Arjun Ranga, a third generation entrepreneur and current chief-executive officer, embodies the values of his family business. The Mysore-based N Ranga Rao & Sons (now NR group) was established by Arjun’s grandfather, N. Ranga Rao in 1948 with a personal capital of less than Rs. 100. Today, NR group is a Rs. 500 crore successful business enterprise and its mantra for success initiated by the founder and endorsed by each one of the successors has been hard work coupled with strong business acumen. Agarbathie (incense sticks) remains the primary contributor to the company’s revenue with a 30 per cent market share in a Rs. 1,200 crore industry. In the past four decades, the group has diversified into new lines of business – natural and essential oil extracts, home fragrance and electronics manufacturing.
In 1952, the brand name “Cycle” was coined to capture the imagination of consumers pan India. Cycle Ratna, Cycle Sugandhi, Cycle Mallika and Cycle Natyakesari have helped the company grow its market share. The focus of the company over the last six decades has been to go from strength to strength in the areas of branding, fragrance creation and distribution. The decisions taken in 1950 to set up an in-house fragrance creation laboratory or in 1975 to move away from the stronghold of the agarbathie dealer network or the continued investment in strengthening the distribution channel are examples of how the management has always thought ahead.
The company has laid the foundation for an existing line of business as well as creating new product lines. Excellent market penetration with the support of 1,200 sales representatives and 4,000 distributors has ensured direct access to retail outlets across the country. Additionally, exports are a large contributor to the overall revenue with agarbathies being exported to more than 60 countries. The overall share of export sales constitutes close to 15 per cent of total sales.
Between 1970 and 2000, the second generation built a solid foundation primarily focussing on the agarbathie business. The open mindedness of the second generation was demonstrated by their invitation to the third generation to plan their exit. Today, even though they are not involved operationally in the business, the second generation’s advice is sought on key strategic decisions and major financial investments.
The professional edge
“Before joining the group, I gained outside work experience. I had three bosses above me evaluating my performance. As an outcome, I learnt the nuances of being a good boss and working with tough deadlines. I have learnt to deal with the pressure and expectations of running a successful business,” says Ranga.
Ranga had to work his way up the ladder. He was initiated into the business with the mandate to grow Manmohak Agarbathie, a small group subsidiary. Once this was merged with the group, he took independent charge of the north and east regions in addition to the Maharashtra market, handled exports and production, before becoming the CEO in 2005.
Building customer loyalty, according to Ranga, is perhaps one of the most difficult aspects of running the business. Not being a functional product, a fragrance has to create an emotional connect to transcend moods at a subconscious level. “Consumers like to try out new options, but what keeps them rooted to us is our endeavour in making our products available, ensuring value for money and delivering consistent quality.”
The agarbathie industry is labour-oriented and highly dependent on natural produce and this presents numerous extraneous challenges. In fact, sourcing the required volume and variety of raw material remains the biggest challenge for the NR group. It partners with over 20,000 rural women and 4,000 tribals to meet the large production volume. “The availability of labour is our biggest challenge. In addition, inflation and increasing logistics costs always threaten our margins,” says Ranga.
The production of the agarbathie involves three main steps. The first is to roll the agarbathie from the natural forest produce; this is followed by applying fragrance and packaging. The first and final steps of this process have been outsourced to rural women working out of their home or community homes. Ranga says, “This outsourcing model has helped us seamlessly achieve the large production volume”. Applying fragrance remains a part of the in house production cycle.
“The availability of labour is our biggest challenge. In addition, inflation and increasing logistics costs always threaten our margins.”
Today, the enterprise wide ERP (enterprise resource planning) system is ensuring that the supply chain team is equipped and empowered to meet the growing demands of the business. Ranga is spearheading technology with the organisation wide ERP linking 60 locations and building an e-commerce portal. According to him, “People and process are the pillars of business growth. The goal is to find the right balance to foster people innovation and process flexibility.”
Looking to the future, the company’s focus will remain on growing its lead in the agarbathie segment. This division remains the cash cow of the business with its continuous focus on new fragrance creation.
As with all family businesses that have managed to keep the lead in their respective industries, NR Group has shown that thinking ahead of the times, especially with regard to plan, process and policy has held it in great stead through all times. It is indeed a proud moment for the founder and the second generation to watch their successors take their vision and mission forward to newer heights of achievement.
NR Group’s subsidiaries
Nesso (established in 1982) supplies natural and essential oil extracts to international perfume houses and is the largest exporter of essential oils from the country.
‘Ripple’ Fragrance (set up in 1986) with its brand Iris which has become a major player in the wellness home fragrance segment.
Rangson Electronics, another subsidiary (started in 1991) is a leading player in the electronic manufacturing sector. Its current focus is on medical, telecommunications, automotive and industrial domains. For Rangson Electronics, the group might look outwards for investment support in the future.