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.
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