Rural India: About The Company
Rural India: About The Company
Rural India: About The Company
NIRMA
About the Company
The man who altered the clothes-washing habits of the Karsanbhai Patel
the chairman of the Ahmedabad-based Nirma Ltd. This chemist who manufactured
detergents at home in Ahmedabad in 1969 has certainly come a long way. He worked
from his backyard which developed into a soap factory, cycled to retail outlets and
hawked his brand at one-fourth of the price of similar products then available. At Rs 6,
Nirma, named after his daughter, was the cheapest detergent vying for attention on shop
shelves. By the late 1980s, Nirma had become one of the world's largest-selling detergent
powders. That he rewrote history and gave Hindustan Lever, the Indian subsidiary of the
Anglo-Dutch foods and toiletries conglomerate Unilever, a huge headache is well-
chronicled. Today he is proud owner of an Rs 2,500-crore Ahmedabad-based soaps and
detergents major
It has been Patel's dream to make Nirma a synonym for quality. "Nirma is not
merely a brand or a product, it is a dynamic phenomenon, a revolution, a philosophy," he
once said. Nirma sells over 800,000 tones of detergent products every year and
commands a 35% share of the Indian detergent market, making it one of the world’s
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biggest detergent brands. Towards this end, he tried his hand at many brand extensions.
From toothpaste to salt and matchsticks, they all nestled under the Nirma umbrella.
Incorporated as a private limited company, Nirma was converted into a deemed public
company and then to a public limited one in Nov.'93. Nirma is an over Rs. 17 billion
brand with a leadership presence in Detergents, Soaps and Personal Care Products,
offering employment to over 15,000 people. In fiscal 1997, the Nirma group restructured
operations and merged four companies – Nilinta Chemicals, Nirma Detergents, Nirma
Soaps and Detergents, and Shiva Soaps and Detergents – with its flagship Nirma Ltd.
Products are marketed through a 100-per cent subsidiary, Nirma Consumer Care.
Nirma has undertaken backward integration into manufacture of Industrial
Products like Soda Ash, Linear Alkyl Benzene (LAB), Alfa Olefin Sulphonates (AOS),
Fatty Acid, Glycerine and Sulphuric Acid.
Today, Nirma sells over 800000 tones of detergent products annually, giving it a
35% share of the Indian market, which are the world’s second largest fabric wash
products markets. This makes Nirma India's largest detergent marketer and one of the
world's biggest detergent brands. The Company has acquired Kisan Industries Limited
situated at Village Moraiya, Dist. Ahmedabad as a going concern, which was engaged in
the business of manufacture of detergents, Single Super Phosphate, fertilizer and printing
and packaging. The second stream of the 420000 tpa Soda Ash plant at village Kalatalav,
Bhavnagar was commissioned in September 2000. The Company also set up a pure water
plant to manufacture 2.80 lacs TPA Vacuum-salt in October 2000.Debottlenecking
process which was made during 2001-02 by the company resulted in expansion of
installed capacity of Soda Ash at Village Kalatalav, from 420000 TPA to 650000 TPA.
The total cost of the project is approximately Rs.110 crores. This project is expected to be
completed in September, 2002. The company issued Secured NCD aggregating Rs.360
crores in order to augment its working capital and also to bring-in cost effiency in
funding cost
In detergents market Nirma and Hindustan Lever are close competitors with
38% market share each. Nirma leads the popular segment, while HLL leads the premium
detergent powder segment. P&G and Henkel Spic are the other key competitors in the
detergent market.
In toilet soaps, HLL has a dominating 63% market share. Nirma has also garnered a
significant 22% market share in a short time. Other major players in the segment are
Godrej Soaps and P&G.
PRODUCT
Nirma is aptly considered as a marketing miracle and this is reflected in the strength
of the brand. Nirma has successfully challenged and changed the conventions of
detergents marketing and today leading business schools are analyzing it's strategies
to demystify this miracle. Nirma's core marketing thrust revolves around prompting
consumer trials by offering a good quality product at most competitive price and
retaining these new consumers by continuously offering the same 'Value For Money'
equation. This is borne by the fact that today Nirma can boast of a strong brand
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loyalty from its 400 million consumer base. Based on the pragmatic concept of
'Umbrella Branding', Nirma has been increasingly successful in extending its
brand equity to other product categories like Premium Detergents, Premium Toilet
Soaps, Shampoos, Tooth pastes and Iodized Salt, thus opening new vistas to the field
of Brand Building.
