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The Soap Industry in India: Internuship Report

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    More and more soap manufactures are trying to capture a commanding market share by introducing and maintaining acceptable products. The soap industry in India faces a cut throat competition while multinational companies dominate the market. They are also facing severe threat from dynamic and enterprising new entrance especially during 1991-92. If we look back into the history of soaps & detergents, mankind knew about soaps nearly 2000 years back i. e. in 70 A. D. when Mr. Elder accidentally discovered the soap, when roasted meat over flowed on the glow in ashes.

    This lump like product was soap & had foaming & cleansing character. In 1192 A. D. the first commercial batch of soaps was made & marketed by M/s Bristol soap market in London, from there in 1662A. D. the first patent for making soap was taken in London. The world consumption of soap in 1884.

    HISTORY OF THE SOAP

    The first concrete evidence we have of soap-like substance is dated around 2800 BC. , the first soap makers were Babylonians, Mesopotamians, Egyptians, as well as the ancient Greeks and Romans. All of them made soap by mixing fat, oils and salts. Soap wasn’t made and use for bathing and personal hygiene but was rather produced for cleaning cooking utensils or goods or was used for medicine purposes.  The soap has history going back as far as six thousand years. The earliest known soap recipe is credited to the ancient Babylonians around 2800 B. C. Throughout history, soap was medically used for treatment of skin diseases. Common soap bars were invented in the 19th century.

    Almost 5000 years ago, it was discovered in ancient Babylonia that mixing animal fats with wood ash and water created a cleansing substance. The first soaps were used in the textile industry and for skin diseases.  Who Invented Soap? The Babylonians were the ones who invented soap at 2800 B. C. They discovered that combining fats, namely oil fats, with wood ash produced a substance capable of easier cleaning. The first soap was used to wash wool used in textile industry.

    INDIAN SOAP INDUSTRY

    The Indian Soap Industry includes about 700 companies with combined annual revenue of about $17 billion. History During the British rule the Lever Brothers, England introduced modern sops by importing and marketing them in the country. The first company created was North West Soap Company, the soap manufacturing plant in India situated in the city of Meerut, in the state of Uttar Pradesh.

    Tata set up India’s first indigenous soap manufacturing unit when he purchased the Coconut Oil Mills at Cochin Kerala. Ok Mills crushed and marketed coconut oil for cooking and manufactured crude cold process laundry soaps that were sold locally and It was renamed “The Tata Oil Mills Company” and its first branded soaps appeared on the market in the early 1930’s. Soap became a necessity for the moneyed class by around 1937. Today with increase in disposable incomes all around the world along with India, growth in rural demand is expected to increase because consumers are moving up towards premium products.

    However, in the recent past there has not been much change in the volume of premium soaps in proportion to economy soaps, this was due to this increase in prices which has led some consumers to look for cheaper substitutes. The major players in the market for the personal wash (Soap) market are HLL, Norma and P&G. The toilet soaps market is estimated at 530,000 TPA including small imports where the Hindustan Lever is the market leader. The market has several, leading national and global brands and a large number of small brands. The popular brands include Lifebuoy, Lux, Cinthol, Liril, Rexona and Nirma.

    Premium soaps are estimated to have a market volume of about 80,000 tones. This translates into a share of about 14 to 15%. However, by value it is as much as 30%. Soaps are categorized into men’s soaps and common soaps. There are few specially soaps like the Glycerin soaps, sandal soaps, specially flavored soaps, medicated soaps and baby soaps. Specialty soaps are high valued which enjoy only a small share of the market in value terms. The market is growing at 7% a year. This means that the incremental demand generation is 5% over and above the population growth.

    With increasing awareness of hygienic standards, the market for the Soaps could grow at a rate higher than 8% annually. Interestingly, 60% of the market is now sourced from the rural sector. This means that the variance between the two segments is not very large. Since upper-end market focus is the urban areas, margin come from the urban sector. Soap is a product for many people and the lathering up can be treasured part of a morning or nightly routine. Whether it might be scented or unscented, in bars, gels, and liquids, soap is a part of our daily lives.

