A report submitted to Delhi Business School, New Delhi as a part of fulfillment of

MBA + Post Graduate Program (Industry Integrated) in

Entrepreneurship & Business.

TOPIC- Marketing Research on Nirma And It’s Supply Chain Management.

Submitted to: Submitted By:

Ms. Pr eeti Singh Pranesh
Shukla
Faculty, Marketing (dbs/0810/W191)
Delhi Business School,
New Delhi

dbs
Delhi Business School
Delhi Business School
B-11/58 M.C.I.E., Mathura Road, New Delhi
Website:www.dbs.edu.in
 ACKNOWLEDGEMENT

I would acknowledge our indebtness to Mr. sabrav Arawkar (Sales

manager, institutional) Nirma, New Delhi and Pro. Ms. Preeti Singh,
who was a source of continuous guidance & inspiration to us & for taking in
organizing, designing & completing this project.

I would also thank’s to all the other person’s who help me directly and
indirectly to make this Project .

PRANESH SHUKLA
 CON TENTS

PREFACE
About the Company:-
Annexure
Vision, Mision & Philosophy
Nirma product’s
Pricing
Supply Chain Management:-
Umbrella Marketing
Distribution
Level of Distribution
PREFASE :

RURAL INDIA

THERE'S an interesting way of putting rural India into perspective. If India's

population, as per the 1998 estimates of the United Nations Population Division, is
982,223,000, then rural India, taken as 73.3% of India, is 719,969,459. Divide that by the
estimated total world population of 5.9 billion, and rural India becomes 12.2% of world
population. Forget all of us sitting in the cities (4.4% more) -- 12.2% of the world lives in
rural India. Which, given our effective lack of knowledge makes it a bit like one of the
world's last great undiscovered countries.

Rural inhabitants aren't a different species, but consumers as quirky and

demanding of marketers as any of their urban cousins. And just as eager to consume --
maybe even more so, given their access to messages of consumption via TV, but lacking
the easy access that makes urban consumer’s blasé. For marketers the potential is huge --
a country waiting eagerly for their products, providing they can make the effort to export
inwards, and learn to play the games by rural rules. And if they don't, the chances are
that they will be left behind. Even with the minimal effort put in by companies so far,
rural India now accounts for majority, or near majority, consumption in many categories.
-- Rural India is clearly not such an area of darkness anymore, and as a further incentive
to keep the lights on, remember that farmers get electricity free!

One of the most popular and widely accepted Marketing Myth is that the rural
consumers will only buy really cheap mass market brands. But the stark reality is that
though brands like Nirma lead, but penetration of premium products has also been
observed even to the lowest SEC. The percentages may be very small, but given the
large universe, the actual figures may be significant

Thus when we are aware of the fact that brands like Nirma rule the rural market, it
would be interesting to study and analyse their basic marketing inputs -----the 4P”s
 NIRMA

About the Company

Nirma is the Rs.17 billion Detergents, Soaps and Personal Care Products Brand, a
market leader in the Indian detergent market and
second largest in bathing soaps... the brand NIRMA being one of the world's biggest in
it's segment... a result of it's mission to provide 'Better Products, Better Value, Better
Living'.

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
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.
ANNEXURE

Board of Directors
Chairman & Managing Director: Karsanbhai K Patel
Executive Director: Kalpesh A Patel
Director: Shrenikbhai K Lalbhai
Director: Manubhai R Shroff
Director: Rajendra D Shah
Director: Atulya Prasad Sarwan
Director: Rakesh K Patel
Director: Hiren K Patel
Additional Director: Kaushikbhai N Patel
Additional Director: Chinubhai R Shah

