Profile

Achievement: Man behind the hugely successful brand, Nirma.

Karsanbhai Patel is the man behind the hugely successful brand, Nirma. His' is a legendary rags
to riches journey during which he shattered established business theories and rewrote new
ones.
Dr. Karsanbhai Khodidas Patel (b. 1945, Ruppur, Mehsana, Gujarat) is an Indian industrialist, founder of
the Rs. 2500 crore (USD 500 mn) Nirma group with major interests in detergents, soaps and cosmetics.
In 2005 Forbes listed his net worth as USD $640 million. He has interests in education, and founded a
leading engineering college, the Nirma Institute of Technology. He is sometimes referred to as Dr. K.K.
Patel.

History
Born into a farmer family from north Gujarat, Karsanbhai finished his B.Sc. in Chemistry at age
21 and worked as a lab technician, first in the New Cotton Mills, Ahmadabad, of the Lalbhai
group and then at the Geology and Mining Department of the state Government. In 1969,
Karsanbhai set up Nirma, (named after daughter Nirupama) selling detergent powder. This was
an after-office business - the one-man company would bicycle through the neighbourhoods
selling handmade detergent packets door to door. At a price of Rs. 3 per kg, (one third the price
of leading detergents), it was an instant success.This is called patel power of Gujarat.Indeed
karsanbhai Patel is having dynamic personality, inspiring person.

After three years, Karsanbhai felt confident enough to quit his job. Later he said:

The lack of any such precedent in my family made the venture fraught with fear of
failure. But farmers from North Gujarat are known for their spirit of enterprise."

Karsanbhai set up shop at small workshop in an Ahmedabad suburb. The Nirma brand quickly
established itself in Gujarat and Maharashtra.
Specialty of product
The high quality and low price of the detergent made for great value. Fueled by housewife-
friendly advertisement jingles, Nirma revolutionized the detergent market, creating an entirely
new segment in for economy detergent powder. At the time, detergent and soap manufacture
was dominated by multinational corporations with products like Surf by Hindustan Lever, priced
around Rs. 13 per kg. Within a decade, Nirma was the largest selling detergent in India. Since
production was labour intensive, Nirma also became a leading employer (employing 14,000
people 2004). Made without some phosphates, Nirma was also somewhat more environment
friendly.

After establishing its leadership in economy-priced detergents, Nirma entered the premium
segment, launching toilet soaps Nirma bath and Nirma beauty soap, and premium detergent
Super Nirma detergent. Ventures into shampoo and toothpaste were not as successful, but the
edible salt Shudh is doing well. Nirma beauty soap is one of the leading toilet soaps, behind
Lifeboy and Lux. Overall Nirma has a 20% market share in soap cakes and about 35% in
detergents. Nirma also has successful operations in neighbouring countries.

In 1995, Karsanbhai started the Nirma Institute of Technology in Ahmedabad, which grew into a
leading engineering college in Gujarat. An Institute of Management followed, with the entire
structure being consolidated under the Nirma University of Science and Technology in 2003,
overseen by the Nirma Education and Research Foundation. The Nirmalabs education project,
aimed at training and incubating entrepreneurs, was launched 2004.

Karsanbhai's two sons and son-in-law are now at leading positions in the Nirma organization:
Rakesh K Patel (MBA) looks after procurement and logistics, Hiren K Patel, chemical engineer
and MBA, heads marketing and finance, while Kalpesh Patel is in human resources.
Karsanbhai Patel and the success of nirma
The nirma success story of how an Indian Entrepreneur took on the big MNCs and rewrote the
rules of business :

It was in 1969 that Dr. Karsanbhai Patel started Nirma and went on to create a whole new
segment in the Indian domestic detergent market. During that time the domestic detergent
market only had the premium segment and there were very few companies, mainly the MNCs ,
which were into this business.

The process of detergent production was labour intensive and this gave employment to a large
number of people.Nirma focused on cost reduction strategies to make a place for itself in the
market.Nirma has always been known for offering quality products at afforbable prices and
thus creating good value for the consumer’s money.

In the 1980s nirmamoved ahead of Surf , a detergent by HLL , to caputre a large market share.
Later, Nirma successfully entered in the premium segment of soaps and detergents.Nirma went
on to become the largest detergent and the second largest soap company in India. The
company got listed on the stock exchanges in the year 1994.

Nirma adopted backward integration strategy for the regular supply of raw materials,90 % of
which they manufacture themselves.Nirma also gave due importance to modernization
,expansion and upgradation of the production facilities.The company also made sure that it
uses the latest technology and infrastructure.
About business
vory 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 upmarket brand. Patel now has to chalk
out a strategy that’ll help him keep the competitive edge.

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.

