Cavin kare

C K Ranganathan, chairman and managing director of�CavinKare, has shown the world it is possible to beat the multinationals even in the most difficult market of fast moving consumer goods.

Ranganathan's journey, which started from a�small town�of Cuddalore in Tamil Nadu, has been an amazing one.�A business which he started with only�with Rs 15,000�is now worth Rs 500 crore (Rs 5 billion).

He learnt the first entrepreneurial lessons from his father, Chinni Krishnan, who�started a small-scale pharmaceutical packaging unit,�before moving on to manufacture pharmaceutical products and cosmetics.

In an interview with rediff.com,�the CavinKare chief speaks about his inspiring journey.

His father,�his inspiration

My father, Chinni Krishnan, an agriculturist, was also into pharmaceutical business. As I was poor in academics, he wanted me to either do agriculture or start a business.

My�siblings were good�in studies -- two of them became doctors and�another�a lawyer. I was the odd one out. While my siblings studied in English medium schools, I was put in a Tamil medium school. I used to suffer from an inferiority complex�because of�my poor academic record.

Studies did not interest me, but�rearing pets did. When I was in the fifth standard, I had a lot of pets --�more than 500 pigeons,�a�lot�of fish and a large variety of birds. I used to�earn my�pocket money out of�pet business at that time. Perhaps, the entrepreneurial spirit�in me showed its first streak.

The origin of the concept of sachets

My father died as I�entered college.�He had come out with the sachet concept a couple of years prior to his demise. He felt liquid can be packed in sachets as well. When talcum powder was sold only in tin containers, he was the one who sold it in 100 gm, 50 gm and 20 gm packs.

When Epsom salt�came in 100 gm packets,�my father�brought out salt sachets�of as low as 5 gm.

'Whatever I make, I want the coolies and the rickshawpullers to use. I want to make�my products affordable to them,' he used to say.�

Selling things in sachets�was his�motto as he said, 'this is going to be the product of the future.' But�my father�could not market the concept well. He�moved from one innovation to another but never thought of marketing strategies. He was a great innovator, but a poor marketer.

Joining the family business

After my father's death, my brothers took charge of the family business. In 1982,�when I joined them after my studies, they had�launched�Velvette Shampoo. Within�eight to�nine months, I left the�business because my ideas�clashed with theirs.

As I was in the manufacturing unit, I did not know anything about marketing or finance. But, my�inferiority complex notwithstanding, I�was somehow confident�of doing�business better.

Starting his own business with�Rs 15,000

I had left�my brothers saying that I did not want any stake in the�property or business. That was a defining moment for me. I had saved�Rs 15,000 from my salary and that was all I had. Yet I was confident of achieving success.�I�did not feel anything�about riding a bicycle after having got used to cars.

For a week, I�could not make up my mind as to what�business to do. I knew only two things; making shampoo and rearing pets. I didn't want to�venture into the shampoo business as it�would initate a fight with my brothers. However,�I decided to do the same�later as I�could only make shampoo.

I�rented a house-cum-office�for Rs 250 a month against an advance of Rs 1,000. I took another place for�the factory for a rent of Rs 300 a month and�against an advance of Rs 1,200. I bought a shampoo-packing machine for Rs 3,000.

How Chik Shampoo was born

I named�it Chik Shampoo after my father.�The product did not succeed immediately;�we learnt�many things�during the process. In the first month, we could sell 20,000 sachets and from�the second year, we started making profits.

I moved to Chennai in 1989 but our manufacturing unit continued to be�in Cuddalore.�It took me three years�to get�the first�loan because banks asked�for collateral. I did not have any. But�one particular bank gave me a loan of Rs 25,000�which we rotated and later�upgraded�to Rs 400,000, Rs 15 lakh (Rs 1.5 million), etc.

You know what the bank manager�wrote in our loan application? 'This person does not have any collateral to offer but there is something�interesting about this SSI unit. Unlike others, this company pays income tax!'

I must say�my business never looked back because I was very particular�about paying�income tax.

Strategies�that made Chik Shampoo No. 1 in South India

When�Chik entered the market,�Velvette Shampoo�was being marketed aggressively by Godrej. But a scheme of ours became extremely successful -- we exchanged five sachets of any shampoo for�a Chik Shampoo sachet, free.

Later, we altered the scheme�--�we started�giving one free Chik Shampoo sachet�in lieu of�five�Chik Shampoo sachets only. Soon, consumers started asking for Chik sachets only.�The sales went up from Rs 35,000�to Rs 12 lakh (Rs 1.2 million)�a month.

