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IBS Center for Management Research

Eureka Forbes: Responding to Changing Market Dynamics

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This case was written by Hadiya Faheem, under the direction of G V Muralidhara, IBS Hyderabad.
It was compiled from published sources, and is intended to be used as a basis for class discussion
rather than to illustrate either effective or ineffective handling of a management situation.

2015, IBS Center for Management Research. All rights reserved.

To order copies, call +91 9640901313 or write to IBS Center for Management Research (ICMR), IFHE Campus, Donthanapally,
Sankarapally Road, Hyderabad 501 203, Telangana, India or email: casehelpdesk@ibsindia.org

www.icmrindia.org

BSTR/467

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Eureka Forbes: Responding to Changing

Market Dynamics

In recent years, while the market has grown enormously, intense competition has
significantly impacted the lead and advantage that Eureka Forbes had. Both new
business as well as repeat revenues from existing customers have been hit.1
Devangshu Dutta, CEO, Third Eyesight, in September 2014.

INTRODUCTION

In June 2014, consumer durable company, Eureka Forbes Limited (Eureka Forbes), reported that
for the financial year (FY) ended 2013, it had a 36 percent market share in the Reverse Osmosis2
(RO) water purifier segment. The company was facing stiff competition in the rapidly growing RO
segment from Kent RO systems, which had cornered a 30 percent market share.3

CO

PY

Eureka Forbes had been the market leader in the water purifiers segment ever since it launched its
Aquaguard range of water purifiers in 1984. Over the years, the company had launched several
products in the water purifier segment. For the fiscal year ended 2012-2013, the water purifier
business accounted for 50 percent of the companys revenues. During the same period, the
company was a market leader in the ultraviolet (UV) purifier market with a 70 percent market
share. However, competitors such as Kent RO were eating into its market share by underlining
their RO water purification technology. In addition to this, Eureka Forbes was also facing
competition from other emerging players such as HUL, Nasaka, and Ion Exchange.

Some industry experts opined that Kents success in the RO market was attributable to its
aggressive advertising. The publicity had helped the company rise from obscurity to become the
second largest water purifier company in India, and to transform itself from a Rs. 0.25 billion
company in 2005 to an industrial giant worth Rs. 6 billion in 2014.4,5

Industry experts stated that Eureka Forbes was losing its market share to Kent since it was slow in
responding to changing industry dynamics. On the other hand, its competitors were launching
several products to cater to the different needs of consumers in the water purifier market.

Some industry analysts opined that the companys reliance on direct sales was also not working in
its favour. They felt that cold calling as a marketing strategy was not effective with the emergence
of gated communities. The company also did not focus much on generating sales through retailing
channels, while Kent and HULs water purification products were more visible on retail counters.
Commenting on this, Suresh Goklaney (Goklaney), executive vice chairman, Eureka Forbes, said,
We believe that direct sales is our core and we would persist with the strategy.6
1
2
3
4
5
6

Arpita Mukherjee, In Still Waters, http://businesstoday.intoday.in, September 28, 2014.

Reverse osmosis is a purification technology that removes salt and effluent materials from water.
Shabana Hussain, Can Kent RO Win the Water War? http://forbesindia.com, June 4, 2014.
Shabana Hussain, Can Kent RO Win the Water War? http://forbesindia.com, June 4, 2014.
As of November 17, 2014, 1US$ = Rs. 61.7.
Arpita Mukherjee, In Still Waters, http://businesstoday.intoday.in, September 28, 2014.
1

Eureka Forbes: Responding to Changing Market Dynamics

While it continued with its direct selling model, the changing industry dynamics forced Eureka
Forbes to look for new ways to reach its customers. It finally decided to make its presence felt by
launching more retail stores while also digitizing its sales model in a bid to increase its sales and
retain its market leadership in the water purifier market in India.

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Going forward, the company had plans to launch more innovative products in the water purifier
segment and to enter new segments such as air purifiers and fire extinguishers. It also planned to
scale up its business by entering international markets.

BACKGROUND NOTE

The history of Eureka Forbes dated back to 1909, when a Detroit-Michigan-based businessman,
Fred Wardell, launched vacuum cleaners under the Eureka brand name. The companys vacuum
cleaners were sleek, versatile, and lightweight compared to other vacuum cleaners of that time that
were clumsy and difficult to use.

In 1945, the company moved its headquarters from Detroit to Bloomington, Illinois. In the same
year, Eureka merged with Williams Oil-O-Matic Heating Company, a heating and air-conditioning
equipment manufacturer. The merged entity was called Eureka-Williams. Eureka also diversified
into other businesses such as defence equipment and the manufacture of oil burners.

PY

In 1960, the company entered into a merger with National Union Electric, an electronic goods
manufacturer. However, it did not run these businesses for long and soon started focusing only on
its core vacuum cleaner and other home appliances business.
In 1974, Electrolux AB7 (Electrolux) bought Eureka-Williams and the name was changed back to
Eureka. Electrolux expanded Eurekas manufacturing base by opening factories across the US.

