As CEO Pranab Barua admits, RCI should grow its segments, strengthen its distribution-and make like a FMCG.

By Ranju Sarkar

Sixty years after the Rs 393.70-crore Reckitt & Colman India (RCI) launched its flagship brand, Dettol, in this country, it learnt that 70 per cent of its customers still pour the powerful liquid antiseptic onto cotton-wool-and apply it directly. But RCI has always prescribed a different dosage on the Dettol bottle-label: ''Add 1 tablespoon to 250 ml of water.'' In a nutshell, that sums up the RCI saga: brands whose potential has been wasted.

Says Amitava Chatterjee, 39, Vice-President (Marketing), RCI: ''That forced us to ask ourselves: what should we do next?'' Unfortunately for RCI-the 51 per cent subsidiary of the London-based $3.58-billion Reckitt & Colman-the same question can be asked about all its other brands too. Seeking the answers, finally, is 45-year-old Pranab 'Prince' Barua, who took over as the company's youngest CEO in July, 1998. After three decades at the Rs 8,528-crore Hindustan Lever Ltd (HLL), Barua's brief is as energising as it is simple: shake up a complacent RCI, and convert it into a marketing juggernaut.

''The key is to grow our product segments,'' says Barua. Don't we know it. Quite simply, it is the lack of aggressive and innovative marketing-not the scarcity of strong brands-that has restricted RCI from realising its true potential. Present in 8 segments-antiseptics, analgesics, laundry-care, lavatory-care, pest-control, shoe-care, surface- and floor-care, and toiletries-which are growing comfortably, RCI has not been able to leverage its dominant brands to jump-start its categories, which have stayed disappointingly small. Explains Dorab Sopariwala, 56, the Mumbai-based marketing consultant: ''RCI's key problem is that it is a small company with niche products, and limited money to expand.''

Take, for instance, an old RCI stalwart like Cherry Blossom (marketshare: 76 per cent): while the Rs 46-crore market for wax shoe-polish grew by 14 per cent between April, 1997 and May, 1998, it does not find favour with the ubiquitous cobbler, who prefers to use cheaper brands from the unorganised sector. Worse, the Rs 14-crore liquid shoe-polish segment grew by just 2.90 per cent in the same period. Similarly, while Robin Blue powder has a marketshare of 56.80 per cent, the Rs 135-crore powder blues segment grew by just 6.50 per cent last year.

If Dettol (marketshare: 83 per cent) is a Rs 168-crore brand today, recall that it has grown five-fold since 1990-when it was valued at Rs 27 crore-thanks to its brand extensions into bath soap, liquid soap, and plasters. Even here, RCI was woefully behind: it launched Dettol plasters in 1991, a quarter of a century after the Rs 494.39-crore Johnson & Johnson came out with Band-Aid. Complains Jagdeep Kapoor, 35, CEO, Samsika Marketing Consultants: ''RCI has the mindset of a pharma company-not an FMCG company.''

Sure, RCI has already made a beginning by launching 30 new products in the last 8 years. One of them, the insect-repellent Mortein, is worth Rs 85 crore today, and is trying to zap the marketshares of brands like Tortoise, GoodKnight, Jet, and Odomos. However, RCI's surface-cleaner, Lizol, which was launched in 1997, faces stiff competition from HLL's Domex in a category dominated by affordable phenyls. And air-freshener Haze (1986), dish-cleaner Teepol (1995), and fabric-softener Woolite (1996) only mark RCI's presence in more small-growth segments.

Hardly surprising, then, that these products have yet to add to RCI's bottomline. Despite its healthy net profit margins, which have ranged between 6.94 and 7.84 per cent in the past 5 years, RCI has remained a low-volumes player in a number of segments like lavatory-care (contribution to 1997 turnover: 5 per cent), surface- and floor-care (7.50 per cent), analgesics and other pharma products (6.50 per cent), and foods (1.50 per cent). Only now has Barua set a stiff target of a 40 per cent growth in sales in 1998-99-double the Compounded Annual Growth Rate of 19.70 per cent in the last 5 years. Warns Rajat Sabharwal, 29, an analyst with Kotak Securities: ''If RCI wants to achieve, and sustain, high growth levels, it has to change its mindset.''

