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 [ Images ]

When Chik entered the market, Velvette Shampoo was being marketed aggressively by Godrej [ Get Quote ]. 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 [ Get Quote ] 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 [ Images ], 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.

C K Ranganathan Vice-President, Commercial at An infrastructure & property development company based at Chennai

Chennai Area, India Retail

Current

Vice-President, Commercial at An infrastructure & property development company based at Chennai

Past

Vice President - Commercial at Reliance Group

Education

University of Madras

Connections

1 connection

C K Ranganathan's Experience

Vice-President, Commercial

An infrastructure & property development company based at Chennai

Retail industry

July 2010 – Present (1 year 4 months)

Vice President - Commercial

Reliance Group

Public Company; Retail industry

June 1997 – September 2009 (12 years 4 months)

That was a great 12 years' experience with India's top private sector group. Was involved in three important projects of Reliance, First being the building up of worldclass refinery complex in Jamnagar between 1997-2000; Second being the building up of the massive Telecom Infrastructure in tamilnadu in the process of Telecom Revolution in India, Third being the building of & Operating of Petroleum Retail Chain later captured an unprecedented 15% market share in retailing. I have had all round experience in all Commercial, Accounting aspects including Project Commercial, Contracting, tax structuring, Accounting in SAP environment, Realestate, Accounting and Commercial organisation of Petroleum retailing, etc

C K Ranganathan's Education

University of Madras

1983 – 1986

MILESTONES 2011CavinKare won the award for Innovation in Recruitment in the 2nd Asia’s Best Employer Brand Awards 2011 held at Suntec Singapore. CavinKare has been ranked 23rd for Best Employer Brand in the Country by World HRD Congress.

Under the Employer Branding Award given by World HRD Congress, CKPL has won an Award for "Innovation in Recruitment".

CavinKare received “Best HR Strategy in Line with Business" Award from the renowned HR forum - World HRD Congress.2010CavinKare Accounts and Finance team has won the CII Award for “Total cost management Maturity model (Level 3)”CavinKare won Worldstar Award for Spinz Talcum Powder pack !

CavinKare won INDIASTAR 2010, the National Awards for “Excellence in Packaging” for Fairever Anti Ageing Cream and Spinz Talcum Powder

CavinKare’s CMD Mr. C K Ranganathan was conferred the International award of “CEO WITH HR ORIENTATION” by the Employer Branding Institute.CavinKare’s  Vice President – Corporate HR  Mr. Oommen Abraham received a citation for being one of the Most Powerful HR Professionals in India by Employer Branding Institute.CavinKare  received  commendation for “Strong commitment towards Excellence in HR” from Confederation of Indian Industry in the National CII HR Excellence Awards. CavinKare featured in the list of top 100 Best Employer brands in the Asia Pacific!Dravidar Kazhagam honoured Mr. CK Ranganathan with “Periyar Award” for his exemplary service in Corporate Social Responsibility.Mr. CK Ranganathan appointed as one of the Trustees for Annai Anjugam Trust, which is authorized to run a free hospital for poor from the Chief Minister M Karunanidhi’s residence after his and his wife’s lifetime.CavinKare won IIMM-Tecpro SCM Award 2010 for ‘Supply Chain Performance Excellence’ (Corporate Category) awarded by the Indian Institute of Materials Management, Chennai .Won Special commendation for the Golden Peacock National Quality Award 2010 instituted by the ‘Institute of Directors’ (IOD).CavinKare’s Haridwar factory quality circle team "Vijaypath" won runners up award in the "National Quality Circle Finals" at National Quality Circle contest organized by Confederation of Indian Industry.