CO

In 1981, Electrolux brought the Eureka brand to India through Eureka Forbes Ltd. (Eureka
Forbes), a joint venture with Forbes Gokak Ltd. 8 (FGL). While Electrolux held a 40 percent stake
in the JV, FGL held the remaining 60 percent. In 1982, the company established its direct sales
division and also set up its subsidiary, Aquamall Water Solutions Ltd.
In 1984, Eureka Forbes launched the Aquaguard range of water purifiers. In 1985, it established its
dealer sales division. In 1986, it set up its industrial sales division and in 1989, its exports division.

During the mid-1990s, the company diversified into products like mixers and irons. However, it
had to discontinue these businesses since the quality of these products was reportedly poor. In
1994, Eureka Forbes entered the air purifiers segment. In 1995, it launched the Aquaflo water
purifier range which was to be marketed exclusively through the dealer route.

In 1997, Eureka Forbes diversified into electronic security solutions under the brand name
Eurovigil.

In 2005, the water purification market was estimated at Rs. 5 billion with Eureka Forbes cornering
a market share of 80 percent.9

Electrolux, headquartered in Sweden, is one of the worlds largest producers and marketers of
refrigerators, washing machines, cookers, vacuum cleaners, air conditioners, etc.

FGL was a 60:40 joint venture between the construction major Shapoorji Pallonji Group and one of
Indias largest business houses, the Tata Group of companies.

Bodhisatva Ganguli and Kala Vijayraghavan, Eureka Forbes

http://articles.economictimes.indiatimes.com, November 21, 2005.
2

has

80%

Market

Share,

Eureka Forbes: Responding to Changing Market Dynamics

In early 2008, Eureka Forbes set up new retail channels in a bid to increase the penetration of its
water purification devices.
For the FY ended 2014, Eureka Forbes recorded revenues of Rs. 30.67 billion. (Refer to Exhibit I
for financials of Eureka Forbes).

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ENTERING THE WATER PURIFIER SEGMENT

Eureka Forbes, which launched its Aquaguard range of water purifiers in 1984, was credited with
inventing the category of water purifiers and creating the brand Aquaguard that went on to
become a generic name for purifiers.

While Eureka Forbes was a pioneer in bringing the concept of water purifiers into the Indian
market, it also had to deal with the challenge of explaining the water purification technology to the
Indian consumers who, till then, had followed only the traditional methods of boiling and filtering
water. In the 1980s, most of the consumers in India used chlorine-based water purifiers. Eureka
Forbes was a pioneer in launching UV-based purifiers (Refer to Exhibit II for evolution of water
purifiers). Initially, many consumers did not understand what the water purifier could deliver.
Thus, Eureka Forbes was faced with the Herculean task of breaking down resistance while
generating awareness for itself.

CO

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Just as it had in the case of marketing and selling its vacuum cleaners, Eureka Forbes adopted the
direct selling route to demonstrate the benefits offered by its water purifier. The company
positioned its Aquaguard salespersons more as solution providers than as salespersons. These
salespersons were friendly when they came to the house to demonstrate what they described as the
indispensability of water purifiers. The Eurochamps, as they were called, informed people of the
hazards associated with drinking unsafe water. The company made the consumers realize that 80
percent of the diseases in India were water-borne. They also succeeded in changing consumers
perceptions and developing the market for water purifiers.
Over the years, Aquaguard transformed itself into a company that offered a comprehensive range
of technologies addressing the needs emanating from different water qualities and purification
conditions.

As of 2013, Aquaguard had a strong sales force of 8,000 Eurochamps across India.

THE WATER WARS

For several years, Aquaguard enjoyed a monopoly in the water purifier market. However, it started
facing competition when Hindustan Unilever Limited (HUL) launched Pureit in 2008. Eureka
Forbes water purifiers were expensive, priced at Rs. 7,000 or more. This put them out of the reach
of many Indians. This gap was exploited by HUL, which priced Pureit at a much more affordable
Rs. 2,000. It had taken HUL more than a decade to exploit new ways of operating to address the
critical water needs of the bottom-of-the-pyramid consumers. The low price of Pureit was
considered as a breakthrough innovation by many industry experts as it made the purifier
affordable to millions of Indians lacking access to potable water.
With the Pureit brand, HUL was quick to claim the market leadership position at the low end of
the market. Eureka Forbes hit back at HULs low pricing strategy for its Pureit brand by launching
a water purifier with a resin-based technology called Aquasure, which was similarly priced and
required no power and no running water. The product was introduced keeping in mind the fact that
most of the smaller towns and cities in India had no access to water and electricity and hence could
be tapped. Commenting on the tremendous potential offered by the unorganized water purifier
market, S K Palekar, senior vice president, marketing and knowledge management at Eureka
3

Eureka Forbes: Responding to Changing Market Dynamics

Forbes, said, We have been operating in India since 1984. From being the only player in the water
market, we have seen a significant rise in competition. The market is still highly underpenetrated
and has scope for more players.10

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The pricing gamble worked in favor of Pureit as it entered one million households in southern
India where the product was first launched. Eureka Forbes, for its part, claimed that it would
capture that portion of the pie by penetrating into the rural areas of India to market its Aquasure
water purifier. However, industry experts stated that HUL had a strong distribution network in
rural areas because of its initiatives such as Project Shakti.