When we introduced jasmine and rose fragrances, our sales went up to Rs 30 lakh (Rs 3 million)�per month and with actor Amala as�our model, our sales rose�to Rs 1 crore (Rs 10 million)�a month! Each idea of ours was rewarded by our customers.�There has been no looking back since then.

Our market share increased and in 1992, we became the numero uno in South India. It took nine years for me to overtake my brothers' business.

How Chik Shampoo conquered the rural market

Multinational companies sold products in big bottles and not in sachets and they�sold only from fancy stores. They�did not look at the small kirana stores, nor did they look at the rural market.

We went to the rural areas of South India where people hardly used�shampoo. We showed them how to use it. We did� live demonstration on�a young boy. We�asked those assembled to feel and smell his hair.

Next�we�planned�Chik Shampoo-sponsored shows of Rajniknath's films. We showed our advertisements in between,�followed by�live demonstrations.�We also distributed�free sachets among�the audience after these shows. This worked wonders in rural Tamil Nadu and Andhra Pradesh. After�every�show,�our shampoo sales went up�three to�four times.

Today, the Indian rural market is growing�at a�pace double than that of the urban market.

Launching Meera Herbal powder

We continued with Chik Shampoo for seven years before�venturing into anything else.

Meera Herbal powder was actually not our idea. Shaw Wallace already had a herbal product but it was marketed very poorly. We felt there was a�demand for�herbal products and�we made�a good product. I felt we should be the�leader if ours was a good product. And guess what? In the third month itself, we�topped the market. In�six months, we had 95 per cent market share,�while Shaw Wallace had only�4-5 per cent.

How Beauty Cosmetics became CavinKare

As we�planned to expand to new�products, we thought the name Beauty Cosmetics would be restrictive.�In 1998, we ran a contest among�our employees for a name and one of them suggested�CavinKare; with C and K spelt in capitals. CK, my father's initials. Cavin in�Tamil means beauty and grace.

Perfumes for the poor

We wanted to cater to those�who cannot afford (high priced) perfumes. Good perfumes�came at a huge price -- they were beyond the means of ordinary�people.�We decided to come out with a Rs 10 pack Spinz.�We were successful in that too.

Shampoo market share

In the last two to three years, our market share has come down though we are growing. It is mainly because of the anti-dandruff shampoos in the market. We do not have an anti-dandruff shampoo yet. From 0 per cent, the anti-dandruff shampoos have taken over 25 per cent of the market.�

Only 75 per cent of the market, therefore, constitutes�ordinary shampoos. We hold 20�per cent�of�the�market share.�

But we are the largest brand in rural Uttar Pradesh,�Andhra Pradesh, etc. and�we are�the number one in many other states as well.

On the decision to launch a fairness cream

We decided to launch Fairever in 1997 as we saw a huge�demand fairness cream.�We are the second largest player in the market in this.

Research�states that�when a product is good,�consumers do not�shift to a new brand.�Our team told me not to venture into the fairness cream market as the consumers were�quite satisfied with the existing products. But we went�to launch our product�containing saffron --�which is�traditionally used�to get a fair complexion. In�six months, our sales galloped.

This was followed by Indica hair dye.

Two and a half years ago, we launched Ruchi pickles in sachets and we�became number one there too. We sell close to 5,000 tonne of pickles per annum. We hope to double this in�two to�three years. Food is a huge market: we have understood that.

Our target is to be a Rs 1,500 crore (Rs 15 billion) company in another three years.

Reasons behind his success

Teamwork is the main reason for our success. We have good professionals who�work really hard. The second reason of our success is innovation. We have executed innovative ideas as well.

CavinKare Ability Award

This month, we�presented the 5th CavinKare Ability Foundation awards for physically disabled achievers.

I stayed as a tenant at Jayashree Ravindran's place�(the woman who started the Ability Foundation). Once, she said� she wanted�to start a magazine for the disabled. Though she did not ask for�sponsorship, I gave her a cheque of Rs 25,000. I also became one of the Foundation's founder members.

Once we came to know about�the disabled�who have�climbed the ladder�of�success, we -- Ability Foundation and CavinKare�-- decided to institute an award for�them.

I feel each of us has to give something back to the society. I have great admiration for those who fight against all odds and�attain success. When I started my career, I�only faced�shortage of funds but these people tide over graver difficulties.�We�must applaud their fighting spirit.

C K Ranganathan, chairman and managing director of�CavinKare.