Asian School of Management

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CONTENTS

INTRODUCTION

VISSION MISSION AND PHILOSOPHY

COMPANY PROFILE

STRATEGY OF NIRMA

STRENGHTS OF NIRMA

ACHIEVEMENTS

CORPORATE SOCIAL RESPONSIBILITY

PHASES OF DEVELOPMENT

SIGNIFICANT PROBLEMS OF NIRMA

CAUSES OF FAILURE

APPENDIX

BIBLIOGRAPHY


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INTRODUCTION

The Indian fabric wash products market was a highly fragmented one. Therewas a sizeable unorganized sector. Of the 23 lakh-tonne market, laundry soaps

and bars made from vegetable oils accounted for around seven lakh tonnes

with synthetic detergents making up the rest. Detergent cakes accounted for

40% of the synthetic detergent used, while powder accounted for the rest.

Washing powders were categorized into four segments - economy (selling at

less than Rs.25 per kg), mid-priced (Rs.25 - Rs. 90 per kg), premium (Rs. 90 -

Rs. 120 per kg) and compact (selling at over Rs. 120 per kg). The compact,

premium and medium priced segments together accounted for 20% of the

volume share and 35% of the value share. The economy segment made up theremaining lion's share of the market. The fabric wash industry in India was

characterized by low per capita consumption, especially in rural markets. The

major players in the Indian detergent market were HLL, P&G, Nirma and

Henkel (through its joint venture with SPIC, a leading petrochemical company

based in the south Indian city of Chennai).

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VISSION, MISSON AND PHILOSOPHY

Nirma is a customer-focused company committed to consistentlyoffer better quality products and services that maximise value to thecustomer.

This customer-centric philosophy has been well emphasised at Nirmathrough:

Continuously exploring & developing new products & processes. Laying emphasis on cost effectiveness. Maintaining effective Quality Management System. Complying with safety, environment and social obligations. Imparting training to all involved on a continuous basis. Teamwork and active participation all around. Demonstrating belongingness and exemplary behaviour towards

organisation, its goals and objectives.

MISSION STATEMENT

A statement of sustained innovation, an unceasing effort to deliverbetter value to consumers, through better product quality.

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COMPANY PROFILE

Nirma is a group of companies based in the city ofAhmedabad in western

India manufacturing products ranging from

cosmetics, soaps, detergents and salt. Karsanbhai Patel, a well known

businessman, industrialist and philanthropist ofGujarat, started Nirma as a

one-man operation. Today Nirma has 14000 employees and a turnover of Rs.

2500 crores. In 2004, Nirma's annual sales touched 800,000 tonnes. Nirma is

one of the most recognizable Indian brands. Its story is a classic example ofthe success of Indian entrepreneurship in the face of stiff competition. Nirma

took on the might of giant multinationals and wrote a new chapter in the

Indian corporate history. Starting as a one-man operation in 1969, today,

Nirma has about 14, 000 employee-base and annual turnover of more than Rs.

25, 00 crores.Founder of Nirma is Dr. Karsanbhai Patel, son of a small-time

farmer and a qualified Science graduate. In 1969, the year he founded Nirma,

Karsanbhai Patel was working as junior chemist in Government laboratory. In

the night Karsanbhai used to make detergent in the 100 Sq. Ft. back yard of

his home, using bare hands and bucket. In 1960s and 1970s, the domestic

detergent market had only premium segment, with very few players and was

dominated by MNCs. After making the detergent Karsanbhai used to pack it

in polythene bag and sold it door-to-door. He priced the detergent at Rs. 3 per

kg, when the available cheapest brand in the market was Rs. 13 per kg. In a

short span of time, with indigenous process, packaging and low-profiled

marketing, Nirma created an entirely new market segment in domestic

marketplace and quickly emerged as dominant market player. Nirma

catapulted Surf, which was a well-established detergent product by Hindustan

Lever, and occupied the top slot in the detergent products segment-a slot it has

made its own. In 1990, Nirma entered the toilet soap market and today it is thesecond largest toilet soap brand in India. Today, Nirma has one of the largest

volume sales with a single brand name in the world.