The battle between the two companies intensified in 2009 when Eureka Forbes spoofed HULs
claims in a television commercial (TVC). HUL in its advertisement showed a man in a yellow
raincoat throwing a challenge to consumers that if they found a purifier that worked with no
power, no running water, met the germ kill criteria set by the Environmental Protection Agency,
and switched off automatically when not in use, the company would give Rs. 10 million. Eureka
Forbes hit back by launching a TVC showing a blurry purifier, presumably Pureit, and a man in a
yellow raincoat offering water to a woman. The woman after drinking the water spits it out on his
raincoat saying it tastes of chlorine. HUL charged that the TVC denigrated its product and
subsequently sued the company, stating that the advertisement mocked Pureit. Eureka Forbes,
however, maintained that its assertions were true. Both companies sent their water samples to an
American laboratory to test whether the claims were true.

PY

Commenting on the legal battle, KPMG Advisory Manager (Consumer Markets) Anand
Ramanathan, said, The legal battle won't affect sales much. It could, however, make the
companies more cautious with future investments in the brand.11
While the claims made by both the companies were not proven, Eureka Forbes was advised to
remove the TVCs mocking Pureit.

CO

In 2008, Eureka Forbes launched a water purification device, Aquaguard Sensa. The device
automatically detected impurities, sensed the water quality, and adjusted itself to the level of
purification required. While Eureka Forbes was applauded for launching breakthrough products, it
was criticized by industry experts for losing its first mover advantage when Kent launched a
gravity-based purifier in 2009 that worked without electricity. Experts opined that given the
crippling power shortage in most parts of India, the market for gravity-based purifiers was huge. In
2009, while 92 percent of the urban areas had access to grid electricity, rural electrification stood
at 55 percent. According to Sasidhar Chidanamarri, Associate Director, Environment & Building
Technologies Practice at Frost & Sullivan, a consulting firm, People use gravity-based water
purifiers in regions that have poor or no electricity supply.12

Even as Eureka Forbes was facing competition from Kent, the Tata Group launched its water
purifier Swach in 2009 for Rs 1,000. This was followed by the entry of other prominent players
such as Godrej, Panasonic, and LG, which added further competition for Eureka Forbes.

For FY 2010-2011, Eureka Forbes sold 200,000 units of RO-based purifiers through its Aquaguard
brand and 432,000 units of UV-based purifiers through its Aquaguard and Aquasure brands. For
the same period, it also sold 500,000 units through its Aquasure brand (Refer to Table I for sales
and units sold of RO-based water purifiers, to Table II for sales and units sold for UV-based water
purifiers, and to Table III for sales and units sold for offline-based water purifiers). Experts felt
that several players were entering the market given the potential of the Rs. 16 billion water purifier
market as of 2011.
10

11
12

Ruchita Saxena, Three-way Fight in Cheap Water Purifier Market, www.business-standard.com,

August 6, 2008.
Sayantani Kar, The Water Purifier Slugfest, www.business-standard.com, November 26, 2009.
Arpita Mukherjee, In Still Waters, http://businesstoday.intoday.in, September 28, 2014.
4

Eureka Forbes: Responding to Changing Market Dynamics

Table I

RO-based Water Purifier Market (FY 2010-2011)

Value (In Rs. Billion)

Sales (Units)

Aquaguard

2.25

200,000

Kent

1.97

133,559

Zero B

0.52

Whirlpool

0.33

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Segment

30,700
30,000

Source: Water Purifiers, www.adimedia.com, April 2012.

Table II

Inline/UV-based Purifiers Market (FY 2010-2011)

Value (in Rs. Billon)
1.74

Aquasure

0.525

HUL-Autofill

0.145

Kent

0.13

100,000
50,000
20,000

0.0885

15,000

0.0238

3,500

PY

HUL-Marvella OGT

332,000

Aquaguard

Sales (Units)

Segment

Zero B

Source: Water Purifiers, www.adimedia.com, April 2012.

CO

Table III

Offline -based Purifiers Market (FY 2010-2011)

Segment

Aquasure

Zero B

Kent

HUL

Value (in Rs. Billon)

Sales (Units)

2.71

2,050,000

0.65

500,000

0.3

150,000

0.0234

13,000

Source: Water Purifiers, www.adimedia.com, April 2012.

