The WATMIZER system was an ultraviolet system, which was
used in centrally air-conditioned environments (HVAC
Systems - heating, ventilation and air conditioning systems) to
save energy and improve indoor air quality by killing bacteria and
germs. The product worked on a principle similar to that of using
UVlamps in water purifiers to disinfect water and make it safe for
drinking. In enclosed centrally air-conditioned spaces, there were
high chances of bacteria, germs, mold and fungi settling and
growing in the coils and fins of the cooling coil block of the air
handling unit (AHU). WATMIZER was a system of UV lamps
mounted on an aluminum frame and placed within the air
handling units. The UV rays acted on the cooling coil and
destroyed germs, bacteria, mold and fungi, thus keeping it clean.
Besides reducing the level of harmful bacteria and viruses in the
environment, the system also improved energy transfer efficiency
and helped to save power. Air handling units were installed in
centrally air-conditioned premises to remove dust and cool the
used air within the premises. These AHUs sucked out used air
(normally warmer air) from work spaces through the return air ducts, releasing only 10 per cent to the atmosphere and recycling
90 per cent through the air handling units. In the air handling
unit, the air was made to pass through a filter and cooling coil.
The cooling coil was constructed of tubes carrying cold water and
fins to direct the flowing air in a way to maximize contact with the
cooling water tubes. After passing through the cooling coil, the
cooled air was pushed out with the help of a blower and returned
to the work spaces through other air ducts. Refer to Appendix 1
for an air-conditioning system and Appendix 2 for how a typical
air handling unitworks.
UV light is a component of an electromagnetic spectrum,
loosely referred to as light. UV rays are emitted between the
wavelengths of 100 and 400 nM (nanometer). At the
wavelength of 254 nM, UV rays have the unique property of
killing germs, viruses, bacteria and micro-organisms that
constitute harmful mold and fungi. This very valuable property
of the ultraviolet rays at 254 nM was discovered before the
1900s. Refer to Appendix 3 for UV lights and Appendix 4 for
"before" and "after" of cooling in an air handling unit, where
the WATMIZER system had been installed and was operative
for the last three months.
Centrally air-conditioned system
In a centrally air conditioned system, air from the work spaces
was sucked back through "return-air-ducts" and passed
through the air handling units. As the air entered the air
handling unit, larger particles were filtered out by a filter. The
air then passed through the cooling coil where cold water
flowed through the pipes. The air that flowed over these cooling
coils cooled because of heat transfer between the cold water in
the tube and the air outside. The air was then sent back to the
work spaces through a different duct by the action of a blower.
The air, which was recycled (90 per cent), contained microdust
and micro-moisture. This micro-dust and micro-moisture
settled on the pipes and fins of the cooling coil because they
were a few degrees cooler than the ambient air. Viruses,
bacteria, germs, fungi and mold settled on this surface and
formed colonies on this layer of dust. The "dust", which was
actually a mixture ofmicro-dust, micro-moisture and billions of
bacteria, fungi, virus, formed a covering on the fins and tubes in
the cooling coil and reduced the efficiency of heat transfer
between air and the cooling water. As a result, extra power was
consumed to achieve the required level of cooling. These
viruses, bacteria, molds, spores, fungus, etc. settled and grew
exponentially inside the damp and dark areas of the cooling coil
and then spread all over the buildings through the air
conditioning systems, thus making the indoor environment
infectious, unhealthy and unsafe to breathe.[1] This constantly
increased the total bacterial and fungal count.
How the WATMIZER system works
The WATMIZER system was an assembly of an aluminum
frame with reflector profiles across the vertical arms of the
frame, which was fixed to the floor of the air handling unit. UV
lamps were fitted on the reflectors. The WATMIZER system
faced the cooling coil and was about 6 to 8 inches away from it.
The ultraviolet beam, which was directed at the face of the
cooling coil, destroyed the sticky germs, viruses, bacteria, fungi
and mold. Thus, the sticky matter, which bound the dust, moisture and germs, got destroyed and the whole integral mass
collapsed into the drain pan for clearance. In a few weeks, the
entire cooling coil sparkled and became shiny. As a result of this
cleaning, two things happened. The obstruction in the coils and
fins was removed, thereby improving the efficiency of the heat
transfer and resulting in the saving of energy. The virus and
bacteria were destroyed at the deoxyribonucleic acid (DNA)
level, and had no place to settle and grow. Thereby, there was
significant improvement in the indoor air quality (refer to
Appendix 5).