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http://en.wikipedia.org/wiki/Ahmedabadhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Karsanbhai_Patelhttp://en.wikipedia.org/wiki/Gujarathttp://en.wikipedia.org/wiki/Ahmedabadhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Karsanbhai_Patelhttp://en.wikipedia.org/wiki/Gujarat


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STRATEGY OF NIRMA

Nirma carved a niche for itself in the highly competitive detergents and toilet

soaps market in India. The various strategies employed by the company to

counter the competition from the FMCG giants, particularly HUL. It shows

how Nirma used its cost-reduction strategies to achieve success.

STRENGHTS OF NIRMA

The strength of Nirma is based on mutually rewarding and satisfyingrelationship.

Nirma pioneered the concept of flat distribution network. NirmaConsumer Care Limited operates with two parallel distributionnetworks. The NIRMA brand is marketed through the first network,

which consists of about 450 exclusive distributors. It is one of thelowest cost FMCG distribution channels of the country.

Principal Channel [Nirma Products]:

Lowest Cost system in India Speed in distribution Flexibility

The NIMA range of products is marketed through a parallel marketingnetwork that comprises of more than 2000 distributors.

Parallel Channel [Nima Products]:

Wider Reach Speedy Market Intelligence Competitive edge & Better focus Complementing Principal Channel


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ACHIEVEMENT

The ACNielsen Retail Audit (2002/03) has ranked Nirma as India's seventh

largest consumer brand. It is, perhaps, the first Indian brand which relied

completely on home-grown research and development, and marketing

strategies to successfully challenge the marketing might of multinationals.

Nirma created the concept of value-for-money and made it part of the Indian

marketing lexicon. It was also the first brand to recognise and harness the

power of the Indian rural market. Not surprisingly, Nirma became one of the

first Indian brands to merit a Harvard Business Review case study.

CORPORATE RESPONSIBILITY.

Nirma's vision visualises itself as a vibrant, pro-active and widely admired,

ethical corporate citizen. Nirma believes, that exemplary achievements on the

business points are not enough in the making of a good corporate citizen. In

fulfilment of this role as a responsible part of the society and environment in

which one operates, Nirma has undertaken a host of activities in the

educational and social development areas. Realising the significant role of

education - especially technical and managerial in socio-economic

development of the nation, Nirma played a vital role by establishing the

Nirma Education & Research Foundation (NERF) in 1994. Recently, this

Foundation has been awarded University status. This status gives way toshape up and expand into a body providing education in other courses like

medicine, nursing, biotechnology, etc. along with the existing courses under a

single roof of Nirma University. Today, this state-of-the art academic

infrastructure runs various institution bodies such as Institute of Technology,

Institute of Management, Institute of Pharmaceutical Sciences and

Institute of Diploma Engineering. These all institutions are located in a

disciplined, serene and pleasant environment. The campus blends beautifully

with the green landscaping, aesthetic elegance of arches and the vibrant

pursuit of knowledge by the young aspirants. The environment gives full
http://www.nit.edu/http://www.nim.ac.in/http://www.nids.edu/pharmacyhttp://www.nids.edu/http://www.nit.edu/http://www.nim.ac.in/http://www.nids.edu/pharmacyhttp://www.nids.edu/


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scope for group activities, which are plenty, as also to individual pursuits for

development on preferred tracks

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Products of Nirma:

1. Consumer Products:

Soaps: Nirma Bath Soap, Nirma Beauty Soap, Nirma Lime FreshNima Rose, Nima SandalDetergent: Nirma Washing Powder, Nirma Detergent Cake, Super

Nirma Washing Powder, Super Nirma Detergent Cake, Nirma Popular

Detergent Powder, Nirma Popular Detergent Cake

Salt: Nirma Shudh

Scouring Products: Nirma Clean Dish Wash Bar, Nima

Bartan Bar

2. Industrial Products:

LAB (Linear Alkyl Benzene)

AOS (Alfa Olefin Sulfonate)

Sulfuric Acid

Glycerin Soda Ash

Pure salt

Vacuum Evaporated Iodized Salt

SSP ( Single Super Phosphate )

Sodium Silicate


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SIGNIFICANT PROBLEMS OF NIRMA

Soaps and detergents company Nirma Ltd, which gave Hindustan

Unilever Ltds (HUL) Surf a run for its money in the 1980s, is now

battling a shrinking market share in its core business. The companys

profitability and stock price have been on the decline since April 2006.