While Eureka Forbes was considered the undisputed leader in the UV water purifier segment, Kent
started giving stiff competition to the company by launching RO water purifiers (Refer to Exhibit
III for a brief note on RO and UV water purifiers). It was reported that during fiscal year 20112012, while the water purifier industry, estimated at Rs. 38 billion, was growing at 20 percent
annually, Kent had grown at 35 percent annually recording revenues of Rs. 3.3 billion. The
company had reportedly sold 300,000 RO units in 2011. According to Mahesh Gupta (Gupta),
Managing Director of Kent RO Systems, the demand for water purifiers was increasing due to
enhanced awareness about protection from water-borne diseases, increasing industrial pollution,
and the emergence of cluster group housing. For the year 2011-2012, Kent had garnered a market
share of 40 percent with RO systems accounting for 80 percent of the companys total sales.13
13

Charanjit Ahuja, Kent RO Systems Targets Rs 500 cr Turnover, http://archive.indianexpress.com, July

9, 2012.
5

Eureka Forbes: Responding to Changing Market Dynamics

To strengthen its presence in the RO segment, Eureka Forbes launched Aquaguard RObot, which
had a storage tank along with the purifier. This was helpful in cities which did not have continuous
water supply. Aquaguard Total Sensa was a cutting edge offering which auto sensed and selected
optimum purification technology.

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In 2014, Eureka Forbes was dragged into another brawl by Kent, which alleged that Eurekas
water purifiers were prone to leakages and technical hitches. Kent also claimed that Eureka Forbes
did not possess any reliable international certifications such as WQC and NSF. Speaking on the
issue, Gupta said, They did try to get certification, but their product couldnt meet the
parameters.14 Kent also claimed that Eureka Forbes was not future ready with its products in the
water purifier segment since it focused largely on UV-based purifiers. According to Gupta, Kent
would become the undisputed leader in the next few years as the UV segment was fast declining.
Eureka Forbes hit back, claiming undisputed leadership in the RO and UV categories. According
to Marzin Shroff, (Shroff), CEO Direct Sales & Sr. Vice President Marketing, Eureka Forbes,
the company had a 44 percent share in the RO segment and a 71 percent share in the UV segment,
making its overall market share 53 percent. Shroff added, We have over 110 certifications from
leading laboratories including an endorsement from the Indian Medical Association. Globally, we
received WQAs certification 10 years before Kent got it.15

CO

PY

Eureka Forbes also claimed that it sold water purifiers in a more responsible manner and that,
unlike Kent, it did not push the more expensive RO models on to consumers who did not require
them. Gupta asked why, if Eureka Forbes claimed their RO water purifier was the best product, it
sold more UV purifiers than ROs. Some marketing experts felt that Kent was pursuing a challenger
brand strategy by attempting to stake a claim to the RO segment that was poised for maximum
growth. This was borne out by a 2014 report from TechSci Research which stated that Kent had
plans to corner a market share of 38 percent in the RO segment by 2018. Experts felt that the battle
between Eureka Forbes and Kent would only intensify as the water purifiers business was poised
to become a Rs. 61 billion market by 2017, according to a recent report by research firm Market
Pulse. The report titled Opportunities in the Water Purifier Market in India stated that the market
for RO purifiers would grow to more than 3 million units in 2017 from its present size of 7,86,000.

DEFENDING THE MARKET LEADERSHIP POSITION

LAUNCHING RETAIL STORES

In 2008, Eureka Forbes set up new alternative retail channels in a bid to increase the penetration of
its water purification devices. The companys retail division extended its products to chemists and
general merchandise stores.

Eureka Forbes realized that the direct selling model was not economical in smaller markets.
Hence, it started a franchising model in those markets and created franchised direct selling agents.
Subsequently, in 2013, Eureka Forbes stated that it would aggressively adopt the retail marketing
route since most of its competitors sold their water purifiers through retail outlets. According to
Shroff, Nowadays both husband and wife are working, so there is no one at home and therefore
the direct sales force is unable to reach a large segment of people.16 He also stated that with the
increasing competition, the company could no longer ignore the retail channel. Though Eureka
Forbes had tested the retail channel some years earlier, it maintained that it would sell only select
entry-level products through the route.

14

15
16

Rajiv Singh, Will Slanging Matches between Kent RO & Eureka Forbes Help or Harm the Water
Purifier Brands? http://articles.economictimes.indiatimes.com, January 8, 2014.
Shabana Hussain, Can Kent RO Win the Water War? http://forbesindia.com, June 4, 2014.
Eureka Forbes Heads for Retail Stores, www.dnaindia.com, July 1, 2013.
6

Eureka Forbes: Responding to Changing Market Dynamics

The company was also experimenting with new marketing models to meet changing consumer
demands. Other than developing distinct products to suit customers and environmental needs,
such as Geneus, Enhance, Xpert RO, etc., Eureka Forbes was also expanding its presence in the
retail for mass market products under the AquaSure brand name.

