Prof.

Satyajit Majumdar, Professor,

T A Pai Management Institute, Manipal 576 104 (Karnataka)

Technology Leadership at Membrasep

We want to grow from Rs.30 crore to Rs.300 crore in the next five years, said Hitesh Mehta,
CEO Membrasep Technologies Pvt. Ltd., to two newly hired Management Trainees. Membrasep
is in the business of providing separation technology mainly Reverse Osmosis, Ultrafiltration,
Nanofiltration, Microfiltration, Ion Exchange and Chromatography to Pharmaceutical and
Manufacturing companies. Membrasep operates in a niche market and has earnedvery good
reputation in Pharmaceutical industry for providing high quality purification
systems.Pharmaceutical industry business contributes almost 80% of Membraseps turnover. The
company isconsidered to be an expert in providing customized solutions to its customers.
Indian economy was experiencing a rapid growth. On the back of growing economy and
increased thrust on green technologies, market for membrane separation technology was growing
at a fast pace. With technological evolution membrane technology was finding many new
applications.Hitesh wanted to take full advantage of the growing membrane market. Membrasep
experienced tremendous growth in the last three years.Its turnover had leaped to Rs 30 crore in
2006-07 from Rs 5.19 crore in 2002-03. Its philosophy was to create and capture niche
markets.Promising applications of membrane technologywere being developed for Dairy, Sugar
and Automobile industries.
Based on his vast experience Hitesh had a hunch that membrane market was going to experience
a growth that was incomparable to the past growth. He felt that Membrasep should penetrate this
market to realize its goal. However, he needed a solid platform to make his decision.
Background
Before the inception of Membrasep, Hitesh Mehta, a chemical engineer, had a short stint in the
business as one of the founders ofUltrasep a company started in 1989. In 1990s the filtration
systems were fully imported, which made the system more costly. Hitesh and his partners saw
opportunity in this and started their own partnership firm. Their business modelwas based on
procuring piping system from Indian market and building filtration system using imported filter
systems to reduce the cost of the total system. Both had developed good contacts in
pharmaceutical industry in their initial years at Chemsworth Pvt. Ltd., which was also in
membrane filtration business.
The business of Ultrasep was mainly project type, initially the company provided water based
systems which included piping, storage facility and later gradually acquired membrane
technology to move up in the value chain. The company had developed good competence in
managing turn-key projects.Later the company also moved to membrane separation business
which was even more challenging as it required higher degree of expertise. In 2004 they divided
their business into three divisions namely Christ-Ultrasep, Piping and Execution and Filter-tech.

Filter-Tech was headed by Hitesh and was focused on separation technology for different
industries. Hitesh strongly felt that membrane technology business could be done in a much
better manner. This led him to move out and set up his own company Membrasep.
Membrasep had come a long way. It supplied a much advanced technological product now.
Marketing of their product demanded techno commercial skills.The vision of the company
wasthat, the whole organization had to be entrepreneurial.Membrasep had emerged as a provider
of customized solutions supplying fully automated systems and total validation and
documentation support to its customers. Membrasep had succeeded in bringing customized
solutions along with the advantage of Green technology in the field of filtration, separation and
pure water management using membrane processes. This technology not only achieved high
purity levels but alsowas termed as clean technology that did not generate wastes and
effluents. Membrasep hadtied up with reputed global brand Novasep process of France (Orelis
and Applexion) to bring the worlds best in clean process products to the pharmaceutical,
heathcare and biotech industries.
Hitesh defined growth as, Increase in sales, profit and assets. Membraseps strategy was:
Distinct ways of doing business and creating new business.Membrasep aimed to create and
capture niche markets and provide specialized solutions to its customers. This gaveMembrasep a
unique advantage over its competitors.
Core Competence
Membrasep strongly believes in ethics in business operations, environment conservation and
creating long term relationship with customers, suppliers and employees. These three principles
form an important part in the entire decision making.
The core competence of Membrasep is in System design, integration with suitable and acceptable
technologies and installation at the customers premises. Hiteshs engineering background was of
advantage for Membrasep. The major business came in the form of turn key projects requiring
manufacturing and project management skills. Membrasep followed a rigorous recruitment
process and recruited skilled, experienced and qualified personnels. Advice from management
consultants was also sought on a regular basis. Hitesh rated Membrasep high on the
competencies requiring process knowledge, pre sales technical support and post sales technical
support, project management skills and operations management.
Membrasep specialized in adopting new technology from abroad to continuously creating value
for the customers. Major thrust was on continuous updation on the latest technological
developments so that technology front always remained ahead of time. Membraseps strategy
was to collaborate with world leaders and educate customers. Hitesh felt proud that Membrasep
was the first to bring new technology to Indian market. He strongly believed in technology based
growth. However, there had been instances when Membrasep couldnt take full advantage of
being the first mover and competitors out performed Membrasep, even though the initiative was
taken by Membrasep.