One of the basic axioms of management is to avoid a head-on confrontation with a giant multi-
national, especially one which is the undisputed leader in its field. Karsanbhai Khodidas Patel, a
one-time government servant, chose to buck these grandiose theories, and took on the might
of Hindustan Lever with his puny homespun outfit. In this one respect, his case can be
compared to those of Henry Ford and Apple in the USA, and Sony and Honda and Honda in
Japan, all maverick entrepreneurs who built their empire on gut feeling rather than following
the classical pattern taught in business schools.

To look at the 48-year-old Karsanbhai, one would hardly believe that he is the head of, and the
sole brain behind, an industrial empire that is today within a heartbeat of crossing the magical
Rs.1,000crore mark. The round, bespectacled face, the great shining pate with a crescent-moon
of hair on its fringe, and the simple white cotton shirt are typical of thousands of middle-class
people who commute daily between their modest homes in the suburbs and their modest
homes in the suburbs and their places or work in the city.

It was during experiments in his kitchen that his knowledge of chemicals enabled him to
concoct an effective detergent which was inexpensive enough to allow him to sell it to his
neighbour’s for a small profit. He called the turmeric yellow powder Nirma after his then one-
year-old daughter, Niranjana, who was affectionately known to everyone as Nirma (she was to
tragically die at the age of 20 in October, 1987 in a car accident).
For harried housewives, struggling to balance their monthly budgets, the product 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. As word-of-mouth spread,
Karsanbhai got more and more customers to whom he effected his deliveries on foot.

Karsanbhai believed strongly in the time-honoured 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.

As televisions reach spread in India during the late 1970s so too did Nirma’s. the little girl on the
pack became a symbol that was almost generic with a good quality, low-priced detergent. A
catchy jungle hammered home the message to millions of housewives. It was as if a down
market consumer revolution had taken off.

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.

Nirma’s inexorable march has been arrested to some extent in the course of the last one year,
though its growth rate remains higher than that of the rest of the washing soaps industry. In
detergent powder and cake, my market share would be around 65 percent claims Karsanbhai,
who is very fond of comparing and contracting his own sales figures with those of his major
rival.

The industry has been growing at the rate of 15 per cent annually while Nirma’s growth has
been at least 30-35 per cent a year for the last few years.

Even today, after Nirma price has gone up with inflation and rising production costs, the yellow
detergent still retails at around Rs.12.50 per kilo in Bombay.

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.
As he had done with Nirma detergent, Karsanbhai did not start up a media assault until his
entire distribution network had the product in place. We advertise only after we have launched
a product in place.

A toothpaste, which Karsanbhai claims has been developed with indigenous technology, is next
in the pipeline, but has already taken nearly four years on the drawing board.

Of late, Karsanbhai had encountered several other problems that promise to try his managerial
skills to the utmost. One is the fact that his size has expanded so much that he is deemed to be
a public limited company. That status will deprive his products of their edge in price, because
they will be gathered into the excise net.

The intrepid entrepreneur also faces intense competition from the small sectors, which was his
initial launch-pad. Inspired by the success of Nirma, there are literally hundreds of soap-makers,
who have made Ahmedabad the detergent capital of the country. Since transportation costs are
a very crucial part of the costings in a low-priced detergent, many manufacturers are locating
their factories as close as possible to their eventual sales points so as to save on transport costs.
Nirma could well lose out soon on its best Unique Selling Proposition-price.

maintain the highly centeralized style of running that has always been characteristic of Nirma.
For an enterprise that is today competing with Godrej for the accolade of the largest privately-
owned business in India, Nirma has an exceedingly toplight management structure, with barely
200 managers handling the huge 14,000 strong work force. Decision-making is restricted to a
handful of top people.

Karsanbhai pooh-poohs the suggestion that this centralized and paternalistic manner of running
such a huge operation could damage his organization. If prefer to keep in touch with things
directly, he maintains

It is some achievement that, despite the size of Nirma Chemical works, Karsanbhai has
managed to keep it a private limited company. He has been talking for the last five years of
going public but has been postponing doing it, one pretext or another.

And there the matter stands. But if he does proceed with what remains only a nebulous idea at
the back of his mind, this could be one issue that the public will rush for, and which could well
set up a new record for oversubscription. For Karsanbhai Khodidas Patel has become something
of a cult figure in the Gujarati community, next only to DhirubhaiAmbani, as a sort of
benchmark for every aspiring entrepreneur to aim at .
Awards
In 2001, Karsanbhai was awarded an honorary doctorate by Florida Atlantic University,
recognizing his exceptional entrepreneurial and philanthropic accomplishments.

In 1990, the Federation of Association of Small Scale Industries of India (FASII), New Delhi,
awarded him the 'UdyogRatna' award. The Gujarat Chamber of Commerce felicitated him as an
'Outstanding Industrialist of the Eighties'. He has served twice as Chairman of the Development
Council for Oils, Soaps and Detergents.