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According to Shroff, the company was selling several models for both the premium and the mass
segments, across national and regional stores. Moreover, it was manufacturing certain products
only for the retail channel. However, the models being sold in stores were cheaper than those sold
by the direct sales force. According to Shroff, You have to be cheaper in retail as people are
looking for good value for money products. Also, there is a severe price competition.17
ADOPTING THE DIGITAL MARKETING ROUTE

An issue for Eureka Forbes was its huge reliance on direct sales. However, with the emergence of
gated communities, cold calling as a strategy was no longer effective. Hence, the company was
forced to find ways to reach out to new customers.

To combat the problem, Eureka Forbes adopted the digital marketing route in 2012, persuading
customers to ask for demos. According to Siddhartha Singh (Singh), senior manager of marketing,
We needed to generate more demo requests for our Eurochamps, reach out to the younger
generation as they are spending an increasing amount of time on the Internet, and ride the ecommerce wave coming into the country.18 The company was also visible in some newspapers
ads, displaying numbers for customers to call.

PY

According to Sridhar Samu (Samu), assistant professor of marketing at the Hyderabad-based

Indian School of Business (ISB), the Internet was a perfect complement to EFLs direct-selling
model.

CO

Sensing the tremendous potential offered by the Internet, Eureka Forbes realized that it could not
afford to ignore the power of the Internet. According to Goklaney, I see the Internet as a
tremendous way forward, to be able to cut costs and give the end customer the right product at the
right price with good servicing. In places where we are already present, the Internet can
complement our sales force as a lead generation device. In places where we are not present, the
Internet will become our sales force.19

The first step taken by Eureka Forbes toward digitizing its marketing was to make the companys
website easier to navigate and to develop focused brand-oriented micro sites for its various product
lines. According to Singh, with one or two clicks, the consumer should be able to find the
information he/she was looking for. Moreover, the site had an online Eurochamp, who helped the
consumer choose the right product.

Another significant feature offered by Eureka Forbes on its website was an application that
recommended to consumers the right technology for them after the user entered his/her pin code.
This was possible because of Eureka Forbes initiative of mapping the quality of water across the
country (Refer to Exhibit IV for water map created by Eureka Forbes). The company was also one
of the few consumer durable companies that offered a Hindi version of its website.

A key component of Eureka Forbes digital transition was its Call Connect System. When a
consumer filled out and submitted a lead form online, an automated process identified his or her
location based on the pin code supplied. The system then identified the nearest sales team,
followed by making an outbound call to a salesperson and one to the customer. The system then
connected the two calls all with an expected hold time of less than 30 seconds.

17
18

19

Eureka Forbes Heads for Retail Stores, www.dnaindia.com, July 1, 2013.

Moving beyond Direct Selling, Eureka Forbes Embraces Digital
http://knowledge.wharton.upenn.edu, February 16, 2012.
Moving beyond Direct Selling, Eureka Forbes Embraces Digital
http://knowledge.wharton.upenn.edu, February 16, 2012.
7

Customer

Service,

Customer

Service,

Eureka Forbes: Responding to Changing Market Dynamics

In addition to customer lead generation, Eureka Forbes had also made attempts to digitize the
back-end, or after-sales, service, which was among the most important determinants of sales in
high-involvement product categories. The company had set up a five-step service request
application. If the consumer was not satisfied with the response he or she received, the system
moved the request up the ranks of the companys service staff. The history of the consumers
problems was updated at each level until the issue was finally resolved.

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GOING GLOBAL

In 2012, Eureka Forbes announced its plans to go global through acquisitions, increase product
offerings, and foray into newer segments such as fire extinguishers, air purifiers, and more.
Commenting on its foray into global markets, Shroff said, You will see us enter new global
markets where there are water related issues, these may include Africa and South East Asia. On the
product portfolio side well achieve more depth with existing brands and width with new additions
and forays.20 Experts stated that Eureka Forbes was adopting the acquisition route since it was
facing huge competition in the water purifier segment from HUL, Kent RO, and other small
players such as Tata Swach, Philips, and Whirlpool. Eureka Forbes had lost its market share from
74 percent in 2004 to 60 percent in 2012.
LAUNCHING UNIQUE PRODUCTS

PY

For areas where consumers had electricity and no water, and sometimes water and no electricity,
Eureka Forbes launched a product called Aquaguard Pride. According to Shroff, When we
launched it [Aquaguard Pride], people felt the need for it immediately. So, yes, we have created
products around these unique needs. We have created products around inconsistency in
water.Definitely, as a listening company, we do create need based products.21