Brand Meera won Abby Award (Bronze) -Goa fest media  innovation. Brand Chik won the Bronze Medal for Khwaish Puri Karo Activation organized by

Advertising Club, Bangalore

World HRD Congress–Employer Branding AwardsRegional Level, CavinKare won

Excellence in HR through Technology Best Talent Management Practices

National Level – CavinKare Wins

Excellence in HR through Technology

 2009

Hindustan Chamber of Commerce conferred Mr. CK Ranganathan with the Champion of Humanity Award for the outstanding contribution towards Corporate Social responsibility.CavinKare ranked10th, all over India, in the category "Excellence in HR through Technology" of the Employer Branding Awards conducted by the World HRD Congress.CavinKare launched its 2nd restaurant,Vegnation -an exclusive one stop food destination for the Vegetarian food lovers in Chennai.CavinKare has acquired M/s. Garden Namkeens Private Limited, a Mumbai based FMCG Company engaged in manufacture & sale of a range of Snacks / Namkeens & Sweets under the brand name “Garden”.CKPL opened its first restaurant in Puducherry, CK’s Foodstaurant - which is a mix of Indian

and western cuisinesCavinKare entered into distribution arrangement with Coty (a leading Fragrance and Toiletries Manufacturer of FMCG brands) to market their Adidas and Jovan range ofpersonal care products.Mr. CK Ranganathan elected as Chairman of Confederation of Indian Industry - TN State Council - 2009/10.Chik - flagship brand of the company achieved Rs. 200 crores.2008

CK Ranganathan was awarded with Lifetime Achievement Award by  Rotary Club of Meenambakkam.Launch of FaireverFruit Fairness Crème in the South India.R&D Measurement group gets NABL accreditation for Chemical Testing.Acquisition of Strategic Stake in Padhmam Herbal thus securing back up Manufacturing shampoo.Green Trends Celebrates 25 outlets in Chennai.CavinKare was honoured with "Corporate Social Responsibility Award" by Rotary Club of Madras.Acquisition of Dairy Business from Prakash Dairy.CavinKare Foods enters snacks category.Launch of Chik Satin, superior conditioning shampooGreen Trends launches outlets in Sub Metros - Coimbatore and Trichy.Rotary Club of Trichy Midtown has honoured CK Ranganathan with VocationalExcellence Award.Green Trends enters Hyderabad and Mysore.Launch of Spinz Men Deodorant.Entry into coconut oil category through strategic leverage of Meera BrandAcquisition of Maa Fruits India (P) Ltd thus entering beverages segment.Harvard Business Review magazine has named CavinKare amongst the 50Homegrown Champions in India.CavinKare crosses Rs. 500 crores turnover.  2007

Launch of Karthika Shampoo.Launch of Samba, Jive fragrances in Spinz Deo.Indica Herbal Hair Colour with hair softeners was launched all over India.

2006Divested PIPL’s 100% stake to Essel Propack Limited Started Manufacturing PC products from own Plant at Haridwar, UttaranchalLimelite moves to Delhi

2005Launched Tex – First entry into Toilet Cleaner segment.Limelite spreads its wings to Bangalore

2004Inauguration of new R&D center - CavinKare Research CenterInauguration of new Corporate Office CavinVille Chik Shampoo in top 100 brands in India - ET

C K Ranganathan honored with ‘Distinguished Services Award’ by -Advertising Association of India

C K Ranganathan was awarded Entrepreneur of the year given by Economic times  2003

Chik Shampoo won the AAA award given by Advertisement Association  of Chennai First Major Acquisition gaining leadership in the pickles market through  Ruchi

2002Limelite Chennai's first upmarket salon openedTrends Invogue started

2001Turnover crosses Rs.200 CroresCreated an In-house media buying outfit, CavinKare Advertising Pvt Ltd

2000Made its presence online with SAP 4.0BSet up a division for exclusively focusing on its export initiatives Changed Corporate logo to reflect true personality of the Company

1999Enters Talcum Powder segment in the South

 1998

Witnessed the launch of Indica Hair Dye with herbal extracts BCL renamed as CavinKare Pvt Ltd to revamp its Corporate imageSaw the launch of Fairever, a revolutionary Fairness Cream with saffron.On popular demand, Deodorants were added to the Spinz Range

1997Introduced Spinz perfumes to the masses

1993Nyle Herbal Shampoo was launched for consumers beyond the South

1991Floated Packaging India Pvt Ltd for supplying packaging laminatesSaw the launch of Meera, a herbal hair wash powder

1990Set up Beauty Cosmetics Pvt Ltd with the aim of producing world class products

1983Set out as Chik India, a firm that marketed Chik Shampoo. 