Detergents
Nirma dominates the popular detergent segment with brands like Nirma Popular
powder, Nirma Detergent powder, Nirma bar, etc. Super Nirma detergent powder is
positioned in the mid-priced segment. Detergent volumes in FY00 increased by 4.4% to
615,749 tons.
Nirma Detergent Powder was launched in 1969, by Mr. Karsanbhai Patel. The
product created a loyal customer base that increased day by day. In 1982 Nirma
Detergent Powder became the largest selling detergent powder in western India and by
1989 the same was established on the national scene. The detergent when launched was
priced one third that of the nearest competitor. The detergent powder was overnight
converted into a common mans necessity from being a luxury of a few. The credit goes to
the pioneer of this new environmental friendly technology, Mr. Karsanbhai Patel who
lowered the usage barrier and started the Nirma phenomenon which took the world by
storm. After a period of more than 20 years the poly packet for Nirma Detergent Powder
was changed in 1998 to differentiate it from me too look alike'. The strategy seems to
have worked as consumers have successfully identified the new pack as a genuine Nirma
product. The product today is available in two pack sizes 500 grams and 1000 grams.
Super Nirma high quality spray dried detergent was launched into market in
1996 with a price 40% lower than the nearest competitor offering the same quality. With
in a short span of two years Nirma Super Detergent Powder cornered substantial market
share in the premium detergent segment. The brand targeted towards Nirma consumers
who were shifting towards more sophisticated form of washing, clicked very well as the
ever dependable Nirma Brand name assured high quality at affordable prices. The
powder is available in 25 grams, 500 grams and 1000 grams in polypacks.
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packed in multi-colour poly bag. This product is available in 500-grams and 1-kg packing
and is sold exclusively through the efficient Nima distribution network.
Driving the inspiration from its success in Detergent powder market, Nirma
expanded its product portfolio by introducing Nirma Detergent Cake in 1987. The
cake was launched keeping in mind the washing habits of rural India where limited use of
bucket and more so of running water added to the wastage of washing powder. The
answer was brought by Nirma in form of Detergent Cake. The brand today is ranked as
most distributed detergent cake brand in the country by AIMS retail audit. The product is
available in two pack sizes of 125 grams and 250 grams
Nima Blue Detergent Cake was introduced as a low cost alternative to the
then available blue detergent cakes in Q4 - '99 in very few select states and has ever since
been performing very satisfactorily. It is the epitome of Nirma's endeavor to provide
better products at more competitive prices. It is available in 125 gram and 250 gram pack
sizes. This cake is packed in a dark blue wrapper and has strong eye catching presence on
the shelf.
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Nirma Clean was launched in Q2 - 2000 and is available in a 300 gram bar
packing. The "Chak Chaka Chak" television commercial of 'Nirma Clean', showing a
whole set of spotless, clean vessels in a kitchen sparkling with starlight, delineates the
high cleaning quality of this scouring cake. It is targeted at the low end of the market.
'Clean' is expected to trigger conversion from the unbranded detergent powders and
cakes. Nirma expects the scourers market to undergo dynamism with its introduction of
two scourer cakes.
Bathing Soaps
Nirma Bath Soap (Carbolic): Toilet soap market was dominated by few
MNC's who could monopolistically drive the prices. The growth of toilet soap market
was tremendous in 90's and was expected to increase further. Nirma's brand equity in
detergent market was very strong and was unanimously associated with value for money
products. We saw no reason why cannot this be extended to the personal care market.
Nirma ventured into this market with Nirma Bath a carbolic soap to counter the largest
selling soap from a MNC stable. The carbolic soap segment though a declining market
saw a sudden burst of activity. Nirma Bath started gaining substantial volumes at the cost
of he competitor's and India's largest selling brand. The pricing of the product was
penetrative at a quality (TFM - 60%) which the competitor's could not match. The
product is available in 75 grams and 150 grams pack sizes.