CO

In May 2014, Eureka Forbes launched a mobile water purifier called Aquaguard-on-the-go
priced at Rs. 595. Aquaguard-on-the-Go came in the shape of a sipper loaded with miniaturised
water purification technology and was available across retail outlets and general stores, according
to Eureka Forbes. Commenting on the development, Shroff, said the miniaturised water
purification technology was rolled out after seven years of research. He added, Aquaguard-onthe-Go is perhaps the only water purifier in India which can enable affordability, adaptability, and
availability of safe drinking water for Indians. It is an important milestone in the history of brand
Aquaguard which will take our market leadership in India to the next level.22

UNVEILING A CONSUMER CAMPAIGN

In July 2014, the company launched an experiential consumer campaign with Aquaguard Canters
in Mumbai, Maharashtra23. This was a bid to generate awareness about alternative and innovative
ways to produce drinking water. The campaign was unveiled after a report by the Indian
Meteorological Department (MET) forecast that by 2015, 334 million Indians would lack access to
safe drinking water. The National Water Policy of the Government of India, Ministry of Water
proclaimed that Water which is already a scarce resource, will become even scarcer and that
Non-conventional methods of sourcing and utilization of water need to be practiced. In the wake
of below average rainfall, water scarcity was a looming threat in Maharashtra and the rest of India.
Hence, Eureka Forbes launched a technology that used refrigeration techniques for condensing
water from atmospheric air in Mumbai.

20

21
22

23

Rachit Vats, Eureka Forbes Looks beyond Water Filters in Growth Plans, www.hindustantimes.com,
March 12, 2012.
Verify Markets Interviews Marzin Shroff of Eureka Forbes, www.verifymarkets.com, July 1, 2014.
Eureka Forbes Aquaguard-on-the -Go is a Mobile Water Purifier Priced at Rs 595, www.bgr.in,
April 30, 2014.
Maharashtra is a state in India with Mumbai as its capital city.
8

Eureka Forbes: Responding to Changing Market Dynamics

The air-water generator was designed and developed by Aquaguard in collaboration with Mumbaibased WaterMaker. The technique could generate 120 litres or 500 glasses of drinking water every day.

PO
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Commenting on the technology, Shroff, said, India is facing an acute water crisis owing to
delayed monsoons and subsequent water scarcity. At Eureka Forbes, we have been striving hard to
educate consumers about right use of water purification technologies which is the most suitable for
their drinking water quality. Most consumers are unaware that incorrect use of water purification
technology can be harmful not only to their health but also to environment. Our Aquaguard air-towater initiative is in line with our mission to provide safe, healthy, and happy environment to our
consumers. This campaign is an endeavour to showcase futuristic and market-changing concepts
which will safeguard both consumer and environment interests.24

THE RESULTS

To some extent, the digital initiatives had converted into sales for the company. In 2012, the
companys online sales grew from US$10,000 to US$50,000 a month. The Facebook leads also
lowered the companys advertising costs. However, according to Singh, As of now, online sales
actually using a credit card online to make the purchase are less than 1% of sales.25 Going
forward, Goklaney expected the Internet to be a primary driver of sales in the international market.

The company through its several initiatives and new product offerings was able to retain its market
leadership in the water purifier market in India. For the FY 2013, the company recorded a 53
percent share in the water purifier market.

PY

Industry experts felt that the companys digital initiatives had helped it gain more brand awareness
among consumers. It was reported that when Eureka Forbes digitized itself, it received 22,000
likes on its Facebook page. As of 2014, the page had over 150,000 likes.

LOOKING AHEAD

CO

According to Samu, the increased affinity with its consumers would be key to Eureka Forbes
transforming its sales model. He added, This can eventually develop as the main selling model, as
it will include home visits for demo purposes, replacing the current direct selling methods.26

Despite the various challenges and competition Eureka Forbes faced, Goklaney was confident that
the company was on the right track. But analysts felt that Eureka Forbes needed to take drastic
steps to take on the competition.

The company had plans to enter new segments such as air purifiers, fire extinguishers, and security
systems as an alternate strategy markets that were still fairly niche and where the company did
not have a first mover advantage. The air purifier market in India was estimated to be valued at
US$ 12.65 million in 2013, while the fire and safety equipment market was estimated to be about
US$ 3.16 billion in 2013, according to research firm TechSci Research. 27 Some analysts felt that
Eureka Forbes would be able to retain its market share since the Indian water purifier market was
expected to grow 229 percent, up from Rs. 18.64 billion in 2012 to Rs. 61 billion in 2017,
according to Opportunities in the Water Purifier Market in India, a report compiled and released by
Market Pulse, a leading marketing research firm.
24

25

26

27

Eureka Forbes Kicks-off a Unique Experiential Consumer Campaign in Mumbai with Aquaguard
Canters, http://businesswireindia.com, July 8, 2014.
Moving beyond Direct Selling, Eureka Forbes Embraces Digital Customer Service,
http://knowledge.wharton.upenn.edu, February 16, 2012.
Moving beyond Direct Selling, Eureka Forbes Embraces Digital Customer Service,
http://knowledge.wharton.upenn.edu, February 16, 2012.
Arpita Mukherjee, In Still Waters, http://businesstoday.intoday.in, September 28, 2014.
9

Eureka Forbes: Responding to Changing Market Dynamics

Going forward, Eureka Forbes had plans to launch a range of home appliance products in
international markets. The company planned to bank on its Forbes Lux28 joint venture to access
markets in 40 countries across Europe, Africa, and Latin America.