Need for the WATMIZER system
In traditional set-ups, as part of regular maintenance, the
cooling coil blocks were supposed to be cleaned periodically.
The normal interval for cleaning was fixed for every three
months. This cleaning was done using a forced jet of water and
chemicals to dissolve the "dust". This procedure had several
shortcomings. It was a cumbersome process as it required a
shutdown of the system, hence it was usually skipped. The
maintenance team just cleaned the filter and ignored the
cooling coil, as a result got more contaminated. When cleaning
was sporadically attempted, the customary methods of water jet
and chemicals could only clean to some extent from the surface
while most of the coil and fins remained contaminated. Most of
the cooling coils continued to be in a state of sub-optimal
performance. The WATMIZER system was a superior and
effective method for coil cleaning and thus resulted in saving
energy and improving indoor air quality. UVC rays were a
highly effective method of killing germs without the use of any
harsh methods like chemical cleaning or steam injections. The
use of UV rays was a safe, environment-friendly and the most
efficient method for removing mold and bacteria from coils and
the drain pan surface.[2] The system had several benefits. It
eliminated the growth of mold and mildew on cooling coils
resulting in improved heat transfer between the chilled water in
coils and air. It improved air flow through coils and eliminated
further depositions of dust on them. This reduced the amount
of energy consumed in a building by 10-15 per cent and
improved indoor air quality by up to 70 per cent. It prevented
periodic cleaning of coils, thus significantly reducing annual
maintenance costs (AMC) by over 50 per cent and extending
the life of the equipment by 25 per cent. The initial set-up cost
was low with payback as low as 15 months. The system was
compatible with any new and existing heating ventilation and Customer
The typical customers of the WATMIZER system were
hospitals, pharmaceutical manufacturers, hotels and large
companies that had the facility of a centrally air-conditioned
system. Customers were segmented depending on their
concern for environment, health and safety (EHS) and interest
to provide their employees a clean working environment.
Progressive companies and multinationals belonged to this
segment as compared to smaller still-to-evolve companies.
Customers were also segmented based on the time when they
purchased theWATMIZER system, either at the initial stage of
the construction, wherein the WATMIZER system was a part
of the original air handling unit equipment or at a later date,
which was technically referred to as a retrofit.
Buying process
The product was meant for business and commercial setups.
The purchase of the product was perceived to be a complex
decision; hence, several departments of a company were
involved in the decision-making process. A typical decisionmaking
unit (DMU)involved the following departments:
Facilities: This department took care of running of the
buildings including heating, ventilation and air
conditioning systems in which the WATMIZER system
was fitted. This department was either staffed with
company personnel or outsourced to a facilities company
such as Jones Lang Lasalle or Cushman & Wakefield. The
department was mostly managed by engineers who were
responsible for heating, ventilation and air-conditioning
equipment, electricals, etc.
Project: This department was involved in the setting up of
buildings. Once it was set-up, the facilities department
took care of the day-to-day operation and maintenance.
Environment, health and safety: This department,
particularly in large multinationals, ensured a healthy
environment for their employees by providing a pollutionfree
work environment.
Finance: This department was responsible for the viability
of an investment.
Procurement: This department was responsible to audit the
quotations, negotiate and select the vendor based on the
buying decision.
Chief operating officer: The final person responsible for
approving and signing the contract.
Heating, ventilation and air conditioning consultant: In the
project stage when the facility was constructed, a client
would employ a heating, ventilation and air conditioning
consultant firm to design the heating, ventilation and air
conditioning system and recommend the vendors for
different components like chillers, air handling units,
ducting systems, electrical, etc.
Air handling unit manufacturer: Vendor who manufactured
the air handling unit and sold to the client.
