The Nirma Story
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A HUMBLE BEGINNING Contd...After establishing
itself in India, Nirma expanded to markets abroad in 1999. Its first foray
was into Bangladesh, through a joint venture – Commerce Overseas Limited.
Within a year, the brand became the leader in the detergent market in
Bangladesh. The company also planned to enter other regions like the Middle
East, China, Russia, Africa and other Asian countries.
THE ROAD TO SUCCESS
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The use of detergent powder was pioneered in India by
HLL's Surf in 1959. But by the 1970s, Nirma dominated the detergent
powder market, simply by making the product available at an affordable
price. In 1990, Nirma entered the Indian toilet soaps market with its
Nirma Beauty soap. By 1999, Nirma became India's second largest
manufacturer of toilet soaps by acquiring a 15% share of the 5,30,000
tonnes[4] per annum toilet soap market. Though way behind HLL's share of
65%, Nirma's performance was remarkable as compared to Godrej, which had
a share of 8% (Refer Figure I). By 1999-2000, Nirma had also garnered a
38% share of India's 2.4 million tonnes detergents market. HLL's share
was 31% for the same period (Refer Figure II). |
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•Higher Costs - NO
Within a short span, Nirma had completely rewritten the rules of the game, by
offering good quality products at an unbeatably low price. Nirma's success was
attributed to its focus on cost effectiveness. From the very beginning, Patel
had focussed on selling high-value products at the lowest possible price. The
company endeavored to keep improving quality while cutting costs. To keep
production costs at a minimum, Nirma sought captive production plants for raw
materials. This led to the backward integration programme, as a part of which,
two state-of-the-art plants were established at Baroda and Bhavnagar, which
became operational in 2000. This resulted in a decline in raw-material costs.
(Refer Exhibit I).
FIGURE I
MARKET SHARES (TOILET SOAPS): 1999-2000
Source: ISTMA
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FIGURE I MARKET SHARES (TOILET SOAPS): 1999-2000
FIGURE II MARKET SHARES (DETERGENTS): 1999-2000
THE ROAD AHEAD
QUESTIONS FOR DISCUSSION
EXHIBIT I
ADDITIONAL READINGS OR REFERENCES
[4] According to the Indian Soaps and Toiletries Makers Association (ISTMA).
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