CO

PY

PO
ST

Commenting on its vision, Shroff said, We see ourselves as innovators, we see ourselves as
listeners, we see ourselves as leaders, and we will strive to keep our customers and our
Eurochamps happy, and I think that growth is the by product of customer satisfaction. I think that
we will continue to dominate this market, we will continue to focus on our customers and we will
continue to build new, innovative, and unique products, we will continue to add value to our
customers lives to create safe, happy, healthy, and trustworthy relationships. I dont think
marketing is any rocket science. It is about doing small things right; and its about one odd gamechanger. We are working on new technologies and building robust relationships.29

28

29

In 2013, Eureka Forbes and Lux International joined forces to form a joint venture, Forbes Lux. With this
JV, Eureka Forbes planned to access international markets for selling its products.
Verify Markets Interviews Marzin Shroff of Eureka Forbes, www.verifymarkets.com, July 1, 2014.
10

Eureka Forbes: Responding to Changing Market Dynamics

Exhibit I

Financials of Eureka Forbes (in Rs. billion)

For the year ended March 31

2014

Revenue from operations (gross)

2013

30.93

20.26

0.25

0.26

PO
ST

Less: Excise duty

Revenue from operations (net)

30.67

19.99

0.64

0.31

31.32

20.3

5.6

5.2

51.2

40.0

Changes in inventories of finished goods, work-in-progress and

stock-in-trade

(0.6)

(0.9

Employee benefits expense

5.07

3.05

0.79

0.31

0.54

0.44

13.91

7.65

30.47

19.79

0.85

0.5

(0.13)

0.581

0.72

1.08

0.237

0.278

(b) Less: MAT credit entitlement

(0.00292)

(00.01954)

(c) Excess provision for current tax relating to prior years

0.001322

00.06638

(d) Net current tax expense

2,357.75

2,697.21

(e) Deferred tax

(202.22)

(83.50)

0.504

0.82

0.016

(0.103)

0.013

0.8

0.85

30.09

65.88

II Other income
III Total revenue (I + II)
IV Expenses:
Cost of materials consumed

Purchases of stock-in-trade (traded goods)

Finance costs

PY

Depreciation and amortisation expense

Other expenses
Total expenses

CO

V Profit before exceptional items and tax (III - IV)

VI Exceptional items - (Expense)/ Income
VII Profit before tax (V + VI)
VIII Tax expense / (benefit):

(a) Current tax expense

IX Profit after tax before share of results of associates and

minority interest (VII-VIII)
X Share in profit of associates

XI Net minority interest in (profit)/losses of subsidiaries

XII Profit for the year
XIII Earning per equity share:
Basic and diluted earnings Rs. per equity share (nominal value of
share ` 10)

Source: Forbes & Company Limited, www.forbes.co.in, 2013-2014.

11

Eureka Forbes: Responding to Changing Market Dynamics

Exhibit II
Evolution of Water Purifiers
Year

Water Purifiers
Chlorine-based purifiers were introduced

1990s

Electric UV water purifiers launched by Eureka Forbes

2000s

Electric RO water purifiers launched by Kent RO. Several companies also launched bottled
water during this period

2005

Non-electric low cost activated carbon based purifiers launched by Tata and HUL

2008

Purifiers that automatically detected impurities, sensed the water quality, and adjusted itself
to the level of purification required launched by Eureka Forbes

2010

Purifiers with nanotechnology launched by Eureka Forbes

2011

RO water purifier with advanced alert systems launched by HUL

Aquaguard-on-the-go launched by Eureka Forbes in the shape of a sipper loaded with

miniaturised water purification technology

2014

PO
ST

1980s

Air-water generator that used refrigeration techniques for condensing water from
atmospheric launched by Eureka Forbes
Compiled from various sources.