Competition
Terilair (USA) and TUK (Canada) were the two companies
that manufactured UV lamps of the required grade. Terilair
had business association with Redman, and TUK with
Tapman for selling UGI systems in India. Redman and
Tapman had stopped promoting UGI systems as they had
broken off their relations with the supplier companies. The
reason was that Redman and Tapman were huge companies
with multiple divisions and they found the potential of UGI
system too small to justify their efforts or return. Dustman, a
big player in water purification till now was not very much
interested in the use of UV lamps for air purification though
they did supply a WATMIZER-equivalent system imported
from a British manufacturer of UV lamps to few customers.
Refer to Appendix 6 for price of the system and that of the
competitors system that was imported. By 2016, there were no companies in India aggressively selling an UGI system for
heating, ventilation and air conditioning systems. Until now,
Dustman was not interested; however, seeing the future
business potential, it changed its perspective and became a
competitor to AEROPURE.
Client's satisfaction to date
Till date, client satisfaction has been impressive. For Sonora
Software, for instance, the payback was 11 months and indoor
air quality improvement over 90 per cent. For Shalaka
Constructions, the payback was 15 months and indoor air
quality improvement 83 per cent. Absenteeism at PELL
Systems dropped by 50 per cent. Savings were accrued through
reduced downtime during maintenance and reduced annual
maintenance costs as the cooling coil did not require any
cleaning. ATP Consultants conducted proof of concept (PoC)
tests in many companies to establish the evidence of savings
and improvement in indoor air quality between 11 and 29 per
cent. The drop in total bacterial count and fungal count was in
excess of 70 per cent and more than 50 per cent, respectively. In
most places, the payback on investment was around 15 to 24
months. Refer to Appendix 7 for PoC test, and Appendices 8, 9
and 10.
Ajay Sharma, the sales person
Ajay was an engineer and had previous experience of working in
a company, which dealt with the assembling and selling of air
handling units. Earlier, he had worked for five years in another
company that sold air conditioning systems. ATP Consultants
had found him suitable for their job profile and appointed him
with a salary package 25 per cent higher than his
contemporaries in the market. Ajay joined ATP Consultants in
April 2015. He reported to Business Development Director,
Sharmishta Dey. His job responsibilities included identifying
prospects, developing business presentations, managing
objections and closing sales. He went through an intense
product and sales training for theWATMIZER business.
Dilemma
The client's officials of facilities and the finance departments
were excited by the WATMIZER system; yet, they were
reluctant to make an investment in those cases, where the PoC
had demonstrated energy savings and indoor air quality
improvement. In March 2016, Mr. Vijay, Director, ATP
Consultants, convened a meeting to analyze Ajay's sales
performance. He was asked to explain the reason for not being
able to achieve his sales target. Ajay wanted to explore a few
options that would help him generate demands and convert
sales. He wanted to discuss those options with Vijay to seek his
support and approval. Ajay was left with only one week's time
formaking his presentation before the directors of ATP.
First, ATP consultants focused on retrofit prospects because
it seemed easier to prove energy savings and improvement of
indoor air quality through PoC tests. Some customers, who
were progressive and able to afford the system, allotted certain
amount of their capital expenditure for such novel technology.
Others, who were strapped for capital expenditure (CAPEX),
preferred the leasing option. Hence Ajay felt the need to
identify and approach the right prospects to develop a thorough
understanding on customer management to achieve both
customer acquisition and retention.
Second, few prospective clients wanted a PoC test that was a
pilot execution of the system to prove energy saving and indoor
air quality improvement at their own premises. This was
because they were unwilling to rely on testimonies of other
customers. While few customers were ready to invest in the
PoC test but were reluctant to make the CAPEX investment
required for the test. Ajay felt the need to assess the value worth
of the client and came up with options like arrange for a PoC
demo at the clients' premises at a 50 per cent discount or a free
demonstration offer based on the agreement of some assured
sales order from the clients or facilitate visits of interested
clients to the company, in which the PoC test demo was to be
carried out. Alternatively, he proposed the use of a digital
platform as a cost-effective method to project the value
proposition of products/services to clients.
Third, each member of the decision-making unit had their
own unique needs and concerns. Hence, the sales pitch had to,
accordingly, address and convince each member by offering
unique selling proposition (USP).
Ajay was sure that Vijay would be convinced of the abovestated
options to help generate demand for sales conversion.
Corporate Finance Principles and Practice
ISBN: 978-1292103037
7th edition
Authors: Denzil Watson, Antony Head