According to market research agency ACNielsen, Nirma had a 15.2%

share of the detergents segment and an 8.2% of soaps (both in terms of

value) in April last year. But by June this year, its market share haddipped to 13.5% in detergents and 6.74% in soaps.

The companys share price also fell 24% during the period.HUL, leader

in the Rs8,000 crore detergents segment, commands a 38% share of the

market. In the Rs6,000 crore soaps category, Gore Consumer Products

Ltd (GCPL) has surged past Nirma with a market share of around 11%

.

In the 15-month period between April 2006 and June 2007, Nirmasmarket share declined by 1.5 percentage points, while GCPL gained by

1.9 percentage points.

.In the year ended December, Nirmas sales grew 4.3% year-on-year to

Rs1,918.8 crore while its net profit fell 15.2% to Rs241.38 crore. In the

quarter ended 30 June, sales grew to Rs609.1 crore against Rs525.5

crore in the same quarter last year, while the net profit fell 45% quarter-

on-quarter to Rs41.1 crore.


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CAUSE S OF FAILURE

According to experts, Nirma suffers from the inability to innovate in theproduct categories it is present in and also tinker with its pricing. They say

companies in the detergents and soaps categories, both multinationals as well

as local players, have built their strategies around viability, affordability and

visibility; Nirmas focus, they add, has largely been on affordability. With

rising incomes, consumers are now shifting from economy brands to

aspirational purchases and Nirma has failed to capitalize on this shift,

Nirmas brand promotion efforts and pricing strategy have weakened over the

past few quarters. Nirma has been continuing with the same advertising for

years and now; even its visibility is on the decline on TV channels, except forDoordarshan, it has also not raised its prices for some time despite the

increase in prices of LAB (linear alkyl benzene, a key ingredient used in

manufacturing detergents) and palm oil (another key ingredient in the

manufacture of soap). In its annual report for 2001-02, the company has

clearly stated that it faced pressures due to erosion in the market size, de-

growth in its products and stiff competition from domestic companies and

imports. While the detergent market shrunk 9 per cent in volume terms last

year, the toilet soap segment recorded a decline of 12 per cent in value terms.

During 2001-02, Nirma's sales dropped by 6 per cent to Rs 2,276 crore whileits net profit was lower due to the deferred tax at Rs 185.6 crore. For the first

quarter ended June 2002, the gross sales were 4 per cent higher, at Rs 621

crore, but the net profit was down to Rs 45.4 crore.


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PHASES OF DEVELOPMENT

Nirma signed a licensing agreement with the multinational firm Procter and

Gamble Home Products to manufacture, market and distribute the soap brand

Camay in India Nirma will now manufacture and market camay for INDIA.

Nirma will use the trademark of Camay for a rolling period of five years andwill give royalty payments to P&G. The licence agreement was made through

Nirma's subsidiary, Nirma Consumer Care. ''This agreement marks the advent

of Nirma into the premium segment of the soap industry. Nirma is looking to

broaden its products portfolio with a view to lowering dependence on the

increasingly competitive and stagnating washing soaps and detergents market.

In keeping with its premium image, Camay will be priced at Rs 13 for a

100gm pack. Though this is lower than the price of competing soaps such as

International Lux (at Rs 15 per 75 grams), Dove (Rs 35 for 100 grams) and

Pears (Rs 19.50 for 75 grams), it must be remembered that it is anintroductory price. Also the company aims to position Camay as a skincare

product which Patel says gives it a broader perspective than limiting it to the

bath soap segment and will also open another product category for the

company personal care. Camay, launched by P&G earlier, did not really set

the market on fire but Patel is hopeful of things being different this time. ''The

company will position Camay in such a way that all aspects of pricing,

distribution and marketing will be taken care of. ''Nirma currently enjoys 20-

per cent market share in the toilet soap industry under its brands Nirma and

Nima. The company plans to introduce a couple of line extensions in theindustry every year. Another business the company is said to be looking at is

the foods market, particularly the branded staple foods segment. It made an

entry into the foods market two years ago with Nirma Shudh Salt. Nirma has

been taking a beating in volumes during the past two years.


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APPENDIX

STOCK

PERFORMANCECHART OF NIRMA


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BIBLIOGRAPHY

I have collected all the information from

www.nirma.co.in

www.google.com
http://www.nirma.co.in/http://www.google.com/http://www.nirma.co.in/http://www.google.com/


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