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Tuesday , 14 August 2018
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Story of an Entrepreneur

KarsanbhaiKhodidas Patel the brains behind the Nirma is today worth a whopping $ 3.6 billion.

Born into a poor family Patel used to work at the Geology and Mining Department of the state Government.Multinationals like Hindustan Lever Ltd targeted the upper class as their prime customer segment for detergents, serving that small premium market with high-cost washing powders. Patel saw an opportunity in this market segment and started making Detergent in the backyard of his own house. Coming from a poor background he knew that it was the women of the house who had to do the washing and therefore that was his target customer.

Having a good knowledge of chemicals Patel came up with Nirma detergent which was a result of innovative combination of the important ingredients such as bleach. Thus Nirma brand was established in 1969 but initially he used to sell his products door to door. He had  his product priced at Rs. 3 per kg which compared to his competitors products (Rs.13 per kg) was very cheap and affordable to the lower and middle class.The process of was labour intensive and this gave employment to a large number of people. The main strategy used by Nirma was to keep its price as low as possible in order to create a value to the consumers.

While growing his business Patel faced a lot of problems. Initially he faced the opposition of the local retailers who used to stock his products on long credit periods and when the salesman used to go to receive the payment, he was never paid on time. This had created a financial crunch for the company and they were finding it difficult to operate.

This is when Patel took a risky step and used advertising to create a massive consumer demand for his washing powder. His famous Jingle (Washing powder Nirma, washing powder nirma, doodhsisafedi) was heard in Indian homes throughout the country.

At the same time he did stock hoarding of his product to increase the demand of his product.

That advertisement was an instant hit with the common public and now the company had a upper hand with the retailers. Now Patel dictatedall cash on delivery and no credits.  Overnight the brand was changed and gave a fantastic fight back to the leading global brands. 

Further in order to minimise its cost Nirma did backward integration wherein it started producing 90 percent of its raw materials. Today the company is one of the largest manufacturers of soda ash, the main ingredient used in making detergents. Also in order to get excise concessions all the Nirma products were produced without electricity. The company got listed on the Bombay stock exchange in the year 1994.In the current scenario Nirma does not lead the segment due to fierce competition from Wheel, etc. Still a recent billion dollar acquisition shows that the company is still a player in the market. 

In a way of giving back to the society Patel started the Nirma Institute of Technology in 1995 and the Nirma University of Science and Technology in 2003.Karsanbhai Patel was conferred with Padma Shri by the president in 2010.

By: Pratik Thakur

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