Success Story of Nirma

A Case study on Karsanbhai Patel

His is a legendary

rags to riches journey

during which he

shattered established

business theories and

rewrote new ones.

● ● ●

Karsanbhai Khodidas Patel (K.K.Patel) is a befitting example of a self made man.

Coming from a humble farmer family he understood the need of the masses to serve

a segment that was neglected but at the same time highly profitable. He established

a position for his firm in the lower income segment of the detergent market,

overtaking many heavy weights and multinationals, to emerge as a winner.

Literally, he made money by washing others’ dirty linens. He is the founder of the

powerful brand ‘Nirma’ which he aptly positioned using all the 4 P’s of marketing

(viz. product, price, place and promotion) to his advantage.

● ● ●

Submitted to: Dr. Anita Tripathi Lal

Submitted by: Madhusudan Partani FMG-18A 91029

arsanbhai Patel was born into a

farmer family in a small village

called Mehsana, North Gujarat in

the year 1945. Karsanbhai finished his B.Sc.

in Chemistry at age 21 and worked as a lab

technician, first in the New Cotton Mills,

Ahmedabad, of the Lalbhai group and then

at the Geology and Mining Department of

the Government of Gujarat.

Entrepreneurship was in his blood and in

1969, at a young age of 25 he embarked on

a life changing journey which catapulted

him into a mastermind businessman. He

addressed the needs of millions of Indian

consumers who had no choice but to kneel

before the limited number of options of

high cost detergents available in the Indian

market.

He launched the brand “Nirma” named

after her daughter Nirupama, in the year

1969. This was an after-office business the

one-man company would bicycle through

the neighbourhoods selling handmade

detergent packets door to door. But later

on, after the 3 years of firsthand

experience with the customer by having a

direct contact with them, he felt very

confident in quitting his job. This shows

how enthusiastic and also how passionate

he was in his dream venture. The following

speech marks as said by Mr. Patel clearly

exhibits the quality of a successful

entrepreneur, that is whatever the

situation may be, whatever the

circumstances may be, the passion and the

fervour can never be curtailed.

“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”

Though he was not from a entrepreneurial

family, though no one in the family earlier

to him dealt into any venture, thus were

very highly risk averse and had a fear of

failure. But the zeal of the venture has

never allowed the circumstances to thwart

his vigour and verve.

Karsanbhai set up shop at small workshop

in an Ahmedabad suburb. The Nirma brand

quickly established itself in Gujarat and

Maharashtra.

The launch of ‘Nirma’ detergent powder

was special in many respects. It was made

from an indigenous formula, without using

phosphate, which was environmentally

friendly and not used by any existing

detergent company. This made the

competitors sit up and take notice of

K

‘Nirma’. Also the detergent was launched

at a low price of Rs 3/kg whereas the next

cheapest detergent at that time was Rs.

13/kg. The use of penetration pricing

worked for ‘Nirma’. In terms of

distribution, Karsanbhai Patel started the

route of door to door selling which was an

effective way to reach the target segment.

The advertising campaign of ‘Nirma’ uses

the jingle “Doodh Si Safedi Nirma Se Aayi”

is so popular among the masses, using the

purity and colour of milk to symbolise the

power of Nirma in a metamorphic manner.

Nirma became a huge success and all this

was a result of Karsanbhai Patel’s

entrepreneurial skills.

Karsanbhai Patel had good knowledge of

chemicals and he came up with Nirma

detergent which was a result of innovative

combination of the important ingredients.

Indigenous method was used ,and also the

detergent was more environment friendly.

Consumers now had a quality detergent

powder , having an affordable price tag.

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 affordable prices and thus

creating good value for the consumer’s

money.

The high quality and low price of the

detergent made for great value. Fuelled 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.

In the 1980s Nirma moved ahead of Surf, a

detergent by HLL , to capture a large

market share. Nirma went on to become

the largest detergent and the second

largest soap company in India. Nirma had

more than 35% market share in the

detergent segment and around 20 %

market share in the toilet soap segment.

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 up gradation of the production

facilities. The company also made sure that

it uses the latest technology and

infrastructure.

Karsanbhai Patel was an opportunist. 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 another success story.

‘Nirma’ beauty soap is one of the leading

toilet soaps, behind Lifebuoy and Lux.

Overall, ‘Nirma’ has a 20% market share in

soap cakes and about 35% in detergents.

As far as Corporate social responsibility

(CSR) is concerned, Nirma has made some

good efforts by starting Nirma Education &

Research Foundation (NERF) in the year

1994 for the purpose of running various

educational institutes.

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. To produce more such

extraordinary entrepreneurs, the

Nirmalabs education project was launched

in 2004, aiming at training and incubating

prospective entrepreneurs. This prepares

aspiring entrepreneurs to effectively face

the different business challenges. Nirma

also runs Nirma Memorial Trust ,Nirma

Foundation and Chanasma Ruppur Gram

Vikas Trust as a part of their effort as a

socially responsible corporate citizen.

Awards and Accolades

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 'Udyog Ratna' award.

Honorary Doctorate by Devi Ahlya University, Indore

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.

Dr. Karsanbhai Khodidas Patel has been conferred with Padma Shri Award for the year

2010. The award will be formally conferred by the President of India Mrs Pratibha Patil.

References

“Business Personality- Karsan Bhai K Patel,” A Presentation by NIRMA University

http://www.nirma.co.in/genesis.htm visited on 11th, 13th and 15th July, 2010

http://www.businessblog360.com/2008/04/25/karsanbhai-patel-and-the-success-

of-nirma/ visited on 12th July, 2010

http://www.iloveindia.com/indian-heroes/karsanbhai-patel.html visited on 11th

July, 2010.

http://en.wikipedia.org/wiki/Karsanbhai_Patel visited on 15th of July, 2010