Nirma Beauty Soap: After targeting the largest selling toilet soap with
Nirma Bath, now was the time to target the second largest selling toilet soap. Nirma after
successful launch of Nirma Bath launched, Nirma Beauty. Nirma Beauty was a popular
category soap which targeted the middle and lower middle class population of the
country. The product had high TFM content of 70%, an excellent aroma and an
advertisement with a touch of aspiration. The product became an instant success, and in
no time became India's third largest selling toilet soap brand. The volumes came from the
category shift as well as brand switching. The product is available in 100 grams and 150
grams pack sizes and three different perfume variants. Recently company has changed its
packaging and made it more contemporary by printing the wrappers on six color Cerruti
machine from Italy thereby differentiating it from the me too look alike'. The brand today
is growing very fast and is firmly moving towards the second position. Competitors tried
to copy the concept and the commercial but were not able to match the success of the
brand. As it is said you cannot fool consumers when it comes to quality
Nirma Premium Soap: For the first time in the history of FMCG there was
an attempt to extend the value for money proposition to the premium segment. The
concept was innovated by none other than Nirma. Nirma launched Nirma Premium Soap
during 1996 in the premium soap category with 80% TFM, mild fragrance, three variants
and a touch of class in its advertising. The brand targeted to match the changing Nirma
consumer's profile in terms of aspiration, quality consciousness and image perception.
The brand has started picking up volumes in the premium soap market which is
characterized by large number of brands and cut throat competition. Nirma Premium has
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been able to differentiate itself in this cluttered market its unique packaging and exclusive
advertisement.
Nima Lime, the first product in the Nima range of products has a very high
TFM content and was introduced in Q2 - ' 98 when the astounding success of Nirma
Lime Fresh Soap prompted competition to launch lime variants in the same price
segments. Nirma is committed to the concept of umbrella branding. We have reaped
benefits of this strategy right from our inception till date. In the past, we have faced
umpteen numbers of situations where the competition introduces special campaigns to
draw away the consumer's attention from our core brands like Nirma Detergent Powder,
Super Nirma Detergent Cake, Nirma Beauty Soap, Nirma Lime Fresh Soap, etc. The
purpose was to lure away consumer attention from Nirma Lime Fresh Soap by
temporarily modifying the product. We, at this point of time introduced a 'fighter brand'
called Nima Lime to provide at shield to our core brand - in this case 'Nirma Lime Fresh
Soap'. The success of Nima Lime has been the cornerstone in Nima brand growing into a
full fledged business
Nima Sandal: This soap was launched in Q2 - '99. Over a period of time, the
Indian toilet soap market has fragmented and has seen the emergence of prominent
segments such as Sandal, Rose, Jasmine, Body moisturizing soaps, Herbal etc. Nima
Sandal is Nirma's offering in the ethnic sandal segment. With a rich and exotic perfume
and 80% TFM content, this toilet soap is available in a 100 gram packing. Nima Sandal is
promoted by a TV commercial shot at exotic locales depicting the form of 21st Century
Indian woman. Early market indication promises this brand to be the future no.1 in this
segment.
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Nima Herbal is the emanation of Nirma's quality and caliber. Nima Herbal is
ingrained with benefits that accrue from using various herbs, shrubs, medicinal plants and
various day-to-day commodities like sandal wood, lemon, turmeric, coconut, tulsi, neem
etc. that are gifted to mankind by nature. Nima Herbal is the nature's legacy. It is
reflection of Nirma's conviction of "Care For The nature's legacy. It is reflection of
Nirma's conviction of "Care for the Consumers". It was launched in Q3, 2000 with a 78%
TFM content in a 100 gram packing.
Nirma Herbalina: Nirma has invariably identified the nerve of the market
and answered it at the proper time. We addressed the ayurvedic and medicated soap
segment with Nirma Herbalina. Launched in Q3 - 2000 with a high TFM content,
'Herbalina' is Nirma's latest introduction in the range of toilet soaps. The natural
commodities that are shown on the wrapper blend very well with the green colour of the
eye-catching pack. Available in a 100 gram packing size, Nirma Herbalina is the 'Natural
flow of freshness'. It is Nirma's yet another impression of 'Better Products, Better Value,
Better Living'. Herbalina has an exceptional long-lasting, heart-capturing aroma.
