‘There is no rural-urban divide in FMCG’

From having a single product — Ujala — in its kitty, to becoming an eminent FMCG player, Jyothy Laboratories has come a long way. Over the years, it has launched products in the fabric wash, personal care and home care categories as well. But Ujala has been so instrumental to the company’s growth that its office in Andheri is named Ujala House. The fabric whitener generates Rs 50 crore profits every year. Ullas Kamath, deputy managing director, talks to Shailaja Sharma about the company’s plans to make its newer products — Maxo and Exo — reach similar heights.

Having added new products to your portfolio in the past year, what is your plan for the year ahead?
This year, our agenda is to take Exo (dish-wash bar) to the national level. Maxo (mosquito coil and repellent) is already national and available in 15 lakh outlets, how to take it to 18 or 22 lakh outlets will also be the focus since Ujala today is available through 29 lakh outlets. We already have direct coverage; indirect coverage — through our wholesaler network or consumer inquiry in rural markets — is something we need to work on.

While other FMCG players rush to rural India, you have already been there...
There is no difference as far as the FMCG business is concerned between urban and rural. There is nothing called ‘Welcome to Rural India’. In Mumbai, Dharavi is rural India. Whether Jharkhand is a rural state or Bihar or Maharashtra is rural India, there is no one identified place, you can sell everywhere. In a confused state, when they can’t call a place rural or urban, they call it semi-urban. These are all technical jargons placed around FMCG, generally by brand managers and product managers. Any household in India is my customer. There is no difference between the whiteness of rural and urban India — whiteness is whiteness. But we appreciate very clearly that in rural markets, the brand loyalty is always the highest. If one can penetrate the rural India, then one can stay there for long. To sell more in rural India, one must know what it is about, how it feels and behaves. They want small packs and they want it across all price points. They want the best quality at lowest price. This is difficult to meet. Operating costs are much more in rural India.

You have launched very few products all these years. Why?
We believe that creating a brand is giving birth to a child. Till the child walks and talks a little bit, you should not have more children. Then you don’t know who is crying for what. Each brand, when we launch it, we know it will be a Rs 100 crore brand. So we launch a product, make it a Rs 100 crore brand, and then move on to launch another product.

Your personal care offering has only one brand — Jeeva soaps; do you plan to expand that offering?
Jeeva is an ayurvedic-positioned product that we launched in 2002. We were very ahead of time. We launched it along with Lever’s (Hindustan Unilever Ltd) Ayush and Medimix going national, Dabur moving towards ayurvedic products, Fair & Lovely becoming ayurvedic and Chandrika changing hands from a Kerala company to Wipro, Margo changing hands from Calcutta Chemicals to Henkel...

A lot of things were happening in the ayurvedic space at that time and we had a wonderful product — Jeeva, which was already 2 years old in Kerala then. So we thought, why not go national? We did well for the first 2-3 years... but the acceptance of ayurveda at national level is not a success for anybody. So it’s slowly tapered off for everybody.

Ayurveda products seem to be gaining a lot of momentum in the international market...
In the international market, it’s a lot of hype, because for them, it’s about ‘herbal’. And it’s a different perception for them. For them it’s like medicine and environment friendly. Here, ayurveda is a home grown medicine.

Jyothy had plans to launch shampoos and hair dyes. There were many reports quoting founder MP Ramchandran on this particular development. What happened?
People will write. We always see what the Indian household needs. If somebody is already selling a dye or if somebody is using some kind of shampoo and they are happy with that, we don’t launch another dye or shampoo because the consumer doesn’t need one more. But there is a gap when somebody is selling mosquito coil and people are not getting the mosquito coil at the price and at the place they want it. That’s how we got into mosquito coil business. Ramchandran (founder of Jyothy Laboratories) will never say that we will not launch a product. He is all inclusive. He says that we are here to launch anything and everything that the Indian households want. That’s a statement I agree with. But when do we launch, what and why do we launch, is what I am answering. We launch where there is a need gap, we enter a segment where the aspirations of a common man are not met by existing players. 98% of the Indian population uses one or the other method of body wash. What is the point in giving them one more toilet soap? We are there in dish-wash bar because in India, of 20 crore households, only Rs 600 crore worth of dish-wash bar is being used. Penetration level could be less than 20% of population. They use ash and mud instead of authentic dish-wash bar. HUL and Henkel are there in this segment, but consumers’ need hasn’t been met as yet. We are not into detergent powder in a big way because 90% of the people are using some or the other detergent powder.

How much do institutional sales contribute to your business?
Institutional sales account for 3% of our business. It is not a focus area for us. Institutional sales is misunderstood in India, unlike globally. Here they (retailers) will give more discounts to consumers after robbing it from the company and say “we are the best sellers”. Globally, it is not so, it then becomes private label business. Ujala, if it is sold at Rs 12 and if inside a Big Bazaar, I’m selling it for Rs 11, then I am cheating the consumer who is buying it at Rs 12 from shops outside. So we tell retailers — you take what margin you want but don’t discount my product. So we are not into that discounting format. You need institutional backing when your brand is not known or if you are taking care of a segment that is not tapped so far.

Is it not your focus area?
Selling more to the Big Bazaars or Subhikhas means... they take longer time to release your money, they have so much of procedure in place that they will never get money before 90 days. The smaller retailer will give you money upfront.

Apart from Subhiksha, have you faced such issues with other retailers?
Generally, we don’t give credit. Only place we have given is Subhiksha, and lost Rs 2-3 lakh. To take care of the consumer household, through retail (organised), wholesaler or small retail format — the best way is through the 30 lakh existing retail outlets. These 30 lakh outlets across the country are their livelihood. Directly or indirectly, there are 1.5 crore people depending on it. Forefathers, grandfathers, fathers and children are into that business. But for younger generation, Big Bazaar is a great place to shop... but that’s a very miniscule population.

What are your plans with the laundry business Fabric Spa?
Fabric Spa will be opened at Bangalore in July 2009. There will be 12 of them. After a year from there we will go to Chennai, Hyderabad, Pune and lastly, to Mumbai.