 

He is the founder of a home grown FMCG company who gave the big boys a run for their money with his great determination and some smart innovations.

Pinakirajan Mishra, E&Y says, “CavinKare is probably revolutionised, selling till the bottom of the pyramid.”

TD Mohan, Joint MD, CavinKare says, “He always will see the opportunities. He doesn’t see any kind of constraints.”

A man who believes that being a price warrior can’t always enjoy profitable wealth.

V Ramani, Tranzlife Personal Products says, “He was very clearly, a ‘lambi race ka ghoda’. And, he also was a man of destiny.”

An entrepreneur who is just as passionate about his brand and business as he is about his sanctuaries.

He is CK Ranganathan of CavinKare.

CK Ranganathan is proud to be his father’s son. Few people know that Chinnikrishnan was the original innovator of the sachet. He believed that whatever a rich man can enjoy, a poor man should afford. Twenty years down the line, CK Ranganathan and Chik Shampoo has made that dream a reality.

Pinakirajan Mishra, E&Y says, “In the rural areas, the shampoo consumption was not as high. So, there was an element of probably education also involved where I guess if I remember right, they used to have a demonstration. Then they expanded their product for portfolio. They got in some additional fragrances in the market. They also got a movie actress, a South-Indian actress, to endorse their brand and probably they also did some advertising in Rajnikanth movies. The best thing for them is today the big players like the Unilever or P&G all of them have gone through that route.”

And while the big boys try to penetrate the rural market, where Cavin Kare has a majority share, CK Ranganathan is concentrating on taking his business global.

In an interview with CNBC-TV18’s Shereen Bhan, CK Ranganathan, Chairman, CavinKare, speaks about his entrepreneurial journey so far.

Here is a verbatim transcript of the exclusive interview with CK Ranganathan on CNBC-TV18. Also watch the accompanying video.

Q: I read in an interview that you had given, you said in another decade we will be in HUL in the making. Is that what is been driving you right through your journey with CavinKare so far?

A: I think we want to be a global company. And we have been always admiring the way HUL has grown worldwide, and particularly in India.

Q: So which is the product in the competition that you think is right up there?

A: P&G’s product, I am always fascinated, Pantene is one, Head & Shoulders is one.

Q: But as the Hindustan Unilevers and the P&Gs of the world try and go into the rural markets, the markets where you actually started addressing two decades ago, you are actually moving into the markets that they have been addressing for several years now.

A: Without losing market or sizing power. Suppose for example I introduce two products, in their high end segments, I introduce three in the low end.

Q: But why do you want to make this switch?

A: I need to continue to upgrade my customers because customer won’t stay still. They will keep on climbing up. Therefore, I need to have products at each point so that I don’t lose market share.

Q: How hard has it been taking on the Hindustan Unilivers and the P&Gs on the market place?

A: I won’t say it is easy, but it is not very difficult either. We enjoy the game.

Q: Is that they are complacent and haven’t seen you as a threat?

A: No, I don’t think so. I think they are responding very well now-a-days. It is not like what it used to be in those days, we were not at all taken note of.

Q: Really?

A: Yes, absolutely.

Q: Give me an example.

A: I think in the market place you offer some displays or some scheme there is a reaction, when you do that and they counter it with some press points and some kind of schemes or such kind of things.

Q: So doesn’t make you happy that they are finally taking note of you?

A: No this has been happening for the last almost a decade. Not now. So, now we are used to that. It is not easy for the growth to come by. When it is easier means somebody is not taking note of you, kind of this thing. Now we are noticed.

And that is bound to happen when an upstart from Cuddalore has his hands on the pulse of the consumer, and mind is always two steps ahead of the curve.

TD Mohan says, “In 2000, he (Ranganathan) wanted to implement SAP. The vendor came, did all the assessment and finally given the feedback, why do you want to do SAP, when you reach Rs 500-1000 crore, that time we will come, it is very expensive. He said I am not seeing today, I know this is expensive. I am affordable to invest, I am seeing for future.”