OTHER PRODUCTS:
1. Hair care
a. Nirma Beauty Shampoo
b. Nirma Shikakai
2. Toothpaste
a. Nirma Toothpaste
4. Industrial chemicals
PRICE
Ivory tower theories are rethinking their business basics-thanks to Karsanbhai
K.Patel. Taking on the might of a multinational, his-priced detergent Nirma captured a
majority market share arresting the sales and growth of a consumer giant’s up market
brand. Among the greatest success stories in the annals of marketing management in
India is that of a low-priced detergent of reasonably good quality which, in the course of
a mere decade, put the skids on a product that was considered the pride of a powerful
multi-national. The story of Nirma has become a classic as a marketing case-study. And
the story of its progenitor is as genuine and romantic a tale of rags-to-riches as one could
hope to find anywhere.
For harried housewives, struggling to balance their monthly budgets, Nirma came
as a boom. It was much cheaper than Surf, which had already gone well out of their
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reach; and it washed clothes nearly as well. Its cleansing power was far superior to that of
the slabs of cheap washing soaps that had been their sole alternative until then. By the
early 1980s the burgeoning sales of Nirma reached a rate of growth that was twice or
thrice that of the industry in general. Moreover, Nirma operated in the small-scale sector
and, therefore saved an enormous amount of excise duty that multinationals had to pay on
every kilo of detergent produced. The latter simply could not hope to bring the price
down to a level that was attractive enough for the middle and lower-middle classes,
which were the bulks segments for Nirma sales.
The pricing policy adopted by Nirma for its Nirma washing powder i.e. adequate
Quality at an Affordable price has challenged the mighty HLL’s Surf.
Even the second product that Karsanbhai introduced-a low-priced toilet soap,
which he thoroughly test marketed in Gujarat before going national with it in 1990-hs
been faring well. Nirma toilet soap retails at a mere Rs.2/- with the shopkeeper allowed to
retain 25 paisa behind each cake sold. The Nirma name itself was a guarantee of quality
for the consumer smiles the businessman. It found ready acceptance. Today, Nirma's
toilet soap products are priced in the range of Rs 6-9. Nirma Lime Fresh, for instance,
commands a price of Rs 8 for 75 grams, while Nirma Premium is priced at Rs 9. Nirma
Bath, a popular soap, is priced at Rs 6. In comparison to Nirma's price range, HLL's toilet
soap brands are priced at a slight premium. LifeBuoy is priced at Rs 14, and LifeBuoy
Gold at Rs 9. The price of Rexona is Rs 9.50, while that of Liril, which competes with
Nirma Lime Fresh, is Rs 13.
The result of there cost effective product offering is that though the industry has
been growing at the rate of 15 per cent annually, Nirma’s growth has been at least 30-35
per cent a year for the last few years.
Nirma has been successful in keeping its prices at such affordable levels
primarily due to their strategy of backward integration projects. These projects had been
undertaken with a strategy to become the lowest cost detergent manufacturer in the
world. Self sufficiency in key raw materials will give protection against commodity
cycles besides yielding substantial savings in raw material cost. The company estimates a
total cost saving of 25% in material and handling costs due to the backward integration
projects. The LAB plant has yielded about 12% cost savings and the company expects a
similar cost saving of about 12-15% once the soda ash plant stabilizes. Overall the
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backward integration has yielded a cost saving of Rs0.8-1bn last year. Post completion of
backward integration the company now plans to focus on building large volumes and
gain from economies of scale.
Till 1985 the Nirma ingredients were simply mixed by hand thus requiring neither
machinery nor capital investment. Due to the scale of his product and the simple non-
mechanized production process, Nirma gained a number of tax and excise benefits for not
using electricity. Since Nirma was a small-scale local venture, they did not have to pay
excise duties that were levied on multinationals.