Customers rated Membrasep very highly on its ability to understand customer requirements and
provide customized solutions. Membrasep also commanded high regard for its engineering and
tooling capability.
Membrasep was introducing latest IT support for its operations. ERP was in advanced stages on
implementation. This step was expected to increase the efficiency and reduce response time in
executing orders. Hitesh believed in empowering employees to make decisions. This helped in
keeping the employees motivated, which was very important as the business required direct
interaction with the customers.
Business Process:
Being a technology driven company, Membrasep employees mainly engineers. There are two
levels viz: Senior and Junior engineers. The senior engineers report to the Hitesh and the junior
engineers report to both Hitesh and the Senior engineers. The firm could be seen as having a
matrix structure as depending of the project people are picked to take up different roles. For each
project there is one project manager, one or two sales personals and design engineers depending
on the size of the project. The Execution Department was responsible for building the system. It
handles the task such as procurement of materials, production and delivering to customers
location.
Most of the orders were brought by Hitesh. Apart from this, the marketing team introduced their
products to prospective customers over telephone. Once an enquiry was received, customer
requirements were obtained. The engineering team prepared an outline of the proposed system
which detailed the functioning and the cost of the system. Negotiations were made on technical
and cost terms. After the deal was finalized, the requirements were communicated by the
execution department to the Engineering department. The project team went to the site and
installed the system. This included trial runs, modifications, final run, training and handover to
the customer. The membranes were procured from the technology partners in France. The
engineering equipment was developed in house and the final assembly was made on site.
New opportunities:
The three industries were such that the demand increased with increasing population. In each of
these industries, Membrane technology was ahead of time. Also, membrane technology had been
proven on a pilot plant level, else where in the world. To make the final decision, the macro
environment in each of these industries was an important consideration.
Sugar industry could be broadly divided as cooperative (52%) and private sugar mills (48%).
The cooperative sugar mills were financially weak and not receptive to new technologies. Private
sugar mills, on the other hand, invested susbstantially on R&D. This R&D was mainly driven
due to the sugarcane pricing structure which gave no incentive to the farmer to improve the
quality of his produce. Thus it was left to the mill to find new methods to improve the yield.
Novasep of France had developed a new process for sugar juice clarification. This process would
replace the traditional chemical process which was energy intensive. Membrane technology was
also expected to give increase in the yield. Novasep had tested this technology on a pilot plant

and patented it. However, the awareness of this technology was poor in Indian sugar industry and
the membrane cost was considered to be hurdle.
The present process required about Rs. 15 per quintal of sugar produced. In Indian situation, the
new process wasnt yet tried by anyone and hence, there was no promise about the expenses that
might have to be incurred. However, this also went with the philosophy of Membrasep. If they
could penetrate this market, they would have a distinct advantage over their competitors. There
was no estimate of the market as no one had proven this technology in India. However, a senior
production manager of a leading sugar mill believed that if this technology could be proven, it
would be a huge break through and a sellout.
Dairy industry posed lot of opportunity for membrane system applications. The dairy market
could divided into western dairy products and traditional Indian dairy products. The western
dairy products mainly composed of milk powders, dairy whiteners, butter, cheese, whey, casein
etc. Traditonal Indian dairy products were products such as khoa, shrikand, paneer, and
traditional Indian sweets. Membranes have wide application in western dairy products and world
over applications for western dairy products contributed for largest demand for membrane
systems. In India only 7% of the milk goes for production of western dairy products. Nearly 50%
of the milk produced goes for production of traditional dairy products. The rest is consumed as
liquid milk.
Membrane systems could be used in concentration of milk, bacteria removal, concentration of
whey and for production of demineralized whey. The annual whey produce was valued at Rs 80
crore. The demand for whey products was expected to rise in coming years mainly due increases
export demand due higher international prices. There are two players present in this market one
is Westfalia and Permionics. Westfalia had significant share in western dairy applications. Both
the players had not ventured for traditional Indian products.
In case of traditional Indian products, most of the technology was developed by National Dairy
Research Institute (NDRI). Most of these technologies were not used on a commercial scale, as
most of the traditional dairy products were produced on small scale and there was further
refinement required on the technology part. It is expected that dairy processing by organized
players will increase to 25% in next three years from the present 20%. It is also expected that in
the long run organized dairy sector will gain share in traditional dairy products.
Novasep had three applications for automobile industry. All the applications were for paint shop
related. First application was for de-greasing this type of application was new in India and the
technology was superior to the current technology. No competitor had similar technology to offer
compared to that of Membrasep. The second being for paint recovery system for electrocoat
painting of vehicle bodies and automobile parts this was also a promising new application
which was superior than existing technology offered. There were two competitors providing
membrane technology for paint recovery. The third being for purification of water this type of
system existed in the market. There were many players who offered this kind of systems
Major auto manufacturers were expected to increase their capacities in the next five years,
mainly driven by increased income levels of individuals and increased economic activity.

Decision to be made:
Hitesh was going through the report submitted by the trainees [presented in the Appendix].
Hitesh now felt that he had a lot of latest information. To him all the three opportunities looked
very attractive. But he wasnt sure which all industries to enter.
*There is no financial data given in the case. However, if the participant wants he can use
any other relevant financial data quoting the source of the data.