But CKR wasn’t a born genius. In the early 1980s, just start of college, he took in sometime to find his feet.

V Ramani says, “He had come to Bombay along with his brother. The initial impression was that he was very quiet, reserved kind of a person and I got to know him better when he branched up on his own. He came from Cuddalore and he had not worked for any large company. But yet, almost every single thing that he was doing on his own was what a large company would do.”

Pinakirajan Mishra says, “They have been a reasonably conservable group. In 20 years, they have not got into 50 product category. They have not done extra things. So to that extent I think it has been a very measured and strategic growth. Now, I see them suddenly opening up and getting into newer newer categories and certainly in a short span they are doing many things.”

Cavin Kare entered the beauty Salon business in 2002. Last year, CKR joined hands with younger brother and merged his Limelite and Green Trends brand with Naturals.

In 2008, Cavin Kare made acquisitions in the package foods beverages space. And this is the first company in India to sell pickles in a sachet for just 50 ps. In 2009, CKR opened his first restaurant Pondicherry and now has three restaurant chains.

EXECUTIVE PROFILE

C. K. Ranganathan     Founder, Chairman and Managaing Director, CavinKare Pvt. Ltd. 0

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Age Total Calculated Compensation

This person is connected to 1 Board Members in 1 different organizations across 1 different industries.

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BACKGROUND

C.K. Ranganathan founded CavinKare Pvt. Ltd. in 1983 and serves as its Chairman of the Board and Managing Director. Mr. Ranganathan has been President of Madras Management Association since July 2006. .

CORPORATE HEADQUARTERS

CavinVilleChennai, Tamil Nadu 600 018

India

ANNUAL COMPENSATION

There is no Annual Compensation data available.

STOCK OPTIONS

Phone: 91 44 2431 7550Fax: 91 44 2436 2879

Board Members MEMBERSHIPS

Founder, Chairman and Managaing DirectorCavinKare Pvt. Ltd.

EDUCATION

There is no Education data available.

OTHER AFFILIATIONS

Madras Management Association

There is no Stock Options data available.

TOTAL COMPENSATION

There is no Total Compensation data available.

CavinKareIt is the story of David taking on Goliath. A small company having its base in Cuddalore in Tamil Nadu, is now taking on the multinationals of the FMCG world. The Levers of the world now have competition breathing down their necks, from an all too Desi company, CavinKare. Pioneers in the field of sachet revolution, and mass marketing in rural areas, CavinKare has grown from a Rs 15,000 venture to a company making a turnover of Rs 350 crores. Speaking to Sify.com,Chairman and Managing Director of CavinKare, Mr C K Ranganathan, is expansive of his plans, his interests and his philosopy of competition.

     

Excerpts from the interview:

Are you a price player in the market? and it is said that you exploit price points when others don't see it? It is not that others dont see the opportunity. They see it but they refuse to service it mostly because they are looking at high levels of profitability and the easiest way to reach it. It would be wrong to assume that a Lever's with such high levels of competence would not have seen the price points.My philosophy is derived from my father, who said that `what a rich man enjoys, the common man too should be able to afford`. Hence we look at the market with my experience, as someone with a rural background, and a greater understanding of the mind of the common man.But we do not want to be known as a price player alone. we would be getting into other areas too.

You are known for your legendary fights with multinationals in the shampoo and cosmetics segment? any experiences you want to share?It has been a learning experience for us all along, and we are becoming better by the day. In all I would say, it has been a healthy competition.

What has the market taught you?

India still lives in its villages, and the per capita income is still very low. i price my products accordingly, and know the people look for affordability. I need to tell them that my product is affordable, and may be in due course, he might be willing to pay me a bit more for quality.

Tell us about your familiarity with the Internet. Can you be called tech savvy?I am not tech savvy, but I am familiar with computers and the Internet. In fact, I buy books on the Internet, and am a fan of www.amazon.com. I am into buying of management books and self-improvement books. The Internet has opened up the world of electronic gadgets for me. I see many of the gadgets and learn about them from the Internet before I go and buy from abroad.

