C K Ranganathan, CEO of CavinKare: Rags-to-riches!!

C K Ranganathan, CEO of CavinKare is somebody who changed the rules of the FMCG game. He is widely regarded as the man behind the sachet revolution. The FMCG business is becoming increasingly complicated with the biggie HLL competing with regional players in various parts of India. HLL battles it out with CavinKare in most of the Southern markets. CavinKare has registered tremendous growth and has ambitious plans to expand its product portfolio. CavinKare acquired Ruchi Food Products (known more for their pickles!) about two years ago and is currently making a foray into international markets.

History: 1983, C K Ranganathan started selling shampoos in a sachet with an investment of Rs 15,000 and dared to take on the multinationals, Lever and P&G, the unquestioned leaders in that segment.

Present: This year, Ranganathan’s company, CavinKare, ended up with a turnover of a little over Rs 500 crore. Ranganathan is positive he can touch Rs 5000 crore in the next 10 years and can emerge as an Indian multinational.

So how did Ranganathan become a tycoon? His father, Chinni Krishnan, a school teacher, had an entrepreneurial streak in him. He was also an inventor of sorts. He had started a small-scale pharmaceutical packaging unit and gone on to manufacture pharmaceutical products and cosmetics. The father may not have become a big time businessman, but he had a few radical ideas about the Indian consumer. He wanted the common man to have access to what was then termed as rich man’s products. He also believed in packaging for single-time use. The sachet which was to revolutionise FMCG marketing was his creation.

When his father passed away, Ranganathan, a fresh graduate entered the family business. His brother C K Rajkumar had been the brain behind Velvette International and the successful launch of Velvette shampoo sachets in the early eighties. However, Ranganathan wanted to branch off on his own. He had clear ideas about how to do business. He started Chik India as a small partnership firm, Chik being an acronym for his father’s name. The partners were his mother and grandmother. Chik India started off by offering a single product, Chik shampoo. Ranganathan took the then shampoo market by storm, selling his Chik brand of shampoo at a much lower price than other shampoo sachets which were selling at Rs 2. He targeted rural and small-town consumers who used soaps to wash their hair. Didn’t he offer his sachets at an unbelievable price of 50 paise? How could he have made any money? Ranganathan says he didn’t start off with 50 paise pricing. He introduced the sachet at 90 paise. Only by 1998 the 50-paise pricing happened. And that’s when the multinationals sat up and noticed him. This was one regional player who was there to stay and also was giving them a good run for their money. With the volumes he had built up by then, his margins became quite healthy in spite of the low price. He would never admit to it, but his company was obviously cocking a snook at Lever when it changed its name from Beauty Cosmetics to CavinKare ( CK). The folks at Calvin Klein, a Unilever brand, were surely not amused. In an earlier interview Ranganathan has said the similarity to the original CK was coincidental though not entirely unwelcome. Says he: “It is a tribute to my father Chinni Krishnan. Also, Cavin in ancient Tamil means beauty and grace.”

From the beginning, Ranganathan was quite sure he wanted to have his own distribution network. He did not want to piggyback on some larger manufacturer’s set up. (His elder brother had burnt his fingers by tying up with Godrej). He said in an interview four years ago, “I was very clear that I did not want to mess up my focus by getting involved in production when there are highly skilled and competent people to do the job for you. My focus was to build brands, be hands-on where marketing and distribution was concerned.” He now says, “I had a basic product, the shampoo. I played around with these ideas.” How did he do that? “I introduced the concept of fragrance. Which was a revolution then. If you opened the sachet, the entire room would be filled with fragrance.” This obviously appealed to his target consumers. This was a period when the small company had no money for advertising. But understanding that the concept of fragrance worked, Ranganathan targeted the stockists. “When we went to visit them, we use to spray fragrance outside the packs. The stockists couldn’t help noticing the lingering fragrance.” They did this till Chik shampoo became an established name. But what really worked was the ‘bring empty sachets and take shampoo sachets in return’ offer. His competitors sneered. They said he was giving away sachets as charity. But Ranganathan proved his critics wrong. Sales zoomed from 35,000 sachets to 12 lakhs. “Initially we took any sachet, but after three months we restricted it to Chik sachets. But the idea had caught on, and it didn’t make any difference to the popularity of the offer.” With increasing cash flows the company finally got some funds for advertising. The next step was the introduction of floral fragrances like rose and jasmine. The sales rose to 35 lakh sachets. “From then there was no looking back,” says Ranganathan.