    In the United States, soap is a $1. 390 million (US$) industry with over 50 mass market brands. But in Indian markets the sales potential for soap is only beginning to be realized. At the end of the year 2000, soap was a $1. 032 million (US$) business in India. India is a country with a population of 1,030 million people. With the household penetration of soaps is 98%. People belonging to different income levels use different brands, which fall under different segments, but all income levels use soaps, making it the second largest category in India.

    Rural consumers in India constitute 70% of the population. Rural demand is growing with more and more soap brands being launched in the discount segment targeting the lower socio-economic strata of consumers. Soap manufactures originally targeted their products to the lowest income strata in urban as well as rural areas, positioning their brands as a way to remove dirt and clean the body. For some brands, that positioning persists even today with a focus on removal of body odor and keeping the user healthy.

    However, soap positioning moving towards skin care as a value-added benefit. Soap is primarily targeted towards women, as they chief decision-makers in terms of soap purchase and for Medicated positioning like germ killing and anti-bacterial are marketed to families. About 75% of soap can be bought through the different types of outlets. This is the most common source for buying soap, which usually forms a part of the month’s grocery list. Pan-Beda Shops: These are really small shops, almost like handcarts, and they are primarily set up to dispense cigarettes and chewing tobacco. Total annual soap sales by companies marketing their brands at national or state levels is estimated at 14,000 tons of a total soap market considered to be about 126,000 tons.

    Today in the economy the popular segments are 4/5th of the entire soaps market. The penetration level of toilet soaps is 88. 6%. Indian per capita consumption of soap is at 460 gms are per annum, while in Brazil it is at 1,100grams per annum. In India, available stores of soaps are five million retail stores, out of which, 3. 75 million retail stores are in the rural areas. 0% of India’s population resides in the rural areas and around 50% of the soaps are sold in the rural markets.

    The Indian Soap Industry includes about 700 companies with combined annual revenue of about $17 billion. Major companies in the industry include division of P&G, Unilever, and Dial. The Indian Soap Industry is highly concentrated with the top 50 companies holding almost 90% of the market. The market size of global soap and detergent market size was estimated to be around 31 M tones in 2004, which is estimated to grow to 33 M tone in the coming years.

    Toilet soaps account for more than 10% of the total market of soap and detergents. In Asia, the countries like China and India are showing rapid growth in the toilet soap section. Market share of body was estimated to be around 2% in 2004 and is showing signs of healthy growth in these markets. India’s soap market is Rs 41. 75 billion. Indian Soap Industry volume is Rs 4,800 crore. For the purpose of gaining a competitive edge, Indian companies are now re-launching their brands with value-additions to the consumers across India.

    For instance, Hindustan Lever Ltd (HLL) has recently launched a host of toilet soap brands which include Lifebuoy, Lux, Breeze and Liril with value additions. Also is in the process of rolling out “Ayush” ayurvedic soap. The aim is to meet the evolving needs of customers. One of the factors which affect the demand of soaps is the penetration, which the products have in market. In case of soaps this has not been a major issue as the penetration in the rural area is as high as 97% and that for urban area is around 99%. Thus approximately the penetration is around 99% for overall India.

    Total Contribution to the economy/sales In terms of market share for Indian Soap Industry the data indicates that HLL had a market share of 64% in the soap market, followed by Nirma at 16. 8% and Godrej at 4. 4%. Nirma’s market share was in the northern region was 21%. The largest contributor to the toilet soaps market in Indian market is Hindustan Lever with the total contribution to the economy and enjoys almost a two- thirds share, with the second ranked Nirma Soaps placed at a distantly low share of 16. 8%. Lux and Lifebuoy have held the away of the market for almost fifty years.

    In the Rs 4,800-crore Indian toilet soaps market, the leading players include: Hindustan Lever Limited,  Godrej Consumer, Products Limited, Colgate Palmolive Limited and  Wipro Consumer Care, Karnataka Soaps and Detergent and Limited

    The origin of sandalwood and its oil in Karnataka, which is used in making of Mysore sandal soaps, is well known as Fragrant Ambassador of India & Sandalwood oil is in fact known as “Liquid Gold”. By the Inspiration of His Highness Maharaja of Mysore late Jayachamarajendra Wodeyar, the trading of sandalwood logs started which was exported to Europe and New destinations, but with commencement of First world War India faced Severe Crisis on the business of sandalwood. This situation gave rise to start of an industry, which produces value added products i. e. , of Sandalwood oil.

