Rspl - Rohit surfactant Private Limited

Ghadi Detergent

1. Presented by: Sudeep kumar Date: 8 th April 2020 Rohit surfactant private limited

2. Vision and mission statement Vision - Evolution is constant Mission - To be a part of consumer’s daily life by giving them best value for money through well researched and ever evolving excellent products

3. About RSPL RSPL Limited (RSPL) is the flagship of the RSPL Group and is one of the leading manufacturers and marketer of detergents in India in the popular brand within the laundry care segment with its brand “ Ghadi ”. RSPL was incorporated on June 22, 1988 as Shri Mahadeo Soap Industries Private Limited . On June 17, 2005, the company's name was changed to Rohit Surfactants Private Limited following the merger of four group companies, also engaged in the manufacture of detergent cake and powder, with RSPL. In 2008, the group underwent a restructuring, which resulted in the detergent and leather business being consolidated in Rohit Surfactants, while the real estate business of the group was separated. In 2011, the leather business of the company was also hived off into a separate entity and the company was converted into a public limited company from August 29, 2011 and was renamed as RSPL Limited.

4. About RSPL……Cont… The company is a closely held company held by the Gyanchandani family of Kanpur. The company has steadily expanded its operations over the years and currently has 25 manufacturing units spread across India. Besides, the company also has its own packaging units at Greater Noida and Kanpur. The company sells detergents in the economy segment under the “ Ghadi ” brand, toilet soaps under the “Venus” brand and dish-wash bars under the “ Xpert ” brand. RSPL has a large marketing set up with over 3,300 exclusive distributors. The company also has wind energy units in five states with a total generation capacity of 50.1 MW.

5. History In 1987, a year before Wheel was launched by HUL, without much attention of media or public, Muralidhar and Bimal Kumar Gyanchandani launched Ghari detergent in  Kanpur ,  Uttar Pradesh . In 1988, Muralidhar and Bimal Kumar incorporated Shri Mahadeo Soap Industries Pvt. Ltd. under which they started manufacturing Ghari detergent. Eventually, Shri Mahadeo Soap Industries Pvt. changed its name to Rohit Surfactants Private Limited (RSPL) in June 2005 . It is said that Ghari was inspired by Nirma , which was launched in 1969 and evicted HUL's Surf within four years of its launch to become the market leader in 1987 having a market share of around 30%. Nirma was at its peak when Ghari was launched in 1987. In 1988, HUL launched Wheel to take on Nirma which snatched top spot from Nirma in 2000. Ghari had to compete against two big players Wheel and Nirma since its launch. After 25 years of its inception, it took the top spot in the detergent market in 2012.

6. Indian Detergent Market landscape

7. Evolution of detergent industry in India Detergent industry had its beginning in 1957. Swastik Oil Mills in Wadala , Mumbai, was the first Indian factory to manufacture synthetic detergents. The evolution of detergent powder industry is summarised in the table below keeping focus on Indian subcontinent. Year What happened 1930 German scientists develop synthetic detergents to overcome post-World War-I shortages in key ingredients then used for soap, animal fat and vegetable oils. The other big advantage of synthetic detergents was that they were better at washing clothes in 'hard' water. They were also far better suited than soap for use by the textile industry. 1945-47 Detergents, specifically the brand Persil, enter post-War German morbid humour. Persilscheins was the jokey shorthand for the de-Nazification certificates issued by Allied Powers to Germans. 1950s Huge post-war expansion of the synthetic detergent industry in its key market, the US, and the associated environmental problems. Sulphonates used in detergent to get the dirt of clothes, were not biodegradable. Their release into water bodies lead to huge amounts of foam being formed in lakes and rivers. Under public pressure, manufacturers switched to biodegradable substances. 1957 The first Indian factory to manufacture synthetic detergents set up by Swastik Oil Mills in Wadala , Mumbai. Even though key ingredients are imported, they still cost far less than importing finished detergents. 1960s HUL (then HLL) enters India  accelerating the shift to detergents is persisting shortages of vegetable oils, a key ingredient in soap. By the mid-60s large corporates like Tata Oil Mills and Hindustan Lever establish themselves in the business. The latter even begins exporting to Russia.

