1. LCCI ltd.

is a company engaged in the manufacturing and marketing of pesticides

and speciality and performance chemicals in India since 1960. This Bombay- based
company started its operations in India as an affiliate of H and R Inc., a US- based
transnational corporation- TNC a Fortune 500 company for the last several decades.
The US- based TNC was/ is extremely well known for its innovation and
development of new molecules and polymers in the area of speciality chemicals. The
TNC is considered to be in the same league as BASF- Germany, BAYER- Germany,
ICI- UK, DOW Chemicals- USA, DUPONT- USA, XENECA- UK, SOLVAY- Norway
and with several Japanese companies of great repute.

The American transnational divested its stake in the Indian affiliate in the late 1980s,
as India with its closed economy did not fit into their global strategy. LCCI ltd. thus
became a part of a leading Indian group- the Sethia group-, which has several
diverse businesses and an excellent track record of profitabilty and working with
several Multinational/ Transnational companies of repute and high calibre.

Following some dissentions in the family, the Sethia Group splintered into individual
companies managed independently by several family members. This happened in
1990.

The LCCI Ltd. with its near monopoly in pesticide and speciality and performance
chemicals was in a very comfortable position, enjoying very high profitability in
percentage as well as real terms albeit at the expense of real volume and quantity
growth.

The chemicals of the speciality and performance Division which catered to the needs
of the leather, textile, paints and coatings, paper, PVC, processing industries were
brand leaders and enjoyed more than reasonable brand loyalty.

The 1990s also witnessed the onset of liberalization, rise in the real incomes of the
Indian populace, greater exposure to international products and an overall change in
the consumption of all sectors catered to by the speciality chemicals division of LCCI
Ltd.

This obviously invited competition from new entrants of Indian origin. The dismantling
of tariff as well as non- tariff barriers also made competition from imports a reality.
The products had become commodities over the years and easy availability of
technology for speciality chemicals of LCCI Ltd. made LCCI a price taker in most of
its products range. The R and D effort at LCCI Ltd. was always low key- due to
dependence on H and R Inc., the principals of the olden days. Lethargy towards
innovation which had ossified over several years. The company, LCCI was not willing
to scale down high profitability standards of the by- gone era and was not reconciled
to be a price – taker.

The company’s reputation of being a supplier of high quality chemicals was intact,
but on the other hand, the customer labeled LCCI as a company incapable of
innovation and capable of only peddling age- old products. The company had a new
management in the division in the mid 1990s and even flocking of age- old products
yielded dividends. Identification of new pockets of markets in India coupled with
greater customer contact and profitability orientation saw sales rise from Rs. 15
crores in 1995 to Rs. 70 crores in 2003. The profitability was also in line with the
industry. In 2002, the company witnessed separation of a large number of middle/
high level technical employees and also decided to shift the company manufacturing
base from Mumbai to several other locations in and around Mumbai. The technology
leak was inevitable, competition for these low technology products grew even
profound, and volumes, profitability started dwindling. The selling proposition was not
only price but also extension of longer credit. The relocation of manufacturing also
took its toll on quality. The management also announced VRS (READ CRS) that saw
exit of a large number of experienced, capable and smart chemists and engineers
from the company.

In an effort to turn this scenario around, the company tried to put R and D efforts on
a fast track but achieved very little success. The so- called new products were either
not acceptable or failed to compete.

Analyse the above case very incisively beginning with a SWOT and propose a
turnaround strategy. Also answer the following questions in great depth. DO NOT
CONFINE YOUR RESPONSE TO THE QUESTIONS ONLY. READ
BETWEEN THE LINES WHILE ANALYSING THE CASE.

I. The company has tried to introduce new products. What are the possible
industrial buyer behaviors?
II. Is the customer receptive to new products from LCCI Ltd.? Debate both
yes as well as no.
III. Can the specaility chemical division of LCCI recapture its old glory? How?
Debate yes as well as no.
IV. Should LCCI Ltd. continue in the business of speciality chemicals?
Debate both sides. Please note: Pesticide division is performing very well
under a CEO who has a huge bias towards pesticide division.
V. What marketing strategy should the division adopt? Provide details.
VI. What, according to you are the concern areas for the company? Give
suggestions to meet these concerns.