    His Highness Maharaja of Mysore created this situation as an opportunity by sowing the seed of the Government Sandalwood Oil Factory, which is the present KS&DL. The project was shaped with the engineering skills and expertise of the top level. Late Sir M. Visvesvaraya, the great Engineer who was the man behind the project. Today’s famous Mysore sandal soaps credit goes to late Sri Sosale Garalapuri Shastri who incorporated the process of soap making using Sandalwood oil. He was an eminent scientist in the field working at the Tata Institute, Bangalore. He was sent to England to master the fine aspects of soap manufacturing.

    The Maharaja of Mysore and Divan Sir M. Visvesvaraya established the Government Soap factory during the year 1918. The factory was started as a very small unit near K. R. Circle, Bangalore with the capacity of 100 tons P. A. In November 1918 the Mysore sandal soap was put into the market after sincere effort and experiments were undertaken to evolve a soap perfume blend using sandalwood oil as the main base to manufacture toilet soaps . The factory shifted its operation to Rajajinagar industrial area, Bangalore in July 1957, where the present plant is located.

    The plant occupies an area of 39 acres (covering Soaps, Detergents and Fatty Acid divisions), on the Bangalore – Pune Highway, easily accessible by transport Services and communication. Another sandal wood oil division was established during the year 1944 at Shimoga, which stopped its operations in the year 2000 for want of Natural Sandalwood. This factory started at a moderate scale in year 1916. The first product was washing soap in addition to the toilet soap in the year 1918. The toilet soap of the company was made up of sandal wood oil. In 1950 Government decided to expand the factory in two stages.

    The first stage of expansion was done to increase the output to 700 tons per year and was completed in the year 1952 in the old premises. The next stage of expansion was implemented in 1954 to meet growing demand for Mysore sandal soap and for this purpose Government of India sanctioned license to manufacture 1500 tons of Soaps and 75 tons of glycerin per year. The expansion project worth of Rs. 21 lakh includes the shifting of the factory to a newly laid industrial suburban of Bangalore. The factory started functioning in this new premise from 1st July 1957.

    From this year onwards till date the factory had never looked back, it has achieved growth and development in production scales and profits. The industry has 2 more divisions one at Shimoga and another at Mysore where sandal wood oil is extracted. The Mysore division started functioning from 1917 and only during 1984 manufacturing of perfumed and premiere quality Agarbathis it was started. Right from the first log of sandalwood that rolled into the boiler room in 1916, the company has been single – minded pursuit of excellence. The project took shape with the engineering skills and expertise of top-level team under the leadership of Sir. M. Visvesvaraya, Prof. Watson and Dr. Sudbrough. Like this soap factory was started as a small unit and now it has grown up to a giant size.

    FOUNDERS OF MYSORE SANDAL SOAP

    Nalvadi Krishna Raj Wodeyar Sir M. Visvesvaraya Sri S. G. Shastri Mysore Sandal Soap is a brand of soap manufactured by the Karnataka Soaps and Detergents Limited (KS&DL), a company owned by the Government of Karnataka in India. This soap has been manufactured since 1916 when Nalvadi Krishna Raja Wodeyar, the king of Mysore set up the Government Soap Factory in Bangalore.

    The main motivation for setting up the factory was the excessive sandalwood reserves that the Mysore Kingdom had which could not be exported to Europe because of the First World War. In 1980, KS&DL was incorporated as a company by merging the Government Soap Factory with the Sandal Oil factories in Shimoga and Mysore. Mysore Sandal Soap is the only soap, in the world made from 100% pure sandalwood oil. KS&DL owns a proprietary Geographical Indication tag on the Mysore Sandal Soap which gives it intellectual property rights to use the brand name, to ensure quality and also prevent piracy and unauthorized use by other manufactures.

    BUSINESS

    As of March 2006, the Mysore Sandal soap held a 6500 ton share among the 450 thousand tones the soap are produced and marketed annually in India. The KS&DL’s soap factory in Bangalore that manufactures the Mysore Sandal Soap is one of the largest of its kind in India having an installed capacity to produce 26,000 tons of soap per annum. KS&DL had sales of Rs 1. 15 billion (about $ 28. 75 million) in the year 2004-2005 with the Mysore Sandal Soap having an average monthly sale of about Rs. 75 million ($ 1. 87 million).

