CavinKare does it again

CKR, who is best known for selling shampoo in 50-paise sachets, hopes to repeat the magic with milk products

Chinni Krishnan Ranganathan (CKR) is best known for selling shampoo in 50-paise sachets, which led multinationals like Unilever and Procter & Gamble to wake up to India’s huge untapped bottom of the pyramid market. That earned CKR, as he is popularly known, the reputation of being superfast in spotting new opportunities.

CavinKare’s Chairman and Managing Director obviously wants to keep that reputation intact, which is evident from the company’s recent entry into the “on-the-go segment” by launching milk-related products, which the company claims is the first of its kind in the country. This is apart from the plan to enter the ready-to-eat segment and launch six products in the existing business segments.

“We will repeat the same revolution that we managed in the shampoo market by way of new packaging and products,” says CKR.

A fortnight ago, CavinKare launched Vanilla Milkshake in the launched Ultra High Temperature (UHT)-treated segment. Earlier, it launched UHT-treated milk, which can last for 120 days, without refrigeration.

“In the next two years, we will launch six products in the segments we operate now and they will be a differentiator”. The 100-member team of scientists is already working on these products and the launches are on schedule, says CKR.

By his own admission, Ranganathan was a backbencher in school. However, that didn’t prevent him from starting CavinKare when he was just 19 years old. The young entrepreneur started the business after walking away from Velvet Shampoo, which was controlled by his brothers.

The company he started in a small room in Cuddalore in the name of Chik India with a single product has sustained and continues to challenge major brands in personal care (hair care, skin care, home care), food products, beverages, dairy products. Some of the popular brands include Chik, Meera, Indica, Garden, Ruchi, Cavin’s etc.

The first brand, which CKR launched was Chik shampoo and he priced it at 50 paise a sachet as against the competition’s Rs 1. “It was completely a gut feeling,” says CKR, who earlier struggled to convince retailers to accept his products.

He recalls the marketing strategy that he used in the initial days — whoever comes with five empty Chik shampoo sachets will get one for free. If retailers collect sachets from three customers, they will get one free. Though common now, it was a new initiative that time.

“This is where I think the big change came in,” CKR says. CavinKare’s turnover zoomed to Rs 10 lakh from just Rs 35,000 in just nine months. It soon became Rs 25 lakh after the company brought in differentiation of its products through fragrances – again a first such move in the industry.

In 2011-12 the company has clocked Rs 1100 crore and set a target of over Rs 2100 crore 2014-15.

“While competitors used fragrance costing Rs 500-700 for their products, we imported fragrances, spending Rs 3,000. It was a disproportionate investment, but it worked,” says CKR. Today the Chik brand is worth Rs 250 crore.

CavinKare spends around three per cent of its revenue in research and development and is talking to private equity firms to raise around Rs 500 crore for creating distribution network, manufacturing capacities and brand building. The company has 800,000 outlets now which will be increased to one million in the next two years.

This, CKR says, is necessary to become a national player. The company has set a target to increase the non-southern revenue to 55 per cent of the total revenue in the next two years from the current around 40 per cent.