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Rohit surfactants plans to take hul head on in premium category


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Rohit surfactants plans to take hul head on in premium category

  1. 1. Rohit Surfactants plans to take HUL head on in premium category; aims to replicate 'Ghari' magic in urban landscape with 'UniWash' When RSPL launched its new laundry brand UniWash a month ago, its strategy was in complete contrast to what it adopted for its runaway success Ghari detergent a quarter of a century ago. For one, UniWash was launched in Punjab, Haryana and New Delhi while Ghari stayed in Uttar Pradesh in the first two decades of its existence. Also, at Rs 95 a kilo, the new product commands a 10% premium over competitors Rin and Tide's basic variants and costs double as much as Ghari. That's quite a gamble in one of the most price sensitive segments — laundry—currently worth Rs 14,000-crore in the country. Inside RSPL's headquarters in a dusty bylane of Kanpur, however, its founder Muralidhar Gyanchandani shows no sign of tension, if at all, as he fields ET's questions from behind his desk in a simple white kurta-pyjama. "Let consumers decide the fate of our new product as we are confident that the quality will speak for itself," he says, borrowing from UniWash's tagline, 'Ab safedi khud bolegi'. This snowy haired sexagenarian's confidence is reflected in his firm's bold distribution drive. Anand Mour of ICICIBSE 0.62 % Securities in a recent report said, "The company has taken an advance of about a month's payment from distributors, and if we are to believe the quantities for which the advance is taken, UniWash is set to be carpet-bombed in the market." Clearly RSPL hopes its new laundry product will replicate the magic of Ghari, which emerged the country's largest brand in a segment where the world's largest consumer product firms UnileverBSE 0.84 % and Procter & Gamble are engaged in a marketing war. And RSPL is once again betting on its quality rather than on pricing or advertising. "Ghari never got itself involved in a price war," says a former senior executive at Hindustan UnileverBSE 0.84 %. "Priced 20% higher than rival brands, the company has always marketed their product on the back on a 'better quality proposition'," says the executive who was directly involved with HUL's operation STING (Strategy To Inhibit Nirma's Growth) in the late eighties. If STING helped HUL's Wheel pip NirmaBSE 0.06 % as the top detergent brand, Ghari emerged on top in November 2011 when it had 30 basis points more market share than Wheel, a Prabhudas Liladher report quoting Nielsen data had said. Latest market share numbers are not available.
  2. 2. Muralidhar Gyanchandani, who retired almost seven years ago when he turned 60, diligently makes 20-odd phone calls everyday to officials involved in operations to logistics to finance to production, from about 8 am till noon, until he is satisfied everything is in order at the firm he founded with his younger brother Bimal Kumar Gyanchandani in 1987. So how did he pull it off at a time when the market was about HULBSE 0.84 % and Ahmedabad based Nirma, whose eponymous washing power evicted HUL's Surf from the top slot in 1985? Gyanchandani points to the company's message board: "Serve consumers with insight and build brands with passion. Sales and market shares are merely logical outcomes." "I think I have also been lucky," says the man who seldom talks about his success that is celebrated as an example of small town entrepreneurial chutzpah. He isn't far off the mark. Part of his success in the last decade stemmed from Nirma digressing from brand building to putting up soda-ash business and HUL focusing more on the top end of the market. It is in the higher end market that RSPL has now introduced UniWash as an urban-centric laundry product. It isn't the only change at RSPL in the last few years. The two senior Gyanchandanis might be still hands on, but it is the second generation— Muralidhar's sons Manoj and Rahul and Bimal's son Rohit—that now steers the ship as RSPL is expected to record sales of Rs 3,900 crore this fiscal, up from Rs 1,000 crore in 2006. What has not changed is its relentless focus on cost savings. "When most companies spend around 10-12% of their net sales on advertising and promotional spends annually, RSPL spends merely 2% in marketing and hasn't roped in any ambassador till date for Ghari. Neither for UniWash," Rahul Gyanchandani, a director at RSPL, says. While other consumer companies rely on clearing and forwarding agents, RSPL supplies
  3. 3. its own products from factories to dealers, saving at least 2% in costs. "The promoter's domain and geographical knowledge has been very strong," says Amin Babwani, an independent consultant who recalls how a driver-cum-portercum-salesman used to distribute Ghari to dealers when its rivals employed three people to do the same job. Gyanchandani's drive for quality and cost consciousness also made the firm resist the industry practice of outsourcing. From making the product at its 20-odd factories to packaging to distributing the goods through over 450 trucks and tankers, everything is done in-house. That pretty much explains why RSPL hasn't reported net losses ever in one of the lowest margin businesses. So what else has changed? The group is no longer just a laundry product maker. In the past few years, RSPL has moved to bathing soap and dishwash bar and to unrelated businesses such as real estate, leather and dairy business. "Our brand Namaste India has outperformed market leader Amul in the dairy space within two years of its launch in Kanpur," says Manoj Gyanchandani who is also incharge of leather brand Red Chief, endorsed by cricketer Virat Kohli. RSPL, which entered more than a dozen new states in the last four years, plans to take its brands to Bangladesh, says Rohit Gyanchandani who handles Xpert dishwasher and real estate business. "We are also launching products such as sanitary napkins as we feel that there's limited competition in such as high potential segment." An attempt to be a national FMCG company reflects in its name too, which has changed from original Kanpur Trading Company to Rohit Surfactants Private Limited to RSPL. As the new generation readies to take up this challenge, any words of advice from mentor Muralidhar Gyanchandani? "No matter how hard it gets at the market place or difficult to earn margins, you can't afford to be out of the shelves," he says.