    Traditionally, the soap has not been marketed in a high profile manner and only during the year 2006, M. S. Dhoni, the Indian cricketer was selected as the first brand ambassador of the Mysore Sandal soap. Other marketing strategies being employed to market this soap include a scheme where the distributors who meet the targeted sales could enter a lucky draw where they could win silver or gold coins. About 85% of the sales of the sandal soap are from South Indian states are of Karnataka, Andhra Pradesh and Tamil Nadu. Majority of the users of this soap are above forty years of age and it is yet to gain more acceptance by the youth in India.

    Apart from the regular, Mysore Sandal Soap, KS&DL has also introduced the Mysore Sandal baby soap to target this share of the market. However, KS&DL is facing issues like shortage of sandalwood which has resulted in the company using only 25% of the manufacturing capacity of its factory leading to a lesser production of soaps. The main reason for this is the depletion of sandalwood reserves in the state of Karnataka. To overcome this, KS&DL has also started procuring sandalwood by bidding in the open market and is also considering importing the wood from other countries.

    The absence of a sustained sandalwood regeneration programmed has a taken a big toll on sandalwood reserves in Karnataka. This is a great irony in a State that once set up factories to use up its excessive reserves and wears two GI (geographical indication) tags on its sleeve on account of its historic association with the precious wood.

    Ensuring global presence of Mysore Sandal products while leveraging its unique strengths to take advantage of the current Tech scenario by intelligent & selective diversification. Secure all assistance & prime status from Government India all Tech alliances. Further, ensure Karnataka’s pre-eminent status as a proponent & provider of Tech services to the world, nation, & private sectors. MISION:

    • To serve the National economy.
    • To attain self-reliance.
    • To promote purity & quality products
    • To maintain the Brand loyalty of its customers.
    • To build upon the reputation of Mysore sandal soap based on pure sandal oil.

    QUALITY POLICY ISO 9001: 2008 KSDL with a tradition of excellence of over eight decades is commercial to customer delight, through total quality management and continuous improvement through the involvement of all employees. KSDL has got ISO 9002 certificate. To improve the quality management system and to facilitate TQM in the process of soap and detergent, the management took decision to obtain ISO-9002 by end of March 1999. Accordingly action plan was drawn and a committee was set up for purpose during October 1998 with a mission statement.

    The company gives initial training including conducting employee’s awareness programmed document quality manual and quality system procurement. In this direction company obtained the guidance from Consultancies, Bangalore and Bureau of Indian Standards, Bangalore. Accordingly company standards registered for ISO 9002 by end of March to the Bureau of Indian Standards. Obtained the certificate by the end of the March 1999 itself. This is to project in the national and international market and also to improve quality of products offered to the consumers with the assurance of quality in the message.

    The company got itself upgraded to ISO-9001-2004, Quality Systems in the year 2004-2005. ISO-14001:2004 ISO 14001:2004 sets out the criteria for an environment management system and can be certified to it does not state requirements for environmental performance, but maps out a framework KS&DL can follow to set up an effective environmental management system , it can be used by any organization regardless of its activity or sector. Using ISO 14001:2004 can provide assurance to company management and employees as well as external stake holders that environmental impact is being measured and improved.

    The benefits of using ISO 14001:2004 can include:

    • Reduced cost of waste management.
    • Savings in consumption of energy and materials.
    • Lower distribution costs. Improved corporate image among regulators, customers and the public.

    PRESENT STATUS OF THE COMPANY

    The company is mainly dependent on southern market. The product availability in retail outlets particularly for Mysore sandal soap is almost comparable to any other similar industries products in the premium segment in the south.

    Whereas in other parts like Eastern & Northern markets penetration of KSDL product is relatively poor, which depends on the company’s distribution structure, stockiest and field personnel strength. With increased trust on distribution, the company does not foresee any problems to achieve the projected sales through the redistribution package. Further, the policy of Indian Government also sees the public sector enterprises enter the industry in a large way there by making the products available to the consumers at reasonable prices.

    Being located in the center of southern part of India the Government Soap Factory claims preferential treatment for expansion programmed in view of availability of exotic natural Sandalwood oil.