How did you come to start CavinKare? Can you tell us something about its history?As a school boy I was not very good at studies, and we were a family of six from Cuddalore. My father was a teacher, and was an entrepreuner. He was amongst the first to recognise the value of a sachet and distributing products in that module. He was in the business of repacking of pharma products and he tried his hand in putting honey and epsom salts in sachets.

You are a man of varied interests, ranging from exotic fish breeding to breeding birds.. can you tell something about these..Even as a boy I was constantly scolded by my parents for being behind pets, and it was always a constant point of argument. I breed some varieties of exotic fish, and I am also into breeding of pigeons and love birds. I breed about 40 - 50 varieties , but there is no commercial angle at all to this activity. It is something which I like and do it for fun and relaxation.

You are an young entrepreuner.. Can you trace your personal history as an entrepreuner?My father started a business, and when he expired, we did not have the money to close it down as the bank asked us to pay Rs two lakhs if we were planning to close it down. So we began running the business. and then later I worked for about six to seven months, under my elder brother, who set up the brand, Velvette.. I left my elder brother with Rs 15,000 in my pocket, and now we are a company of Rs 350 crore turnover.

What's your vision for the company?To be a Rs 5,000 crore company by 2012

Money is no problem; lack of ideas is - CKR

I notice several traits common in the two business leaders - K Eswaran and, C K Ranganathan - modesty, a yen to experiment, self-made, humble, a hands-on feel of the market and, most importantly, the concern to develop human resources. CKR delivered the first K Eswaran endowment lecture on entrepreneurship under the aegis of MMA. The address was frank and straight from the heart with no attempt to gloss over wrong decisions and failures.

Excerpts from CKR's address My father Chinni Krishnan was a maths teacher and my mother worked in the administration department of a school in Cuddalore. My father had a strong desire to start a business of his own and set up a small OTC pharma business. He pioneered the concept of packing in single use sachets. He developed a machine of his own for packing shampoo, honey, hair oil...

We are six siblings, four brothers and two sisters. Unlike my other siblings, I was weak in studies and had to take tuitions to catch up. I studied in the Tamil medium and could not speak good English. In contrast, my brothers and sisters were bright in studies and qualified as doctors, lawyer... I fumbled along and passed out of the school with difficulty.

Thank you SBI for forcing us to continue in business!

My father died of heart attack when I was in the second year of my undergraduate studies. My elder brothers were also studying. The family decided to close down the business for want of someone to manage. But we had taken a loan of Rs.2 lakh from SBI and had no money to pay it up. So we were forced to run the business!

Velvette shampoo soon became a popular brand. When I joined the business after graduation I took charge of manufacturing. Life was comfortable. We could afford a car.

I found the workers lethargic, wasting time reading magazines during working hours. I could not take them head on. I even felt business was not suitable for me; but my mother encouraged me saying that I can do it and I was going to do it. I gained confidence. My inferiority complex went away and I did not look back since. I was also convinced that there is a lot to enjoy giving work to many, creating employment rather than seeking a job.

C K Ranganathan, Chairman, CII Tamil Nadu & Chairman & Managing Director, CavinKare Pvt Ltd.

C K Ranganathan was born in Cuddalore to parents with primary interest in education. He took up his Bachelors in Chemistry and after a short stint in the family business, he set up “Chik India”.  The Company began its journey as Chik India and was renamed CavinKare Pvt. Ltd (CKPL) in 1998 with a starting investment of Rs. 15, 000/-

The Company manufactures and markets many products under the brand of Spinz, Fairever, Meera, Nyle, Karthika, Indica, Tex, Ruchi, Chinnis, Maa, and Cavins’s etc both in domestic and international markets.

The Company has pioneered the concept of 'Family Salons' in India with its specialist brands - Limelite, and Green Trends and hence started Trends In Vogue Pvt. Ltd a Group Company which has a clear-cut focus providing personal styling and beauty solutions to everyone in the family. 

Ranganathan has conferred the prestigious “Entrepreneur of the Year award” by the Economic Times in 2004. He has been elected as Chairman of Confederation of Indian Industry, Tamil Nadu State Council for the year 2009/10. He is the past President of Madras Management Association.

