C K Ranganathan, chairman and managing director of CavinKare, started his journey from a small town of Cuddalore in Tamil Nadu. He started the business with a mere Rs 15,000 and turned in to a Rs 500 crore company. He has shown the world that it easy to beat the multinationals in the most competitive markets of FMCG.
Ranganathan’s father Chinni Krishnan taught him the first entrepreneurial lessons of his life. Krishnan started a small-scale pharmaceutical packaging company before moving into manufacturing of the pharmaceutical products and cosmetics. Chinni was an agriculturist. As Ranganathan was poor in academics, his father motivated him to build his career in business or do agriculture.
Ranganathan’s siblings were very good in studies. While two of them are doctors and the other one a lawyer, Ranganathan was the odd one out. Being educated in a Tamil medium school, he suffered an inferiority complex because of his poor English and academic record. Studies did not interest him.
Pets were something that stole his heart. When he was in the fifth standard, he had somewhere around 500 pigeons, a lot of fish and a large variety of birds. He earned his pocket money out of pet business. And this was the time the entrepreneurial spirit in him showed its first appearance.
Original Concept of Sachets
When Ranganathana entered college, his father passed away. Before his demise, Krishnan had come up with the sachet concept. He felt liquid can be packed in small sachets and sold. He was the first person who packed and sold talcum powder in 100gm, 50 gm and 20 gm packs when every other company was selling it only in tin containers.
‘Whatever I make, I want the coolies and the rickshaw-pullers to use. I want to make my products affordable to them,’ he used to say.
His father, however, was unable to market the concept. He kept moving from innovation to innovation but never thought of marketing strategies well. Indeed, he was a great innovator but a poor marketer.
After the death of Ranganathan’s father, his brother handled the family business. In 1982, when he joined them after his education, they launched Velvette Shampoo. In less than 9 months, he left the business because his ideas clashed with theirs. He was in the manufacturing unit, he did not know anything about the marketing of finance.
Starting with Rs 15,000
After he left his brothers saying that he did not want any stake in the company, he felt motivated to start his own venture. With all the savings he had, that was Rs 15,000 at that time, he was confident of achieving success. He did not feel anything about riding a cycle when he had the experience of riding cars.
For a week, Ranganathan was unable to make up his mind about the selection of business. He knew only two things, making shampoo and handling pets. He didn’t want to start a shampoo business as it would be a direct competition with his brothers and he didn’t want to initiate a fight. However, he decided to do the same because the only thing he knew was making shampoo.
He rented a home office for Rs 250 a month paying an advance of Rs 1,000. He rented another venue for the factory for a rent of Rs 300 a month. He bought a shampoo packing machine for Rs 3,000. He named it Chik shampoo after his father. The product did not capture the market immediately. He learnt many things during hard times.
In the first month, he was able to sell 20,000 sachets and from the second year, he started making profits. In 1989, he moved to Chennai but the manufacturing unit continued to be in his village. After three years of hard work, he finally got a loan. Every other bank asked for collateral which he not had. One particular bank financed him with Rs 25,000 which he invested in his business.
You know what the bank manager wrote in the 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!’
Becoming the Best in South India
When Chik shampoo was new in the market, Velvette Shampoo was already strengthening its roots using aggressively marketing. Ranganathan came up with an interesting technique. He announced that the company will exchange five sachets of any shampoo for a Chik Shampoo sachet for free.
Later, the company altered the scheme and started giving one free Chik Shampoo in exchange for five Chik Shampoo sachets only. Consumers started asking for Chik sachets instead of any other shampoo. The sales skyrocketed 3000 per cent from Rs 35,000 to Rs 12 lakhs a month.
The sales further went up to Rs 30 lakh per month after the introduction of jasmine and rose fragrances. Ranganathan signed Amala as the company’s model and brand ambassador which helped him achieve a sale of Rs 1 crore a month. Every idea was rewarded by the consumers. The company didn’t look back since then.
Conquering the Rural Market
At that time, big companies sold products in big products and all the marketing strategies focused on cities and people with good income. The companies did not focused on small Kirana stores and ignored the rural market. Ranganathan sees this as an opportunity and went to rural areas of South India. People hardly used shampoo there.
Chik shampoo was the first to teach them how to use shampoo. They did a live demonstration on a young boy and asked the villages to feel and smell his hair. Chik Smaphoo sponsored shows of Rajnikant’s films. They advertised in between followed by live demonstrations. They also distributed free sachets among the audience after the shows. After, every show, the shampoo sales increased 3 times.
As CavinKare planned to expand to new products, they thought the name Beauty Cosmetics would be bounding. In 1998, Ranganathan planned a contest among the employees for a name and one of them suggested CavinKare. C and K are his father’s initials. Cavin in Tamil means beauty and grace.
Ranganathan wanted to cater to those who cannot afford high priced cosmetics. In the last few years, the market share has come down but the company is growing. The anti-dandruff shampoo is capturing the market and CavinKare doesn’t have one.
With over 25 per cent market share Anti-dandruff shampoos are a hit. The remaining 75 per cent constitutes ordinary shampoos and CavinKare holds a 20 per cent share in that. It is the largest brand in rural Uttar Pradesh and Andhra Pradesh.
Ranganathan targets Rs 1,500 crores company in upcoming three years. He believes that teamwork is the reason for the company’s success. With good professionals who work hard, the company aims high. Innovation is the key to why customers love the brand.