It is now normal for any conversation with businessmen to begin with the impact of demonetisation. And it is de riguer for them to say that business is down by 25 to 30 per cent.
So, when Kamal Kumar Johari, Managing Director, Nobel Hygiene Pvt Ltd, manufacturers of disposable hygiene products – baby and adult diapers – says that business has been normal, one has to sit up and take notice.
“It is an essential item. You can’t stop buying medicines or diapers”, says Kamal, a chartered accountant by profession who gave up practice to get into this business almost two decades ago.
Although he had an entrepreneurial drive, the catalyst for him to move into business happened when a client wanted him to take up product distribution. Soon came an offer to do the distribution of disposable diaper products for a unit, which he found was not very well run. Kamal then decided to invest his personal savings of Rs 50 lakh and started Nobel Hygiene to market two brands – ‘Teddyy’ for baby diapers and ‘Friends’ for adults. Initially, he relied on imports from various countries, but decided to get into manufacturing in 2009 in order to score a march over domestic rivals, who also were able to import the same products. Kamal reckons that this has helped him considerably – since he had already set up the product and marketing side of the business and the backward integration ensured the quality issue was taken care of. Other competitors who went to manufacturing first found that they were unable to sell their stock – and are now ready to sell their machines – he says with a laugh.
When Kamal began selling diapers in the market, he recalls, selling the first consignment was difficult. There was resistance from the market place as well as mocking that had to be faced from pharmacy owners and shopkeepers. Adult incontinence was then a taboo topic and most stores didn’t understand the need for diapers. But that changed soon. The turning point, he recalls, was an advertisement for his products that he inserted in a paper 16 years ago – which was titled thus, “It must be a wonderful feeling to age gracefully’. He got over a hundred phone calls that day from different parts of the country and his success story had begun.
Today, Nobel Hygiene’s brands command a 65 per cent share in the adult diaper market and a 5 per cent share in the baby diaper market. The adult diaper market is worth about Rs 400 crore, while the baby diaper market is about Rs 4,000 crore and growing rapidly. Kamal thinks that the penetration in this segment is still only around 6 per cent and given the growing middle-class population, there are good times ahead.
Kamal feels the import duty structure needs to be revised. Today, both the finished product and the raw material needed for diapers (pulp, sap, plastic) are all taxed at the same rate of 15 per cent. There should be an incentive to manufacture here, he says, although he concedes that this is an improvement on the situation prevailing earlier when there was an inverse duty structure.
The journey has been challenging and yet fulfilling says Kamal. It has had its share of problems, but he wouldn’t have it any other way. As he says, “You can’t teach entrepreneurship. You have to learn it yourself.”