Ranganathan is one of the founder-members of the Ability Foundation - an NGO working towards the rehabilitation of the disabled. He also instituted CAVINKARE ABILITY Awards to celebrate the exemplary spirit of rare breed of individuals who have risen above their physical limitations to display that attitude is everything.

My dream for Cavinkare is to be a 5,000 crore company by 2012. We aim to be a global player and would not like to restrict ourselves to India alone.”

C K Ranganathan, CMD, Cavinkare

From a small partnership firm in 1983 with an investment of Rs.15,000 to a 255 Crore Company, Cavinkare has grown steadily with C K Ranganathan at the helm. Gifted with intuitive business acumen and a talent for introducing profitable marketing strategies, which has been instrumental in increasing the market share of Cavinkare’s flagship brands, C K Ranganathan is now looking to tap the foods segment as well. In conversation with Abitha .G of exchange4media, C K Ranganathan talks about the growth of Cavinkare, his innovative marketing strategies and his dreams for Cavinkare.

Q.Why the name Cavinkare?

A.The name “Cavinkare” was created because we wanted our brand name to have a neutral appeal compared to the earlier name, “Beauty Cosmetics”. We also wanted to move beyond cosmetics. “Cavin” means beauty in Tamil and “care” in the brand name is spelt as Kare, The name is special to me since it has my initials C and K representing my father’s name, Chinni Krishnan.

Q.Could you take us through Cavinkare’s growth over the years?

A.I started a small partnership firm way back in 1983 with an initial capital investment of Rs.15, 000. In 1990 we streamlined the outfit to make it more professional and made the company a Private Limited concern. We then named it as “Beauty Cosmetics” which was then changed to Cavinkare in 1998.

Initially with a meager capital it was very difficult to move forward. It took me about three years to get a bank loan. Growth started happening eventually albeit slowly. In 1990, we were a 40 lakh company per annum. Today we are a 255 crore company. We maintain an annual compounded growth rate of 40%.

There were various high points during Cavinkare’s growth. 1990 was a high point when we hired professionals in different areas. Another high point was when we expanded the network beyond South. This happened between 1991 and 1995. 1998 was a significant year since we launched Fairever Fairness Cream and Indica Hair Dye that took the company to new heights.

Q.What are the most important ingredients, which spurred Cavinkare’s success?

A.We have a very clear understanding of our consumer needs. A consumer does not directly put forth his requirements and hence to obtain a clear image of what he wants we analyze and understand the consumer’s mindset. Secondly we leverage and execute the understanding better. One other key effort we have taken up is in distribution and marketing. We definitely have an edge over our competitors since we have made our products available in every nook and corner of India including remote villages.

Another factor is Research and Development. We have about 36 people working in our full-fledged R&D center. We are also coming up with a new research center in Chennai itself, which is due to commence operations next year and is presently under construction. It is about 38,000 sq.ft and is located in Ekatuthangal. We will be making an investment of about 15 crores in 3 years time for the internal infrastructure facilities of the Research Centre. This Centre will focus on fundamental research, enabling us to exhaustively understand nature’s potential, analyze different natural ingredients and harness their potential without losing their efficacy. Apart from that we will also be working in synthetic areas and strengthen the composition of our flagship products. The R&D center has been primarily put up to stress our focus on research as a very vital tool and moreover we also want to attract good talent for the center. We don’t have a factory of our own so that leaves us with these key things, which are, to sum up, Research, Marketing and Distribution that have spurred our success.

Q.What are the important milestones in your career with Cavinkare?

A.When we launched shampoo as a commodity there were roughly about 200 competitors in the market and when we approached the retailer it was the retailer’s call in most of the markets. They wanted to have a strong say in the pricing and were not interested in stocking the products otherwise. So we undertook a consumer study to understand behaviour patterns. In one such study where I was present, I happened to see a consumer approach the counter requesting for a Velvette Sampoo Sachet. In those days Velvette was

the pioneer in selling Shampoo in Sachets. Though the retailer gave the consumer a different sachet brand, the consumer still chose to buy it without much ado.