    HARD AND SOFT ELEMENTS

    All Ss are interrelated, so a change in one has a ripple effect on all the others. It is impossible to make progress on one without making progress on all. Thus to improve your organization, you have to master systems thinking and pay attention to all of the seven elements at the same time. There is no starting point or implied hierarchy- different factor may drive the business in any one organization. Shared Values

    Shared valued are commonly held beliefs, mindsets, and assumptions that shape how an organization behaves – its corporate culture. Shared values are what engender trust. They are an interconnecting Centre of the 7Ss model. Values are the identify by which a company is known throughout its business areas, what the organization stands for and what it believes in, it central beliefs and attitudes. These values must be explicitly stated as both corporate objectives and individual values. Structure Structure is the organization chart and associated information that shows that reports to whom and tasks are both divided up and integrated.

    In other words, structure describe the hierarchy of authority and accountability centralized, functional division (top –down); decentralized (the trend in larger organizations); matrix, network, holding, etc. These relationships are frequently diagrammed in organization charts. Most organization charts. Most organization use some mix of structures – pyramidal, matrix or networking ones- to accomplish their goals. Strategy Strategic are plans of an organization formulates to reach identified goals, and a set decisions and action aimed at gaining a sustainable advantage over the competition.

    Systems Systems define the flow of activities involved in the daily operation of business, including its core processes and its support systems. They refer to the procedures, processes and routines that are used to manage the organization and characterize how important is to be done. System includes:

    • Business system
    • Business Process Management System (BPMS)
    • Management Information System (MIS)
    • Innovation system
    • Performance management system
    • Financial system/capital allocation system
    • Compensation system/reward system
    • Customer satisfaction monitoring system.

    Style “Style” refers to the cultural style of the organization, how key managers behave in achieving the organization goals, how managers collectively spend their time attention, and how they use symbolic behavior. How management acts more important that what management says. Staff “Staff” refers to the numbers and types of personnel within the organization and how companies employee and shape basic values. Skills “Skills” refers to the dominant distinctive capabilities and competencies of the personnel or the organization as a whole.

    RELATION TO COMPANY Style

    Here style, means that company employees share a common way of thinking and behaving. Also it refers to the style of leadership of the management. The style of management at KSDL is participating style. Strategy The concept of strategy purpose, vision, objectives, goals and major action plans and policies a strategy reflects a company’s awareness of how, when and where it should complete, against it should compete, and for what purpose it should compete. Shared Value Shared values refer to set values and aspiration that go beyond the conventional formal statement of corporate objectives.

    Their goals are the fundamental ideals around which a business is built. They are main values culture of an organization is usually determined by the sum of the values, benefits and working practices that exist within organizational operational standards. System By system we mean that all procedures, formal and informal that make the organization go, today by day and year. Capital budgeting system, training system, cost accounting procedures budgeting system. If there is a variable in our model that threatens to dominate the other, if could well be system do you want to understand how an organization really does get things done?

    Look at the system want to change an organization without disruptive restructurings? Try to change the system. If a manufacturing or production company is trying to come up with an overall corporate strategy. Textbook portfolio theory seemed to apply: find a good way to segment the business, decide which segment in the total business portfolio is most attractive, and most heavily in those. The only catch: reliable cost data by segment where not be had. The company’s management information system was not adequate to support segmentation. Electronic Data Processing System

    There is an electronic data processing system which stores all kind of information which is required by the organization in doing its business. Information regarding customer information relating to the production, information regarding payment done by the customers, information regarding performance of the organization, financial information regarding its employee etc. Human Resource Information System There is an HR package which stores all employee profile such as employee ID, code number, joining date, place of posting, name, personal profile, designation, experience, pay scale and history.

    On the basis of this data rating is done. It also gives information of overall employee structure like number of persons joined in a month, transfer, promoted, loan taken category, etc. Structure Departmentation is very essential for the efficient and effective working of an organization. Studying about the functioning of the departments in one of the most critical jobs, each department in the organization is inter-related and interdependent with other organizational departments. The various departments in the organization are dependent on each other in various aspects in order to achieve the objective of the whole organization.

    The co-ordination, co-operation among the departments helps the organization in achieving its goals easily. But this is only possible when there is good communication, co-ordination and understanding between the employees of various departments.

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    The Soap Industry in India: Internuship Report. (2016, Nov 27). Retrieved from https://graduateway.com/internuship-report/

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