Karsanbhai passes the baton

The founder of Nirma who challenged the MNC's in the detergent industry, is handing over the reigns to the generation next.

india Updated: May 02, 2006 12:37 IST

Karsanbhai K Patel, the founder of Nirma Ltd and the man who challenged the might of multinationals such as Hindustan Lever in the detergent industry, is handing over the reigns to the generation next. Karsanbhai (61), who now figures in the Forbes’ list of richest Indians, has outlined a succession plan, where by his three sons are being given specific responsibilities and designations.

Under the plan being finalised, Karsanbhai’s second son Hirenbhai will take over as the managing director of the company. The eldest son Rakeshbhai will be the new vice-chairman. Kalpeshhbhai will continue as executive director of the company.

Karsanbhai, who will be the non-executive chairman, is passing on the baton at a time, when Nirma brand has cornered almost 65 per cent of the domestic detergents industry.

When Karsanbhai’s yellow-turmeric powder started cornering market share by early 80s, multinationals like HLL did not take it seriously. By 2000, Nirma had a market share of 38 per cent in the detergent category with HLL notching up a second slot with 31 per cent. Karsanbhai was also adept at driving down costs. Nirma bought out its raw material suppliers and brought down the cost by almost 15 per cent. While it has a capacity to manufacture 650,000 tpa of soda ash, its linear alkane benzene capacity stands at 75,000 tpa.

While Nirma has been successful with its detergent business, some of the brand extensions like soaps did not work well.

Driven by a major turnaround in the fortunes of the FMCG industry, Nirma notched up a higher net sales of Rs 1,916.76 crore during the period ended March 31, 2005-06, up from Rs 1,838.87 crore last year. The profit before tax was Rs 404.97 crore, up from Rs 352.81 crore last year. In the past, Nirma had passed through tough times due to floundering fortunes in the FMCG industry.

Nirma is a success story in its own right, having unseated established multinational giants such as Hindustan Lever and Procter & Gamble. Nirma’s success can be attributed to its flat distribution network. Its fullyowned arm Nirma Consumer Care Ltd operates with two distribution networks. These distribution channels have made Nirma a household name.

Nirma is adopting a new strategy for growth. Its now venturing into unrelated businesses. It recently acquired the assets of Ahmedabad-based pharmaceutical company Core Health Care Ltd, which manufactures IV Fluid and injectibles. The FMCG major is planning to use its distribution network to sell pharma products. The detergent major is also setting up a cement plant with a capacity of 1.2 million tpa in Gujarat.

Super brand: Marketing miracle of an era

Karsanbhai k Patel’s story, which continues to inspire many aspiring entrepreneurs, started in 1969 when he started selling a yellow-turmeric powder to his neighbour’s for a small profit.

It was during experiments in his kitchen that the knowledge of chemicals enabled him to concoct an effective detergent. The yellow detergent, still available at a local grocer’s in Mumbai for Rs 12.50, is India’s greatest consumer goods success story. Nirma, named after Karsanbhai Patel’s then one-year-old daughter, Niranjana, who was affectionately known to everyone as Nirma, now holds close to 65 per cent of India’s detergent market.

It was mainly economic adversity that egged Karsanbhai Patel, then a chemist with the Gujarat Minerals Development Corporation, to manufac ture detergents at home in Ahmedabad in 1969.

When Karsanbhai Patel started door-to-door selling of his detergent powder priced at a low price of Rs 3 per kg, the available cheapest brand in the market was Rs 13 per kg. In a short span, Nirma created an entirely new market segment in domestic marketplace, which is, eventually the largest consumer pocket and quickly emerged as dominating market player.

Redefining the marketing rules, Nirma became a one of the widely discussed success stories between the four-walls of the B-school classrooms across the world. The performance of Nirma during the decade of 1980s has been labelled as “Marketing Miracle” of an era. During this period, the brand surged well ahead of its nearest rival–Surf, which was well-established detergent product by Hindustan Lever. Karsanbhai is now number 38 in the Forbes list of richest Indians.

Inspiring success Nirma was named after Karsanbhai’s daughter He launched Nirma for Rs 3 per kg in the market The detergent now holds close to 65% market share.

First Published: May 02, 2006 12:37 IST