The retailer explained that Velvette was the first to introduce itself in sachets, and hence consumers generally ask for the brand but what they really want is a sachet shampoo and don’t notice the brand much. So we wanted to break out of this situation and create quality awareness about our shampoo brand Chik. That is when I hit upon the idea of giving away one sachet of Chik Shampoo free for 5 empty sachets of any shampoo brand initially and then after the move started picking up momentum we restricted the free shampoo exchange only for empty sachets of Chik. This idea worked out pretty well for us. Retailers too reaped benefits from the idea. Apart from their service charges we also gave them a Chik Sachet free for every 15 empty sachets they get from the consumer so they initially set the momentum by making an offer to school going kids to pick up empty sachets of shampoo brands in exchange for chocolates. Also we kept our prices higher than the rest of the shampoos in the market, this helped us maintain our profits and the retailer also believed he had a higher margin by stocking our products. After this move, in about six months time, we became available in several outlets in good quantities.

Another instance was in 1993, when all excise concessions for small-scale industries were withdrawn and we were suddenly placed on par with the multinationals. The advantage we had was gone overnight and we had to compete with them in the marketplace. Contrary to perception we fought the challenge head on and converted the setback into an opportunity. We directed all our efforts to bring out winning combinations of formulations, we strengthened our work force by hiring professionals and we advertised more often. Today we are reaping the benefits of the streamlining and consolidation we did way back then.

Q.Which are the different businesses under the Cavinkare wing?

A.Under Cavinkare we have our export division through which we export Fairever, Chik, Nyle and to some extent Meera to Singapore, Malaysia, Srilanka, Nepal and the Gulf countries. We are rolling out our products one by one as a typical launch in foreign countries, we work with the distributors very closely and we develop ads suitable to the local country. Apart from this, we have two packaging companies that function independently and also a Beauty Salon business, which we are currently expanding.

Q.What makes Cavinkare different?

A.Cavinkare is good at identifying unique products. We offer high value proposition and high aspiration value to our consumers. We are agile and quick to latch onto opportunities. This attitude has been the key to our success.

Q.What are your personal strengths that helped you propel Cavinkare forward?

A.Perseverance, the desire and curiousity to learn every new area that is useful for my business are some of my strengths. One other factor is my ability to recruit good talent, delegate work and give enough freedom to them, without compromising on their accountability.

Q.Could you give us a sample of your innovative market strategies?

A.I can describe two instances in this regard.

Penetration level of Chik Shampoo was not yet in an aggressive pace in 1999 so we went back to the consumer to understand the lag and to arrive at a solution that would drive the sales growth and help us gain a leadership status in the shampoo market. We discovered that soap was an alternative for the consumers besides a few natural products like herbal powders. The biggest barrier was soap usage. People did not see the need for using Shampoo. As part of the consumer study, we tried to impress upon the consumer that soap usage was bad for the hair and when a product exists specifically for hair it should be used. The consumers responded by stating that their fathers and grandfathers have used only soap and their hair continued to maintain good health. So the argument that Soap was harmful did not bear merit to them. However they did agree that Shampoo usage gave soft and silky hair. However their perceived value on hair wash was very less and they did not want to spend more out of their pockets to buy Shampoo. The study also revealed that though the aspiration to use shampoo was there, the need to spend more did not appeal. To arrive at a solution for this situation, we introduced the 50 Paise shampoo sachet, which easily satisfied a single wash. It was a calculated risk we took since our existing volumes of 1 rupee shampoo sachets was also in the market but when sales started picking up for the 50 paise shampoo, the 1 Rupee Shampoo also picked up pace once the consumer started making a habit of using Chik shampoo. Once the volumes were driven the company also gained a good margin.