Another area where Nirma saved millions was in labor costs. Being a cottage
industry Nirma was not compelled to abide by minimum wage rules. To maintain low
costs Karsanbhai used contract workers who were paid Rs. 85 per ton (In 1985 $1 U.S =
Indian Rupee 12.368)1 for mixing raw materials and then bagging them into 1000 bags of
1 kg each. Payment was made according to work done and since labor was not
permanent no additional overhead for benefits etc. needed to be paid. It was not until the
mid 80’s that Nirma started to mechanize their production process, however by then they
were an already well-established name. In 1989 Nirma’s labor costs for 8000 workers
was estimated to be between Rs 15-20 per person day in comparison to HLL who paid
their semi-skilled workers approximately Rs 30-40 per person day. (In 1989 $1 U.S =
Indian Rupee 16.225)2
DISTRIBUTION
In its incipient days Karsanbhai Patel’s distribution network and sales
force was a one-man team…..himself. Karsanbhai affected his deliveries of washing
powder on foot. As the popularity of Nirma grew with a spread of positive word-of-
mouth Karsanbhai adopted the time-honored Coco Cola maxim that his product should be
available within an arm’s length of desire. So he concentrated on widening his
distribution network; and Nirma began surfacing all over Gujarat, in scruffy little shops
in even the remotest villages. As the product’s fame spread, agents from all over the
country began writing in, and expressing their willingness to operate on the tiny margins
that the businessman gave. Distribution is clearly the key to rural marketing, which
Nirma has pioneered over the years. Nirma has a 350 strong sales force, a distributor
strength of 400 and a retail reach of over 1 million outlets. When setting up a distribution
system Karsanbhai was extremely aware of the importance of keeping costs down. Once
demand for Nirma had outgrown his ability to deliver on bicycle he moved on to vans
and then later to trucks. Nirma had neither a field sales force nor owned a distribution
network. Karsanbhai negotiated prices with truck and van suppliers on a daily basis. As
sales grew Karsanbhai eventually hired stockists (those who stocked additional quantities
of the goods) as commission agents. On the one hand it helped him avoid central sales
tax and the stockists were responsible for all transportation, octroi, 3 handling and delivery
2
Seen at http://pacific.commerce.ubc.ca/xr/CADpages.pdf
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costs. There was also a strict system of protocol and distribution depended on
prepayment for stocks so as to minimize risk for Nirma.
Nirma sells over 800,000 tones of detergent products every year and
commands a 35% share of the Indian detergent market, making it one of the world’s
biggest detergent brands. The brand promotion efforts are complemented by Nirma’s
distribution reach and market penetration, through a country wide network of 400
distributors and over 2 million retail outlets, making Nirma products available from the
smallest rural village to the largest metro.
The company has set up for Nima a parallel distribution and sales channel
consisting of 1500 distributors and an independent sales force. A two-tier network, the
Nima distribution channel is 'flat' enabling swift market response. The company took
great care that the new brand did not cannibalize on the existing brands. The Nima
portfolio today complements the Nirma range, furthering the company's strategy of Value
for Money
PROMOTION
Karsanbhai does not start up a media assault until his entire distribution network
has the product in place. Nirma believes in advertising only after they have launched a
product in place. Their belief is that nothing can be more irritating for a customer than to
see a product advertised, and then find it has not reached his grocer. Advertising just tells
people that a product is available. After that, the product has to stand on its own feet on
quality and price.
As televisions reach spread in India during the late 1970s so too did Nirma’s. The
little girl on the pack became a symbol that was almost generic with a good quality, low-
priced detergent. A catchy jungle hammered home the message to millions of
housewives. It was as if a down market consumer revolution had taken off.
While advertising did not appear as a cost in his initial budgets, by the late 70’s as
televisions slowly started to spread into rural India, so did the Nirma ad campaign, with
its simple message and catchy jingle. By the early 80’s Nirma became synonymous with
good quality and low-price. The stockists were also responsible for promotions and they
funded 50% of promotional expenditure for their goods. Nirma’s sales reached a rate of
growth that was two to three times that of the industry in general. As a result of all the
above measures Nirma survived and flourished on what looked like a miniscule margin
per unit.
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38.4 22.6 - 32.2 19.1 -
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Henkel Spic India Ltd 717.44 10 28.6 (15) 7.25 (192)
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