For two decades, Intec was an Original Equipment Manufacturer (OEM) for consumer durable giants like Bajaj, Samsung and Videocon. In spite of that, Intec did not have any brand equity of its own. Could Intec successfully launch a new brand of air conditioners to get the scale and visibility it wanted? 

The Backstory:
The journey so far 
Amarjit Singh started his career by working with his brother who was an OEM (original equipment manufacturer) supplier for exhaust fans. In 1990, when Singh started Intec, he was clear about following his brother’s footsteps to become an OEM manufacturer. Soon, he was supplying fans and machine parts for desert coolers to Videocon and Symphony. But, Singh’s company got its first big break in 1995 when Bajaj gave them a contract for manufacturing 15,000 geysers. By 2000, Intec had become a major supplier for Bajaj. Its total turnover was around Rs40 crore by then. The steady growth had emboldened Singh’s ambition. He forayed into other consumer durable categories such as air conditioners and colour TV s. In 2002, Intec won an order from Samsung to manufacture TV sets. Singh set up a factory in Jammu & Kashmir to service this order. Within six months, Samsung also signed them up as an OEM for its range of air conditioners. Their relationship matured steadily. What had started as on order of 12,000 air conditioner units in 2003 had grown to 1.5 lakh units annually by 2007.

The Problem:
A lost identity
Today, Intec is a Rs260 crore company with 600 people across its four production units. It manufactures geysers for Bajaj Electricals, air conditioners for Samsung, Voltas and Blue Star, colour TV s for Onida and mixer grinders for Kenstar. Over the past couple of years though, Singh realised he wanted more. Despite the growth of his OEM business, Intec wasn’t a recognisable brand. Singh was tired of the anonymity that came with being an OEM supplier. He wanted to build his own home-grown brand. Earlier this year, Intec launched its brand of air conditioners. But, could it make the switch to being a consumer brand?

The Next Steps:
Building a brand without threatening existing clients
Singh zeroed in on air conditioners as the first product category to take to the market. Air conditioners, he says, have a better margin, and with more and more people coming into the urban middle class, have a growing, steady demand. Intec launched its own brand of air conditioners in May 2013. But Singh treaded cautiously as he did not want to threaten his established OEM business. “I talked to all our clients individually to assure them that Intec’s products will be based on a different technology and separate suppliers will be used for all spare parts”. Once his OEM business was secure, Singh knew he needed to create a strong product to attract buyers in what is a crowded, competitive market. He partnered with China-based electronics company, TCL Corporation in 2012 to leverage on their strength in air conditioner technology. In addition, Intec also decided to use the more expensive copper coil in their air conditioners whereas most leading brands use 80 per cent aluminium coil, he says. Copper coils help prevent the machinery from rusting, and make the air conditioner more durable and long-lasting. In May 2013, Intec finally launched its range of window, split, inverter, floor standing and cassette air conditioners for sale in the Delhi NCR market. The company opened two exclusive showrooms in the region. Uptil now, Singh was in familiar territory. But, manufacturing is only one part of building a brand. Pulling in customers and establishing a brand amongst the swarm of MNC s was a huge challenge—an experience he did not have. Here, he could leverage his “social capital” of goodwill built over decades as an OEM supplier. Jogesh K. Jaitley, Samsung’s country head of air conditioners, and Manish Srivastava, general manager at LG , advised Singh in building a dealer network for his brand. As senior members of the industry, their endorsements helped Intec reach out to dealers, earn their trust and convince them about the quality of the product.

The Aftermath:
Smart incentives, strong sales
Some smart business modeling helped as well. “We offered our dealers a better profit margin to keep their interest in promoting our product,” says Singh. Intec offered them margins of Rs2,000-2,500 per air conditioner, in contrast to the Rs1,000 per conditioner they typically get from other brands. Singh hoped that the generous margins would prod the dealers into selling Intec’s air conditioners with greater enthusiasm. His logic worked. Within the first month, Intec sold 2,000 air conditioners in Delhi NCR. To motivate them further, Intec started a clever campaign. Any dealer who bought more than 40 air conditioners from them within two months would be eligible for a week’s fully-paid trip to Spain. Two months later, 65 dealers were eligible for this Spanish holiday. Their robust dealer network also helped them bag corporate orders from institutions such as Lloyd Law College, Greater Noida and Vrindavan Garden Hotel, Vrindavan. In the first three months, Intec sold about 5,000 ACs.

The Takeaway:
Building the after sales connection
“We got a good response from customers because of the whole package—a strong product and it’s after sales service,” says Singh. Intec offers a five year warranty (other brands offer maximum two years, he claims), three services for free, and a coupon to get the compressor replaced in case of any default. Singh proudly claims his company takes action within 24 hours of registration of any customer’s complaint. Also, the trip to Spain helped Singh connect with the dealers in a way that no number of professional meetings could have. “The dealers got to know me and my family. I built a personal rapport with them and could win their confidence,” he adds. The next plan, Singh says, is to open 12 more exclusive Intec showrooms in Delhi NCR by 2014. “We will launch our brand in Mumbai in January 2014 and go pan-India over the next two years.”