23 Sep 2016 18:32 IST

How Mysore Sandal beat the odds

Here’s the story of the only PSU to ever bounce back after being registered in the BIFR as a loss-making entity

For a lot of us (especially those above 40), the rectangular red and green box with a floral pattern enclosing the ‘Mysore Sandal Soap’ brings with it not just a whiff of heady sandalwood fragrance, but also a rush of memories. As itsmanufacturer, Karnataka Soaps and Detergents Ltd (KSDL), celebrates its 100th anniversary, let us take a stroll down memory lane.

Mysuru is called the ‘Fragrance Ambassador of India’ because it produces the world’s best natural sandalwood oil. The message ‘Srigandhada Tavarininda’ (which means ‘from the maternal home of sandalwood’) appears on every Mysore Sandal Soap carton. Mysuru once had vast sandalwood resources, which it also exported to Europe.

The beginning

During World War I, the exports were stopped and the reserves of sandalwood piled up. The solution was to use them to extract sandalwood oil. To this end, in 1916, the Government Sandalwood Oil Factory was established by the Maharaja of Mysore, His Highness Nalwadi Krishna Raja Wodeyar and Diwan Sir M Visvesvaraya.

In 1918, when the Maharaja received a gift pack containing soaps made using sandalwood oil, the idea of using the natural sandalwood oil for making soap was born. To put this into action, SG Shastry, a qualified industrial chemist, was sent to London for advanced training in soap and perfumery technology. On his return, he developed a sandal perfume. This marked the beginning of the era of the Mysore Sandal Soap.

This was the first indigenous soap produced in the country with sandalwood as the base fragrance; it is also the only soap in the world made from 100 per cent pure sandalwood oil (while it contains other vegetable oils like clove leaf, vetiver, patchouli and orange, there is no animal fat). The soap has 80 per cent TFM (Total Fatty Matter) which indicates that it is of the highest quality.

As sales increased, the production capacity was enhanced and in 1944, a second plant was established in Shimoga to extract sandalwood oil. By 1965, the company was exporting its products. In 1980, the Government Soap Factory became a public sector enterprise and was renamed KSDL.

Growth

As the company grew, more products were added and the employee strength multiplied, but it faced problems as well. In the 1990s, despite increased production, the lack of coordination between the production and marketing departments and consumer disinterest at the market level saw stocks piling up. There were allegations of mismanagement and corruption as well.

KSDL began facing heavy competition in the market. As losses built up, the company registered with the BIFR (Board for Industrial & Financial Reconstruction) in 1992, which came up with a rehabilitation package.

Soon, KSDL started showing profits again — in fact, it showed continuous profits year after year, and by 2003, had wiped out its losses and come out of BIFR – the only state public sector unit to have done so.

KSDL is now one of the few public enterprises in Karnataka that turns in consistent profits. During the financial year 2015-16, KSDL registered its highest gross sales turnover of ₹476 crore.

More products and improved manufacturing facilities followed. KSDL’s portfolio now consists of more than 30 different products, ranging from soaps, sandal oil, incense sticks, detergents, cosmetics, hand washes and other miscellaneous sandalwood items such as oil, billets and saplings.

Now, KSDL has manufacturing plants at three locations — Bengaluru (toilet soaps, detergents and cosmetics); Mysuru (sandalwood oil extraction); and Shimoga (sandalwood nursery). It has six branches at Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi with the head office at Bengaluru. KSDL currently has 22 depots in the country with over 1,350 stockists.

The factory in Bengaluru is among the largest of its kind in India, with an average annual production of about 12,000 tonnes. A new plant, to be commissioned in October 2017, is also coming up there.

South Indian brand

KSDL has an ISO 9001:2008 accreditation and an ISO 14001:2004 certification for its Quality Management Systems and Environmental Management Systems.

The company tops the world in the sandalwood oil segment, producing almost 80 per cent of the sandalwood oil in the world, with leading perfume houses buying this oil from it. As per a 2016 survey, 85 per cent of KSDL’s sales of Mysore Sandal soaps come from Tamil Nadu (33 per cent), Karnataka (29 per cent) and Andhra Pradesh. The rest 12 per cent comes from foreign countries.

Mysore Sandal Soap has tremendous brand recall and loyalty in South India, making it more of a southern brand than a national one. Despite this, its market share in the toilet soap category is not big. One of the reasons could be that advertising and marketing expenditures are very low as compared to other players.

The Centennial

One of the recent strategies adopted by KSDL to increase sales was to reward distributors who met the sales target with silver or gold coins through a lucky draw. The annual ‘Soap Santhe (fair)’ is another initiative that has met with an encouraging response from the public. Plans are afoot to launch an e-portal soon.

Variations to the flagship product introduced over the years include the Mysore Sandal - Gold, - Baby, - Millennium and - Centennial Soaps. The Millennium soap, introduced in 2012, is India’s costliest indigenously produced soap, with each 150 gm bar (with 3 per cent pure sandalwood oil) priced at ₹720.

The Centennial was produced to mark the company’s 100th anniversary in 2016, celebrations for which included the presentation of a ₹20,000 cash award to each of the 542 employees.

Giving back

Around 2006, the lack of a sustained regeneration drive saw sandalwood reserves within the state of Karnataka drying up. KSDL was forced to buy sandalwood from Tamil Nadu and Maharashtra. (During this period, Azim Premji’s Wipro almost acquired KSDL. The Government of Karnataka decided not to sell when employees of KSDL resisted the move.)

This led the company to initiate a ‘Grow more Sandalwood’ scheme, details of which are enumerated on its website . The scheme aims at generating employment and empowering rural people. Working along with the Forest Department, the company has also begun a move to replant sandalwood saplings every sandalwood tree that is extracted.

The company’s CSR policy includes the distribution of student hygiene kits ( Suchi Sambhrama or the Wave Kit - containing soap, detergent cake, coconut oil, toothpaste and toothbrush) for hostel students since 1994 and postnatal kits ( Madilu Yojane - which includes additional baby products) since 2008. The latter is given free of cost by the Government of Karnataka.

The Mysore Sandal Soap also finds a place in Tamil Nadu’s Amma Kit. The TN government is planning to purchase Mysore Sandal soap and hand wash worth ₹5 crore from KSDL.

Excellence

Awards won by KSDL include the Chief Minister’s Karnataka Ratna Award in 2010, the National Award for Excellence in Cost Management and Good Performance for the year 2012, the Samman Patra Award given by the Office of the Chief Commissioner of Central Excise, Bengaluru Zone for the year 2013-14; and the Best Export Performance Awards from Chemexil, Government of India, New Delhi during 2006-07 and 2012-13.

Mysore Sandalwood oil and Mysore Sandal Soap got the Geographical Indications tag in 2006.

It is said that when Mahatma Gandhi was at Mysuru, he liked the Mysore Sandal Soap so much that he used it throughout his stay. Others say that the Mysore University Museum still has the remains of the soap he used. Talk about vintage!