Performance of leading companies

Company name Sales % Operating % PAT %

yoy profit yoy yoy
Nirma Ltd 4826.7 40 1287.9 45 690.9 5
Smithkline Beecham Consumer 2376.1 21 512.3 20 324.6 16
Healthcare Ltd
Pidilite Industries Ltd 1145.9 20 254.2 13 135.4 9
Godrej Soaps Ltd 2051.8 18 345.3 32 184.7 602
Indian Shaving Products Ltd 730.5 16 142.2 23 56.2 16
Britannia Industries Ltd 3519 15 317.0 25 145 12
Dabur India Ltd 2989.9 14 397.1 35 222.2 24
Nestle Ltd 4694 13 875.0 24 497 37
Cadbury India Ltd 1866.8 12 350.3 28 171.5 26
Reckitt And Colman Of India Ltd 1484.7 11 98.2 (3) 59.9 16
Henkel Spic India Ltd 717.44 10 28.6 (15) 7.25 (192)
Colgate Palmolive India Ltd 2948 9 311.0 8 176 32
I T C Ltd 10028.9 6 4662.7 19 2516.5 22
Procter and Gamble Hygiene & 1200.9 1 295.2 20 185.4 24
Healthcare Ltd
Hindustan Lever Ltd 24619 0 4475.8 9 3311.6 16
Tata Tea Ltd 2274.9 (2) 655.8 (10) 360.6 (22)
Marico Industries Ltd 1630.83 (5) 171.6 4 129.88 9

Yoy – year on yeargrowth

Source: India Info line database

 Vision, Mision & Philosophy

Nirma is a customer-focused company committed to consistently

offer better quality products and services that maximise value to
the customer.

This customer-centric philosophy has been well emphasised at

Nirma through:

 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.

Nirma is a phenomenon and synonymous with Value for Money. The

brand transcends the specific dynamic of any particular product
category, which is best captured in its above mission statement - a
statement of sustained innovation, an unceasing effort to deliver
better value to consumers, through better product quality.
 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 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.

Nirma launched a flanking brand named Nirma Popular Powder in selected

pockets where Detergent powder usage was limited or the me too brands were eating into
Nirma's share. The product was a good product available at prices that would switch
people to use branded powder. The substandard products took a severe beating in the
pockets where Nirma Popular was launched. It is available in 500 grams and 1000 grams
pack sizes. The product with similar name and slightly different formulation is being sold
in the exports market successfully.
 Nima Green Powder introduced in Q4 - '99 is Nirma's introductions in a
segment which was not addressed by Nirma till then. This powder positioned in the
economy segment has lingering fresh lime perfume. It scores high on cleaning efficiency
and generates a good amount of lather leaving clothes sparkling clean. This powder is
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

The positioning of Nirma Popular Detergent Cake is similar to that of Nirma

Popular Detergent Powder but meant to fight other detergents cake. This product is more
important as the unorganized players are far more penetrated in cake market as compared
to that in the powder market. The product is available in 125 grams and 150 grams pack
sizes. .

To meet the consumer's growing aspirations and to allow consumers to upgrade to a

better quality product, Nirma introduced Super Nirma Detergent Cake in 1992.
As Nirma Detergent Cake is to Nirma Detergent Powder, Super Nirma Detergent Cake is
to Super Nirma Detergent Powder. It was launched to woo back the Nirma Detergent
Cake user who had shifted to the competitor's product. The cake has high detergency
value at an affordable price. It is available in 125 grams and 250 grams sizes.

Launched in Q4 - '98, Nima Green Cake became a close no.2 in its segment
within 3 months of its launch and was successful in arresting the growth of competition
in this segment. This brand has seen a number of consumer promotion schemes tied with
it. The splendid laminated multi-colour wrapper, which shows a slice of lemon and
trishul, exemplifies razor-sharp dirt cutting efficiency of this cake. This cake is rich in
lime perfume and has an exceptionally high brand recall. It is available in 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.