8. 1965-70 Since 1950, another key ingredient in detergents was phosphate chemicals, which is effective in washing clothes in 'hard' water. But they also caused ' eutrophication ', a dramatic and excessive growth of plants in lakes and other water bodies that uses up most of the oxygen, leading to the death of marine life like fish. Detergent makers in the US started using non-phosphate chemicals in response to the criticism, though they fight against an outright ban. 1969 Nirma , HUL's future nemesis , is born. 1970s Shortages in vegetable oils accelerate and so does the use of synthetic detergents. To promote their use among wary soap-using consumers in rural India, companies like HUL perform plays and puppet shows at mandis . HUL also introduces Rin Bar at about this time. Mindful of the need to conserve the use of vegetable oil, government classifies synthetic detergents as a 'core' industry. 1974 Despite the expansion in synthetic detergents, the capacity of the Indian industry is still only 84,000 tonnes , far less than the government-sanctioned capacity of 3.5 lakh tonnes . Queering the pitch, the government begins pondering the  liberalisation of licences , but only to the small-scale sector. 1975 Due to the  West Asia oil crisis , prices of key petrochemicals skyrocket, by as much as 100%, forcing manufacturers to raise prices of detergents. The price of Surf doubles in one year, causing outrage in Parliament against companies like HUL. Such high raw material prices will persist through the 70s. 1975 Point, a detergent brand, achieves history by being the first product in this category launched by a sarkari factory, the public-sector  Government Soap Factory of Bangalore (which also makes Mysore Sandal soap) . Soap Opera, Mid- to Late-70s High detergent prices make soap manufacturers competitive, causing consumers to switch. 1983 25 years after the first domestic factory was established, synthetic detergents only manage a 25% market share of the total fabric washing market. By comparison, the market shares in Thailand that time is 99% and in Kenya, 60%. 1985 Saea ade as lower-priced  Nirma evicts HUL's Surf  from the pole position in the detergents market. 1987 Unnoticed by the biggies, brothers Muralidhar and Bimal Kumar Gyanchandani launch Ghari , which will eventually come to rival the two giants in market share. 1988 HUL introduces Wheel to take on Nirma . In its battle with Nirma , HUL will bring its massive marketing and distribution muscle to bear. 2000s HUL wins the battle.  Nirma falls to second place . Early 2012 Ghari overtakes HUL . Evolution of detergent industry in India

9. The Design Solution First and foremost the Brand Logo was tweaked. A bevel effect was rendered to it along with a modern look. The Font and Colours were retained. However the black colour was eliminated to simplify the logo. The fact that Ghari is a detergent brand was reinforced by bringing the words ‘ Deteregent Powder’ close to the logo and giving it the logo colours thus forming a tight lockup.

10.   WOW! Design   A dipstick research conducted with the existing Ghari pack, showed that the consumer did recognize the blue wave on the pack however they were not happy with the rendition of the same. The Wave was given a more life-like rendition, without those sharp edges in the existing pack. The same was created by interspersing bands of different shades. The existing pack has the wave running horizontally. The same was given a little tilt adding more action to the pack; afterall a wave is supposed to be more dynamic and full of energy.

11. The Result The outcome was a new refreshed look for the Brand, yet not losing out on the familiarity in the minds of the consumer. A perfect example of where ‘Less is More’.

12. Product manufactured by rspl Household Products Ghadi Detergent Cake , Ghadi Detergent Powder , Xpert Dish wash Bar , Xpert Ultra Gel ( Liquid ) , Uniwash Detergent Powder Personal Care Products Venus Toilet Soap Hygiene Care Products Pro-ease Sanitary Pads Dairy Products Namaste India

13. Brand Analysis and STP Ghari Detergent Brand Analysis Parent Company Rohit Surfuctants Private Limited Category Soap & Detergents Sector FMCG Tagline/ Slogan Pehle istemaal kare, fir vishwaas kare USP A low-priced detergent which provides cleansing within the budget of a lower-middle class family Ghari Detergent STP Segment Detergents for households Target Group Lower-middle class family (Tier-4 & Tier-3 families) Positioning A detergent which provides cleansing at competitive prices  

14. Strengths 1. Market leader in the tier-3 & tier-4 segment of detergent market in India 2. Strong reach to the rural consumer 3. The tagline ‘ Pehle istemaal kare fir wishwaas kare ’ has struck a chord amongst the price-sensitive mass market 4. High push by retailers and high word-of-mouth amongst consumers 5. Good branding through TVCs and print ads Weaknesses 1. Limited export market as compared to international brands 2. Unable to completely penetrate in premium segment because of image Opportunities 1. Entered western & southern India recently where lies a huge market opportunity 2. Further penetrate the rural market by collaborating with various NGOs Threats 1. Low profit margins in detergent sector 2.Threat from existing and new players in the market Ghari Detergent SWOT Analysis

15. Ghari Detergent The detergent brand was founded by Muralidhar and Bimal Kumar Gyanchandani in 1987. When Ghari was launched, market was already dominated by big brands like Surf and Nirma. Over the years since the launch of Ghari detergent powder, till date there have been introduction of plethora of brands from biggies like HUL and P&G and many local players. It came to limelight in late 2012 when it surpassed HUL's wheel detergent and grabbed top spot in terms of market share. It took almost 25 years for Ghari to be the market leader in detergent market.