Perhaps that's why RCI now spends 50 per cent of its market research budget every year on tracking the customer's usage-patterns, attitudes, and behaviour. Using this feedback, Barua intends to launch products ''that consumers find convenient, but are not used to.'' So, by the end of 1998, RCI will launch one variant each in the lavatory-care, pest-control, surface-care, and antiseptic segments. And it is also trying to acquire the popular liquid glass-care brand, Colin, from the Mumbai-based Fernhill Laboratories.

Moreover, RCI is also forging marketing alliances to expand its product-base. In October, 1997, it floated a joint venture with the Rs 325-crore Nicholas Piramal, Reckitt Piramal, to market their Over-The-Counter (OTC) brands. While RCI holds a 20 per cent stake in Reckitt Piramal, Reckitt & Colman PLC and Nicholas Piramal control 40 per cent stakes each. So, RCI will be able to sell its products-like the analgesic, Disprin, all the 7 brand-extensions of Dettol, and, potentially, from its parent, Gaviscon (anti-heartburn), Fybozest (anti-cholestrol), and Lempsip (anti-flu)-to chemists and general physicians through Nicholas Piramal's network of 2,000 medical representatives.

In return, Nicholas Piramal has gained access to RCI's distribution reach to retailers and grocers for its OTC brands, like Saridon, Polycrol, and Rennie. Explains Nitin Ghadiyar, 40, CEO, Reckitt Piramal: ''The partners have complementary business strengths.'' But, in the bargain, RCI stands to lose the margins from its OTC brands, which was reflected in its first-half results for 1998. While sales increased by 16.75 per cent to Rs 207.54 crore, RCI's net profit margins came down to 7.38 per cent in H-1 1998 compared to 10.06 per cent in the corresponding period of 1997.

While RCI attributes the fall to higher advertising expenses, Barua insists that he will grow volumes, even at the expense of lower margins, to increase profits. ''The kind of growth that the joint venture will be able to generate could not have been achieved by RCI alone,'' he explains, pointing out that he is also attacking costs. ''Our cost structure is not right.'' For instance, RCI's costs on travelling were 2.58 per cent of its total expenses in 1997; by comparison, travelling costs accounted for only 1.24 per cent of the Rs 580-crore SmithKline Beecham Consumer Healthcare's expenses in 1997.

Spiralling expenditure earlier led to the dismantling of RCI's experiment with a decentralised marketing network in the early 1990s. Although its marketing is centralised, the costs remain high. Despite this, RCI plans to expand its reach from 3.50 lakh retail outlets to 5 lakh by end-1998. Says Samsika's Kapoor: ''While the electronic distribution of its brands is taking place through TV, the physical distribution has not caught up.'' Admits Barua: ''The big-ticket item is to get our distribution act together.''

Also, RCI needs to quickly grow its markets. That will require investments in brand-building. Warns Sopariwala: ''RCI has got to spend money or else, it will remain a purveyor of niche products.'' In this context, the intent of support from its parent-in terms of R&D, brand acquisitions, and increased marketing spend-is reassuring. Thanks to strong brands, even in tired markets, Reckitt & Colman PLC grew by 4.60 per cent in 1998.

For Barua, then, the challenge lies in growing RCI's brands. For instance, Robin Blue is under attack from both Jyothi Laboratories' Ujala and the unorganised sector, and desperately needs a low-priced brand extension. On the other hand, a functional Cherry Blossom could be upgraded to the men's accessories category, which is aspirational. And then, there are variants of Lysol and Mortein that can be tapped from its parent. In that sense, only if he thinks fast (-moving consumer goods) can Barua Cherry Blossom RCI's strategy for tomorrow.

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