Section B-Group 6: Ingersoll - Rand (India) LTD.: The Air Compressors Business at The Crossroads (A) Background

SECTION B- GROUP 6
ANJALI MAHESHWARI | HELI BHAT | MD. ANISH

PRASHANT MISHRA | RAHUL KABADAGI | SHUBHAM SHIKHA
Ingersoll- Rand (India) Ltd.: The Air Compressors Business at the Crossroads(A)
Background
Ingersoll-Rand, Inc.,USA is a global manufacturer of a wide range of equipment catering to different
industries with a turnover of over US $9 billion. Its equipment have been used in a number of
prestigious projects all around the globe.
The pressure and competition in the market, coupled with the commoditization of the air
compressors has led the Ingersoll-Rand (India) Ltd. (IRL) in a position where inspite of having
better technologies in many of its products, it has been bleeding money to protect its market
share. The current client, Deccan Textiles, is also trying to gain more discount in its sourcing on
account of their organisational goals.
IRL team got together with the Deccan Textile managers to understand their needs better. The
study revealed various operational painpoints apart from the corporate management issues.
IRL can try to address some of these issues, as explained later.
Problems
 Commodification of the Air Compressor and the price war that has imbued
 Growth in the air compressor business is negative in the year 2002. Thus, it is required
to improve profitability in the same business
 Gain and manage the new account as in this case of the Deccan Textiles
 Risk of losing the market share
Suggested Steps
The air compressor business is getting commodified and in the process is resulting in a very low
margin. In this case, the better option for the company would be to go for the “Solution
Provider” way than going for the bargaining and provision of the air compressor only. It can
take care of maintenance for a certain period of time and at the same time, provide the spare
parts that are to be provided. It can also provide expert advices to its client as a part of service.
This approach will help IRL to reposition itself as a thought leader in the market as well as help
IRL in efficient client retention.
IRL should brief the management of Deccan Textiles about the INR 120 lacs of loss made due to
downtime and the underutilization of the additional compressor that they have installed.
SECTION B- GROUP 6
ANJALI MAHESHWARI | HELI BHAT | MD. ANISH
PRASHANT MISHRA | RAHUL KABADAGI | SHUBHAM SHIKHA
IRL also has higher quality products and better technology. This should be promoted moe
aggressively. Moreover, the perception about its higher HP compressors (including the
Centrifuge compressors) is higher than its competitors. Thus, trying to derive a premium is
natural course.
Advantages of using the Solution Provider approach
 Anand and his team should realise that just pushing the air compressor for sales will
only result in the price war. It would be more meaningful to provide the service that
would result in their customers like Deccan Textiles to do better in their businesses. By
becoming a Solution Provider, IRL can provide better customer value proposition. The
sales pitch will change accordingly.
 Deccan Textile should be apprised of the fact that, since air compressor downtime
affects their operation to a great degree and the price war resulting in poor quality of
product, going the Solution way is the right path.
 Providing a supplier managed spare parts inventory at the client location so that the
necessary parts are available at the earliest improving the service levels.
 The deal was putting a huge pressure on bottomline as discussed by VP and Financial
controller, this approach will not only improve the bottom-line and the sales incentives
for hard working sales personnel in IRL but also open future opportunities of business
verticals.
 This increases the switching cost for the buyer. This way, customers, like Deccan
Textiles, would stay longer with.
 It also opportunity for cross-selling of the IRLs other products and their solutions apart
from just industrial productivity to Deccan Textiles.
 It also improves the bargaining power of the supplier. This will reduce the mercenary
policy (as mentioned in the case) of the customers like Deccan Textiles.
 This approach will result in avoidance of price war which is a big concern for IRL
presently.

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SECTION B- GROUP 6

ANJALI MAHESHWARI | HELI BHAT | MD. ANISH

Advantages of using the Solution Provider approach

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