16. Xpert Dish wash bar In the Rs 600cr. Dish wash market,Xpert dish wash bar is a fast growing brand in the North Indian market As against the conventional lime variants it was launched in orange variant The company wants to increase the market share of the brand and become the category leader

17. Namaste India Namaste India Foods Pvt. Ltd. is an India n Dairy Company, the sister concern of 3500 Cr. RSPL Ltd., is committed to supply pure milk and fresh milk products. Its a fully automated unit, at par with international standards, is planning to collect, process and pasteurize 4 lakh liters of milk per day. We have Collection Centers in one thousand villages and will be extending to 2000 villages in the upcoming two years. In this way, we are planning to supply pure and fresh milk to every house, in every village and very soon, in every city.

18. Venus Soap Venus soap is the another major product launched by rspl company It is the creamy bathing soap with many fragrances like rose, lemon etc.

19. Pro-ease Our aim is to help women break deep-rooted gender and cultural barriers and live a happier, healthier life. Through thoughtfully designed sanitary products, we intend to help women embrace womanhood with a smile . Our objective is to help them step out into the world with confidence and ensure that nothing stands in the way of their success. Not even their Period!

20. Kapila pashu Ahaar Established in 1992, Kamdhenu Cattle Feed Pvt. Ltd. has become a known Manufacturer and Supplier of a high quality range of Cattle Feed under the brand name of KAPILA CATTLE FEED. have been processing unmatched quality products processed from high grade ingredients sourced from the trusted vendors of the market. We maintain high level of hygiene and cleanliness to ensure safe consumption, purity as well as high nutritional value of the offered products.

21. Market Share Ghadi : Market Share Today , Ghari is the market leader in the detergent industry , with a market share of 17.3% and Wheel is tagging behind closely at 16.9%. Within the economy segment, both Ghari and Wheel are priced similar. Tide is at present at the third position with a market share of 13.5% and Nirma has less than 6% market share. Source: nextbigbrand.in Segment The detergent market in India is divided into three segments Premium, mid-range, and popular. The   premium segment  comprises  Ariel and Surf ; The  mid-range segment  comprises  Tide, and Rin ; and The   popular segment  comprises  Wheel, Nirma and Ghari . The market share of the detergents in the premium segment is 15%, and that of the mid-range and popular are 40% and 45% respectively.

22. Positioning Ghari targets housewives in small town and villages, who are extremely value conscious buyers and willing to switch brands. The only USP is the Value for Money proposition. Hence the brand must remain approachable for the consumers. For a brand which operates in the economy zone and yet clocks sales of over Rs.2,000Cr. its very much a volume game and hence any drastic change in the brand can be fatal. More so because it’s a brands for the lower SECs, who might not welcome their brand going for a complete relook, overnight. Also in the market in which it operates there is also the risk of the new brand look being thought as counterfeit. Hence  WOW! Design  strongly proposed a very subtle change in the Brand Design which just crosses the threshold of consumer’s ability to spot a change in the Brand.

23. Branding and Promotion Advertising and Promotion RSPL spends 2% of sales for marketing and promotional activities. All advertisements are centred on the tagline  ‘ Pahle istemal karein fir vishwaas karein ’  (Use it and then believe it) which encourages trial and prompts repeat purchase. Ghari is for common man and usually it targets household wives. To live in that spirit Ghari brand has avoided using any celebrity to endorse it unlike wheel (endorsed by  Salman Khan ), Rin ( Kajol ), and Ariel oxybin ( Kiran Bedi ). Ghari detergent has gone to advertise in train too. The first train campaign was launched in 2008 and was called the ‘ Ghari Detergent Express’. That train campaign ran between Lucknow and Guwahati for two months. Then it advertised in Pushpak Express and Swarna Jayanti Express. Apart from advertisements in train, RSPL promotes Ghari through roadside shows, magic shows and exhibitions in smaller towns and cities. The magic shows have been highly successful in giving the brand a good visibility in cities like Jaipur , Indore, Kota, Alwar and Kanpur. Brand recall By name Ghari detergent, people immediately connect with the tagline  ‘ Pahle istemal karein fir vishwaas karein ’  which means, ‘Use it and then believe it’. Those who use Ghadi and come to know about the credibility of the message it communicates through various advertisements, would prefer to go for Ghari again.

