Bhupinder Singh
“I hope that Walmart [and others] will stick with us when the time comes" Sunil Jain, Owner, Chemisynth
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Do you know who makes Odonil?” asks Sunil Jain as he holds up a pack of the eponymous air freshener brand owned by Dabur. The question is rhetorical, of course. Jain’s Delhi-based company, Trisis Corp, has been contract manufacturing cleaning products for Dabur and many other leading FMCG brands for well over 30 years now. With Rs 55 crore in annual revenues for FY13, it’s also a leading manufacturer for private label brands of modern retail chains in India.House brands such as Mopz floor cleaner, Expelz toilet cleaner, Scrubz dish washer, and Shinez glass cleaner sold at Reliance Fresh stores are all manufactured in Jain’s factories. So are private labels for other retail chains — the 110% range from Aditya Birla Retail’s More, Clean-mate and White Magic from Big Bazaar, the Arrow range from Metro, and similar products from Bharti-Walmart’s Easyday stores.
Trisis, a holding company for Jain’s many units, started out in 1976 as Chemisynth, making industrial wetting agents, institutional and home cleaners and laundry detergents. After completing his MBA from Punjab University, Jain started a small factory in Gurgaon with Rs 25,000 from his father, a Rs 2 lakh loan from the Haryana Finance Corporation, and some borrowings from family members. From two units in Gurgaon to three sprawling plants in Baddi, Himachal Pradesh, Jain kept adding to his roster of big name buyers. “We started with Mafatlal in the 1980s, added Reckitt & Colman and Modicare in the 1990s, and IFB, Dabur, DuPont and the who’s who of Indian retail on board later,” he recounts.
The three factories in Baddi, in fact, came up alongside the modern retail boom in India. “We are considered star suppliers,” boasts Jain. This means his products and process capabilities needn’t undergo a rigorous screening each time he pitches for new business. “Their expertise and association with other big established retailers helped us choose them,” agrees Roy Thomas, head, buying and merchandising (private labels), at Metro Cash & Carry India.
Slippery ground
India’s organised retail evolution has meant a twin-pronged opportunity for small suppliers such as Trisis. There’s business from private labels, and also from local and regional brands that have been finding their way onto the shelves of modern retail stores. “The proportion of SME-manufactured products is 40-50% in Big Bazaar and around 30% in Reliance Retail stores,” says Anil Bhardwaj, secretary general, Federation of Indian Micro and Small and Medium Enterprises (FIMSME).
This opportunity came with its challenges in the initial years, says Jain. “Orders were placed but not picked up as their sales forecasts would go terribly wrong.” It was a double whammy for suppliers like Jain who had, in turn, placed advance orders for ingredients and packaging material. “Retailers dragged their feet when it came to compensating for such situations,” says Jain, adding that while the uncertainty continues, things have improved significantly now.
So much so that he takes pride in being flexible in meeting fluctuations in demand from his customers. “We accommodate varying demands easily. When we started making Vanish [a stain remover from Reckitt Benckiser], we were told to make 30 tonnes per month. Next month the company asked us to deliver 130 tonnes per month. And we made that,” says Jain.
All this gets Trisis a thumbs up from one of its marquee clients — Bharti-Walmart’s EasyDay chain. “Chemisynth is a capable and professional company, and has significantly partnered with us in our mission to help our customers save money, by supplying good quality and competitively priced products on time. Our business with them has grown significantly over the years,” says a spokesperson from Bharti-Walmart.
New avenues
While he won’t disclose margins in the private label supply business, Jain insists these are already quite thin thanks to cut-throat competition, and hard bargaining by bigger retail clients. Now, margins are under further pressure. Jain says the wage bill for his 300-odd employees runs to Rs 20 lakh every month and recently, due to a pre-election revision in minimum wages by the Himachal Pradesh government, it’s shot up by 25%. “We are still negotiating with some of our customers for a higher rate.”
For SME suppliers like Trisis, the fear of being bulldozed by retail giants with deep pockets is a real one. Supply contracts can be one-sided and riddled with legal jargon. Jain recalls how he opted out of a potential supply contract with a leading French retail chain that entered India recently. “It was highly one-sided, and we couldn’t agree,” he explains. While his daughter, a corporate lawyer by profession, helps him de-jargonise the lengthy contracts, other small suppliers have little recourse. “There is no dedicated mechanism to vet draft contract agreements anywhere for MSMEs. It will be critical in the wake of the superstore era,” says VK Aggarwal, president, FIMSME.
There have been benefits from working with modern retailers too. Jain says he’s been invited to spend time and work closely with the product development teams at Aditya Birla Retail and Reliance Retail. “We tried the formulation suggested by their R&D teams and have improved our products,” he says. In return, Jain’s team brings its experience to the table. “We provide technical services to our clients, helping them with making formulations. We also suggest modifications, if some product is not doing well.”
Trisis has a few of its own brands out as well, in the B2B market. Among them is Kemidet B-300, an industrial detergent it has been selling for the past 15 years to corporates and institutional customers — tea gardens, government departments, engineering, shipping, and railway. Another is Dishmatic, a dish washing detergent that had LG and IFB as former customers, and is now supplied to dish washer manufacturers such as Kaff Appliances and Spain’s CATA. Both brands do sales of about Rs 2-3 lakh per month.
Now Jain is gearing up to take his products to the consumer market. Among them will be toilet cleaners, floor cleaners and dish washing liquid. These will be launched in eastern states such as Uttar Pradesh, Bihar, Jharkhand and Haryana and Punjab in the north, to begin with, and on e-commerce sites. Would he like to go pan India, if big box retailers roll out in big way in future? “Well, that will be adventurous. Also, volumes have to justify such scaling up,” replies Jain, who is a bit apprehensive but hopeful that the effects of FDI in retail will work out well for small businesses like his. “We are already supplying to Walmart. So I hope that they [and others] will stick with us when the time comes,” he adds.
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