Another situation where innovation was required was the economy value consumers saw between using shampoo sachets and shampoo bottles. 65-70% of the shampoo sold in India is through sachets. Only 30% is through bottles. Sachet sells more due to the phenomenal value it offers to the consumer. Let us assume 7ml of Shampoo in a Sachet is sold at Rs.2 and a 100 ml bottle of the same brand of Shampoo is sold at Rs.55. When a consumer buys 14 Sachets and stores them in a bottle, it would make 98 ml. The consumer would invest about Rs.28, which is roughly half the price as that of the bottle. Sachet thus offers high level of economy and also every use is measured. So to offer the consumer value for money we came up with the concept that bottles will be cheaper than the sachets. We had to be innovative and economize on the cost of bottle, packaging and other things and came out with a 50 ml bottle of Chik for Rs.6 with 2ml more in the bottle when costs are compared. This move resulted in a huge volume of sales and helped the growth of Chik from 5% market share to the current value of 21%. So this exercise revealed to us that the consumer would buy a product if he sees enough value for money.

Q.Is it not true that chemical foaming agents are used to make the herbal formulations foam better? Will it not tamper the “natural” quality of the product?

A.The consumer wants a blend of convenience and modernity. We did come up with a product that was very close to the natural form of ritha extract called “Meera Goongdukai Ras” but we were caught in between. People who used natural ritha did not find the aroma appealing and shampoo users did not find it as comfortable as the shampoo. So that product did not work. “Meera Goongudukai Ras” was then relaunched as “Meera Goongdukai Shampoo” which was a hit.

Q.Any plans to tap further segments?

A.Yes, we are planning to foray into the foods segment shortly. We will be concentrating on

ethnic Indian foods. We will also be looking at other avenues for expansion with time.

Q.What about the skirmishes with HLL regarding the positioning battle between Fairever and Fair & Lovely?

A.No comments. They are our competition and we don’t want to convey our views through the media but that does not mean we don’t have our views.

Q.What is your dream as far as Cavinkare is concerned?

A.My dream for Cavinkare is to be a 5,000 crore company by 2012. We are looking at various avenues for further growth opportunities. We continue to scale professional heights day by day and this journey will be a continuous one. We are a socially responsible corporate concern who conducts our business in a straightforward manner. We aim to be a global player and would not like to restrict ourselves to India alone.

My leadership styleParticipative

The political leader I admire the mostM. Karunanidhi. 

The business leader I admire the mostN.R. Narayana Murthy.

The leadership lesson I remember bestIt is the paucity of ideas, and not money, that is problematic.

A book or movie I would recommend on leadershipThe Leadership Engine by Noel M. Tichy.

The difference between a manager and a leaderA leader inspires and invents the future while a manager makes the present healthy.

All good managers are good leadersNo.

- As told to N. Madhavan

C K Ranganathan was born in Cuddalore. He completed his school and college education in Cuddalore itself. After a short stint in the family business, he setup “Chik India” with an initial capital of Rs.15,000/-. In 1983, with a single product, “CavinKare” started out as a small partnership firm. The company that began its journey as Chik India Ltd, was renamed as “CavinKare Pvt Ltd” in 1998. Smart marketing and clear positioning not only ensured CavinKare’s growth, but also helped the company broaden its product portfolio extensively. The company now markets 11 major brands which include Chik,

Meera, Fairever, Spinz etc. The company exports to various countries like SrilanWith effect from 01 July 2011

Indian Bank has announced that Chintaman Mahadeo Dixit has been elected as new shareholder director with effect from 01 July 2011.

Further, C K Ranganathan ceased to be director of the bank with effect from 01 July 2011. ka, Bangladesh, Nepal, Malaysia, US and also some African countries.

“Trends in Vogue Pvt Ltd”, a group company of CavinKare came into being in July 2002. “CKR” as he is popularly known as, is one of the founder members of the Ability Foundation – an NGO working towards the rehabilitation of the disabled. He also instituted “The CavinKare Ability Awards” to celebrate the exemplary spirit of rare breed of individuals who have risen above their physical limitations to display that attitude is everything. CKR was conferred the prestigious “Entrepreneur of the year award” by “The Economic times” in 2004. CKR’s personal philosophy is his trust in people and passion for creating a seamless organization. He always leads from the front. He is very quick in giving his views and decisions. He likes to raise the bars of performance after his colleagues accomplish milestones. This in turn has a cascading effect transforming the whole organization to be nimble footed and agile. With CKR at the helm of affairs, there is no doubt that “CK School of Practical Knowledge” will march forward by leaps and bounds.