New Aptec Consulting Policy
For 15 years it has been the policy of Aptec to provide free consulting service over the duration of every project life cycle in the poultry processing industry in India, for all customers of Meyn. Naturally, such service commences in good faith from the time the potential customer approaches Aptec with the intention of venturing into this field and extends beyond the financial security that an LC offers, generally several months after this free-service arrangement comes into effect.
In the end, some customers opt for other vendors or local fabricators. When they do, cumulative free service rendered to them till that choice in preference to Meyn represents a wasted effort on Aptec’s part. This has so far been an acceptable downside to Aptec’s approach. It is consistent with our belief, mentioned in detail in the article White Paper of Market Size, Prospects, Pitfalls that we need to be part of the grand effort to ensure that bad project planning, a characterizing feature of this industry’s pre-1998 era, does not mar its future.
However, the recent need for one of our competitors to buy projects in India at below transfer price, just to keep their workshop in Europe running, consequent upon their last quarter’s dismal financial performance, which first resulted in their CEO being sacked last year-end, and which threatens to lead to a planned reduction of 25 middle-level executives, including possibly some from their field office in India, has given us pause to review our policy.
Unfortunately, preferring the short-term view, some Indian customers now find it attractive to first milk Aptec’s generous policy of free design and consulting support for the mileage it gives them, and then fall into the below-transfer-price lure offered by this vendor. They are naturally welcome to their choice of vendor, but Aptec needs to protect itself from the generous policy it has been pursuing so far. Consequently, commencing from this date, Aptec will need and secure a financial commitment from all prospective customers in India before it offers any design and consulting support.
During subsequent commercial negotiations with Meyn, in the event Meyn agrees to a price discount parity with this particular vendor, the advance received by Aptec will become part of the sale consideration between Meyn and the customer.
On the other hand, if the customer finds the price advantage offered preferable to the benefits offered by Meyn, the advance payment made to Aptec will be forfeited. We are considering a value of the order of 5% of the list price in our initial offer to constitute the advance payable to Aptec by prospective customers who wish to obtain design and consulting services for their proposed poultry processing ventures for periods prior to opening an LC in favour of Meyn.
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