24. Distributed marketing base with strong distribution and marketing network and low advertising & promotion (A&P) expense RSPL has nearly 25 small manufacturing units& 6 wind power generation plants spread across the country which enables it to undertake production near the consumption centres and lower its cost of freight backed by a strong distribution network . RSPL has kept its advertising and promotion expenses (6%-7% of operating income) lower than its peers (12-14%) as it relied more on print media to reach out to its target customer base. However , with increasing penetration of televisions, advertising spends on television networks have been increasing for RSPL along with an overall increase in advertising spending. Nevertheless , the overall A&P spending remains significantly lower than its peers.

25. Strategies of Ghari Ghari followed Nirma’s path of aggressive pricing The growth of Nirma in the seventies was not from market share gains within detergent powders; however, it was from market expansion. The low price of Nirma brought an evolution among laundry soap users who gradually switched from soap to detergent powder. Slowly detergent powders substituted laundry soaps within overall fabric wash category. Ghari followed Nirma’s strategy of keeping low price and targeting customers at the bottom of the market. Regional Focus Ghari did not have the financial power to beat giants like HUL and P&G. Focusing on Uttar Pradesh, its home state, was a big advantage for Ghadi . The reason is attributed to the fact that Uttar Pradesh has a population of 167 million, the highest among Indian states. It accounts for over 12% of the country’s FMCG sales. In addition, the adjoining markets of Bihar, Madhya Pradesh and Punjab along with UP account for one third of the total consumer products market. The strategic focus for Ghari was to capture adjoining markets after capturing the massive market in Uttar Pradesh. Ghari was successful in capturing the adjoining markets over a period of time. Incentives to the Dealers Compared to competitors who provided 5% profit margin, Ghari detergent provided a profit margin of 6-7% to its dealers. This enabled Ghari to have a stronger dealer base to push sales while keeping its prices low. Mobile application to track sales Around April 2011 onwards, RSPL started using mobile phones to book sales and track distributor's positions and sales for which it adopted a mobile application, ‘ msales ’. Msales helped RSPL’s sales force to take care of the sales activity on the go and the data captured is pushed to its enterprise resource planning (ERP) system. Msales is GPS enabled. So, it is possible to track the sales since the application is GPS-enabled. Earlier, it was not possible to track sales on the go.

26. Challenges The dependence of the company on a single brand , Ghadi , for nearly 90%- 95% of its revenue, competition from the organised and unorganised players and vulnerability to volatility in the prices of the commodities like soda ash and LAB . However, RSPL’s profitability is expected to moderate further in FY2019 primarily due to the significant increase in the interest costs during the year owing to the continued higher working capital borrowings and other term loans availed other than the loans availed for the soda ash project. RSPL has been able to undertake price increases at different intervals during the year to partially offset the impact of the increase in the price of raw materials mainly Linear Alkyl Benzene (LAB) during the year High competition from organised and unorganised players in the economy segment : RSPL faces significant competition from unorganised players in the detergent market. According to certain estimates, there are nearly 500 unorganised players in the detergent market which results in significant competition in terms of the price points in the highly price sensitive economy segment. Additionally , the organised players have also been aggressive in launching and promoting the Rs. 10 Stock Keeping Units (SKUs) for detergent powders and detergent bars. As a result, RSPL has been facing competition in the Rs.10 SKUs segment leading to volume de-growth, though the 1kg packs have shown healthy growth.

27. Future outlook RSPL has plans to raise ~Rs. 1500 crore through an IPO by dilution of 10% equity by the end of CY2019 to retire most of the project debt which would lead to the improvement in the credit metrics of the company. The quantum and timeliness of equity infusion will remain a key monitorable going forward. The benefit of backward integration from the soda ash project will start accruing to the operating profits, though at net level the increased interest costs will keep the cash accruals stable The Outlook may be revised to Positive once the company is able to raise funds through dilution of equity and/or material improvement in the cash generation leading to improvement in the credit metrics of the company. The outlook maybe revised to Negative if there is significant volume de-growth or delay in ramping up of the capacity utilization of the soda ash project leading to adverse impact on the cash flows and thus credit metrics of the company. Source: ICRA

28. Financial Reports Source : RSPL website

29. Network & Manufacturing facility

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