People who have worked with Ranganathan say that he has an intuitive understanding of the consumer and the market, particularly the South Indian consumer. Says Suguna C Swamy, a senior advertising professional who has worked on campaigns with Ranganathan, “Show him a commercial, he will know how people will react.”

Today Chik is the second largest shampoo brand after Clinic Plus.

Ranganathan then moved on to selling pickles in sachets. Now putting pickles in sachets is not as simple as it sounds. There is oil, pieces of pickle and spices — all of which have to be packed in pouches. Consistency in quality and standards has to be maintained. It can’t be allowed to leak. Ranganathan managed to create the right sachet and packaging. And he became the market leader in Tamil Nadu within a year. The next launch was Nyle herbal shampoo in 1993, which faced tough competition from the existing manufacturers. This was targeted for the middle class, and established itself within three to four years and has gained respectable market share. Then there is Meera hair wash powder, easily the market leader. As Ranganathan explains it, he looks for products which fulfill a felt need. Another launch during this period was the Fairever cream in the fairness segment. Lever’s Fair & Lovely is the market leader. CavinKare found that people were not ready to accept a new brand. There was a lot of resistance. “We did our research. We had to have a USP to promote the product. We discovered that milk and saffron worked well to lighten the skin with external application too (It’s usually thought that drinking milk with saffron makes you fair).” Today Fairever is the no. 2 brand in the fairness segment.

A lot of work was done to popularise the Indica hair colouring as well. “Actually we thought of the name Indica before the Tatas came out with their car,” he says. Again this was not an easy market to break into in 1998. Once it was decided to turn into herbal hair colouring, the sales picked up. Ranganathan has not achieved success in everything. For various reasons, his foray into perfumes and deodorants have not had the same acceptance like the other products. However, Ranganathan is not the kind who lets failures faze him.

Says Nandakumar, “He is an avid listener, he doesn’t talk much. You can tell him there are flaws in some of his ideas. He will buy it, work on it, refine it and come back”. Ranganathan gets up everyday at 5.30, sorts out his day’s activities, swims for half an hour (he is a fitness freak), spends time with his three young children and is off to work. He reads only management books, likes to watch comedies and takes short holidays with his family every three or four months. At other times, he thinks about becoming an international company. “I like challenges,” he says. Challenges are what he is looking forward to in the next few years.

A few months ago, the company launched Tex, a toilet cleaner (short for toilet expert) in, of course, a sachet. Now toilet cleaners have a corrosive base: it is near impossible to pack them into a sachet. But CavinKare has achieved this. When first packed in a sachet, the cleaner was oozing out. A lot of work went into it again to get the package right. A little known fact about CavinKare is that one of the group companies is a very modern packaging unit. It supplies to many big names in industry like P&G, Henkel, ITC, Britannia, Godrej, Kelloggs and so on. Tex is doing very well in Tamil Nadu. There are two new hair oils to hit the market soon, Meera and Nyle. Nyle is an up-market product with a very different packaging. Herbs are kept in tubes, which are placed inside the oil for constant interaction.

Going global is the next priority. CavinKare already has fully owned subsidiaries in Indonesia and Bangladesh. It is seriously looking at all the neighbouring countries, the Gulf and Egypt. Plans are being finalised to enter the US market this year. Food products will possibly become even larger than the personal care products. Then there are the exclusive CavinKare Salons, Green Trends and Lime-Lite and which have been set up already in three metros. Ranganathan feels the salons offer a tremendous opportunity. He dreams of setting up 1,000 salons in the next 10 years. They will be the vehicles for top of the line products. Will he be able to achieve all this? “My strength is I deliver on my claims,” he says gently. For more details: click here

This guy is gona create new HLL !!