Nima Bartan Bar was launched in Q1 - 2000, gives an outstanding

performance is Nirma's foray into the scourer's market. The slogan "Darpan Hai Ya
Bartan" in the product's TV commercial has helped immensely in conveying the
message of "Bartan Bar's cleaning efficiency very quickly across all segments. Our TV
commercial supports our positioning of Nima Bartan Bar as the one giving superior
quality cleanliness and making the utensils shiny and sparkling clean. Nima Bartan Bar is
available in a 400 gram packing.

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
been able to differentiate itself in this cluttered market its unique packaging and exclusive
advertisement.

Nirma Lime Fresh was launched in 1997 with absolutely no advertising

support. The lime segment of the toilet soap market was growing at a sedate rate, prior to
the launch of Nirma Lime Fresh. Launch of Nirma Lime Fresh saw the volumes of the
segment grow at more than 10%. During the first year of the launch Nirma Lime Fresh
over took the largest selling brand in the lime segment. The product is priced
competitively with 80% TFM content and strong tingling lime fragrance. The commercial
was aired during the later part of the year which saw the volume grow rapidly. The
commercial shot at Maldives and Switzerland with a new and young face was equally
liked by consumers. The successful launch was termed as the seventh best launch of the
year 1997-98 by Business Standard. There in no looking back and today Nirma Lime
Fresh is the undisputed market leader in the lime segment and is giving shivers to the
competition. The product is available in 75 grams and 150 grams.

Nima Rose: The remarkable and phenomenal market response received by

Nima Rose soap within just two months of its launch has once again proved the merits of
Nirma's commitment towards its consumers. Nima Rose soap has got an exceptionally
fine perfume of rose that lingers around your body for a long time even after you bath.
Due to high TFM (Totally Fatty Matter) content, it provides one of the nicest baths. This
brand has already carved niche in its particular segment by achieving leadership position
just within tow months of its launch.

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.

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
3. Iodized Nirma Free Flow Salt
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
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.

Nirma Washing Powder

18.00
1kg

Nirma Washing Powder 9.00

500grams

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.

Thus it is a well known fact that Nirma’s best Unique Selling

Proposition is Price

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
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

1
2
SUPPLY CHAIN OF NIRMA:
Nirma Limited markets its products through its fully owned
subsidiary Nirma Consumer Care Limited (NCCL), which was
incepted in 1985. NCCL in turn resells these products in the
market under the umbrella brands “NIRMA” and “NIMA” along
with extensions.

The distribution strength of Nirma is based on mutually

rewarding and satisfying relationship.

Nirma pioneered the concept of flat distribution network. Nirma

Consumer Care Limited operates with two parallel distribution
networks. The NIRMA brand is marketed through the first
network, which consists of about 450 exclusive distributors. It is
one of the lowest 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

marketing network that comprises of more than 2000
distributors.

Parallel Channel [Nima Products]:

 Wider Reach
 Speedy Market Intelligence
 Competitive edge & Better focus
 Complementing Principal Channel
All NIRMA and NIMA range of products have a retail reach of over
two million retail outlets and more than 40 million loyal
consumers spread all over the country. The Company has been
successful in establishing an extremely good urban as well as
rural presence through the two distribution channels. The
distribution channels have played a significant role in making
Nirma a household name. The efficient network has made Nirma
Washing Powder and Nirma Detergent Cake, the brands with
highest penetration in the respective product categories in the
market. The network is well equipped to meet the demands of
the loyal consumers of the Company across the country.

The robust network ensures the availability of various products

at different retail outlets across the nation. The Distribution
channel is geared up to enhance trade relations, build up the
retailer base by providing various benefits and incentives,
organize and implement different activities to generate sales and
manage numerous other programmes, schemes and activities
concentrated towards business development.
 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 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

3
 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
Level of Channel Distribution:

Company manufacturing unit

Consolidator

Wholesaler

Semi-Wholesaler

Retailer

Consumer
 NIR MA COM PANY DIST RI BUTI ON IN
YE AR /4

80
70
60
50
East
40
West
30 North
20
10
0
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

According to “Product Distribution” .