PY

Exhibit III
A Brief Note on RO and UV Water Purifiers

CO

Water Purifiers include many variants such as offline water purifiers, UV water purifiers, and RO water
purifiers.
Offline water purifiers
Offline water purifiers do not require water supply or electricity. They are available at low cost.
UV water purifiers
UV water purifiers use ultraviolet light for germicidal eradication. This is one of the most widely used
procedures for germicidal treatment of water. Mercury low pressure lamps generating 254 nm UV light
are an effective means of sanitizing water. The adsorption of UV light by the DNA and proteins in the
microbial cell result in the inactivation of the microorganism.
RO water purifiers
RO technology is considered as the most economical method that removes 90 to 99 percent of
contaminants while purifying water. The pore structure of RO membranes is tougher than that of UF
membranes. RO membranes are capable of rejecting bacteria and organisms including pyrogens. In the
RO system, the natural process of osmosis occurs when solutions with two different concentrations are
separated by a semi-permeable membrane. Water is driven through the membrane due to osmotic
pressure; water then dilutes the more concentrated solution; and this results in an equilibrium.
In water purification systems, hydraulic pressure is applied to the concentrated solution for counteracting
the osmotic pressure. Pure water is collected downstream of the membrane.
RO involves an ionic exclusion process. Only solvents are passed through the semi-permeable RO
membrane; ions and dissolved molecules are retained.
The RO purification technology is highly effective in removing several impurities from water such as
total dissolved solids (TDS), asbestos, lead, turbidity, and other toxic heavy metals, radium, and many
dissolved organics. The process also removes chlorinated pesticides. RO is considered one of the most
effective treatments against the broadest range of water impurities and contaminants.

Compiled from various sources.

12

Eureka Forbes: Responding to Changing Market Dynamics

Exhibit IV

Water Map Created by Eureka Forbes

What Water Where: Eureka Forbes prepared a sophisticated water map, created
from data collected by the government, NGOs and their own sales teams
experience. It provided different solutions to different water problems
-

West Bengal

Andhra Pradesh

UP

Arsenic

Fluoride

Arsenic

0.05

1.5

0.05

Ferric Hydroxide
adsorption

Reverse Osmosis

Ferric Hydroxide
Adsorption

Punjab

Assam

Chhattisgarh

Pesticides

Iron

Arsenic

0.05

Nano Silver

Oxidation
Precipitation

Ferric Hydroxide
adsorption

Oxidation
Precipitation

Salts

Fluoride

1.5

RO/NF
membrane

Reverse Osmosis

State

Main Impurity

Rajasthan
Salts
-

RO/NF membrane
-

Orissa

Iron
1

Haryana

Tamil Nadu

Karnataka

Pesticides

Fluoride

Fluoride

1.5

1.5

Nano Silver

Reverse Osmosis

Reverse Osmosis

PY

MP

CO

Gujarat

PO
ST

Safe Limit (MG/L)

-

Technology Solution
-

Adapted from: Shravan Bhat, Eureka Forbes Purifies Water for Rural India, http://forbesindia.com,
August 1, 2013.

13

Eureka Forbes: Responding to Changing Market Dynamics

Suggested Readings and References:

1.

Arpita Mukherjee, In Still Waters, http://businesstoday.intoday.in, September 28, 2014.

2.

Eureka Forbes Kicks-off a Unique Experiential Consumer Campaign in Mumbai

with Aquaguard Canters, http://businesswireindia.com, July 8, 2014.

3.

Verify
Markets
Interviews
Marzin
www.verifymarkets.com, July 1, 2014.

4.

Shabana Hussain, Can Kent RO Win the Water War? http://forbesindia.com, June 4,
2014.

5.

Eureka Forbes Aquaguard-on-the -Go is a Mobile Water Purifier Priced at Rs

595, www.bgr.in, April 30, 2014.

6.

Rajiv Singh, Will Slanging Matches between Kent RO & Eureka Forbes Help or
Harm the Water Purifier Brands? http://articles.economictimes.indiatimes.com,
January 8, 2014.

7.

Forbes & Company Limited, www.forbes.co.in, 2013-2014.

8.

Shravan Bhat, Eureka Forbes Purifies Water for Rural India, http://forbesindia.com,
August 1, 2013.

9.

Eureka Forbes Heads for Retail Stores, www.dnaindia.com, July 1, 2013.

of

Eureka

Forbes,

PO
ST

Shroff

Charanjit Ahuja, Kent RO Systems

http://archive.indianexpress.com, July 9, 2012.

Targets

11.

Water Purifiers, www.adimedia.com, April 2012.

12.

Rachit Vats, Eureka Forbes Looks beyond Water Filters in Growth Plans,
www.hindustantimes.com, March 12, 2012.

13.

Moving beyond Direct Selling, Eureka Forbes Embraces Digital Customer Service,
http://knowledge.wharton.upenn.edu, February 16, 2012.

14.

Sayantani Kar, The Water Purifier Slugfest, www.business-standard.com, November

26, 2009.

15.

Ruchita Saxena, Three-way Fight in Cheap Water Purifier Market, www.businessstandard.com, August 6, 2008.

16.

Bodhisatva Ganguli and Kala Vijayraghavan, Eureka Forbes has 80% Market Share,
http://articles.economictimes.indiatimes.com, November 21, 2005.

Rs

500

cr

Turnover,

CO

PY

10.

14