Business India ×
Corporate Report

Published on: Jan. 12, 2021, 5:12 p.m.
Nilon's spices up its business
  • The fully-automatic candying plant rolls out 30 tonnes of tooti fruity every day

By Sekhar Seshan. Consulting Editor, Business India

From a ‘largely on-the-table’ company to products for the kitchen has been a journey to get a larger part of the pie has enabled Nilon’s to grow from mid-single-digit EBITDA – earnings before interest, taxes, depreciation and amortisation - to mid-double-digit, says Dipak Sanghavi, managing director of the Jalgaon, Maharashtra based company. 

“Ten years ago, we had a fair amount of width, depth and velocity in our key category of pickles, which is not a very large market in India,” he explains, pointing out that this category, together with jam and ketchup, accounts for only 5 per cent of the average Indian consumer’s spend on processed food. Items like spices, ginger garlic paste, pasta and noodles, on the other hand, take up seven times this: a good 35 per cent. This, obviously, was where the company should be.

“We have achieved a turnover of Rs452 crore, which is less than half the target of Rs1,000 crore we had set for 2018,” adds Nilon’s director and CEO Rajheev Agrawal. “But we have outpaced all our peers.” The jump in profits, however, is a statement of purpose: that it has realigned its path and is on target to achieve a 40 per cent growth in the current financial year, up from its CAGR of 27 per cent over the past 16 years since he joined.

“The earlier target was not achievable if we stuck to the path on which we were,” explains Agrawal, whom the MD credits with leading the company’s growth from a small, Rs8-crore unit even four decades after his late father Suresh B. Sanghvi founded it in 1962. He therefore decided to do away with the products and packs which brought in lower margins, like the 5 kg jar of pickles for institutional buyers and the 20 kg bag of pasta and vermicelli which were unpacked and sold loose in grocery shops.

As part of the new push for products that had higher profit margins, Nilon’s introduced a number of new items, keeping pace with the changing consumer demand: masalas pasta, noodles and chowmein, as well as for traditional Indian favourites like pao bhaji and chaat. It also has a range of chutneys, ketchup and sauces in 90 gm squeeze packs.

The product for which the company was best known, however, has fallen to account for only 8 per cent of its sales. The sweetened and coloured little cubes of preserved papaya that give their taste to fruit bread, cakes and the famous fruit biscuits made by Karachi Bakery in Hyderabad, Telengana. The delicacy, formally named ‘candied fruit’, rolls off a fully automatic candying plant imported from Italy at the rate of 30 tonnes per day (tpd). “Karachi Bakery buys four truckloads every month,” Agrawal says. “We also export a lot of it.”

At Cimei Food Ingredients Sdn Bhd in Malaysia, which buys 17 fcl (full container loads) – 540 tonnes - a year for re-export to its food product customers in different parts of the world, procurement managerHo Suck Fen says they have been buying the product since 2011. “We had tried with a few other manufacturers from India but they either had quality issues or did not make the shipment as per our request,” she says. “So it was always a very chaotic situation to work with. With Nilon’s, our shipments and requests are handled very smoothly and any issues are settled very efficiently. The quality is good and our customers are happy with the products. Nilon’s is a good supplier to work with.”

  • Sanghavi is confident of achieving targets while staying profitable

    Sanghavi is confident of achieving targets while staying profitable

As far as the domestic market goes, Sanghavi explains: “A typical formula of sales of any FMCG company is width x depth x velocity: its width of distribution, how many outlets in which it is present; depth of distribution, how many SKUs (stock-keeping units) of the company’s product each shop sells; and velocity, the rate of offtake of the product from the outlet. We envisage that with our sales team push we will be able to achieve the same width, depth and velocity for all the new categories we have entered.”

Nilon’s therefore decided to focus on making the company significantly more profitable, even if this compromised on some topline growth. “We have been able to reach our EBITDA target. On this parameter, we are spot-on on target,” he says.

The sauces, chutneys and spices like pasta masala and ginger garlic paste, which Agrawal describes as the ‘new age condiments’, will account for more than 40 per cent of its turnover this financial year, totalling Rs180 crore.

According to Agrawal, the company has realised that south India is actually four different countries as far as consumer preferences go. This, he says, is why each state has its own market leader: Eastern in Kerala, Aachi and Sakthi in Tamil Nadu, MTR in Karnataka and Priya in Andhra Pradesh and Telengana. “But we have a very good market share in states like Odisha, just north of AP,” he says. “This is true of Madhya Pradesh and Chhattisgarh too.”

In its home state of Maharashtra, however, it faces the problem of being an active marketer for only about 10 years against more established players like Bedekar, which is 110 years old, or Pravin-Suhana and Mother’s Recipe.

Brand building 

“We also need to take certain macro-economic factors like Demonetisation and GST in view,” Sanghvi points out. “These shocked the entire economy for two to three years and brought it into a slower growth trajectory as the country tried to align with these measures. The impact was more on the unorganised sector and the interior market because of lack of clarity and the fear factor. A significant part of Nilon’s sales, almost 98 per cent, comes from mom-and-pop shops, not modern stores. Also, 75 per cent is from the hinterland and not Tier-I cities.”

  • Agrawal counts on the customer’s ‘promiscuity’ to boost market shares further

    Agrawal counts on the customer’s ‘promiscuity’ to boost market shares further

The sales target, however, is taking longer to achieve than envisaged, as it is not easy to take the new products reach to the depth it had reached in the pickles. “It is easy to place a product on the shelf through Nilon’s network. But to get the offtake from the shelf without any marketing spends needed pure word of mouth based on quality. We have been able to do this considerably, and many of our kitchen products have the same depth as pickles,” he says.

Now, however, having achieved its profit target gives the company the power to spend on marketing, advertisement and brand-building. Such spends will help in further improving width and depth and significantly more on velocity, as more consumers come and ask for goods. And because our product quality is excellent, it further induces repeat buying and word-of-mouth publicity.

Agrawal says Nilon’s has picked leading agency Ogilvy to launch a major advertising initiative from April 2021, with TV and digital campaigns for its products, mainly the newer ones. “We have earmarked 6 to 7 per cent of our turnover for advertising.” The current Gen X and millennials are not essentially loyal to the old brands which their parents prefer, but are willing to experiment, he feels: “People have become a little promiscuous in their food tastes!”

Sanghavi has the last word: “With all this going for us, we are confident that this marketing and ad-spend will help us get the desired velocity and reach for a 25-per-cent CAGR growth journey for the next five to seven years,” he adds.

Cover Feature

Modi's coalition challenge

A shrunk mandate for Modi means compromises and problems in governance

Corporate Report

RPEL undergoes a metamorphosis

RPEL focusses on innovation in high-value stainless-steel products for growth

Corporate Report

How SLMG became a force to reckon with

India’s largest independent Coca-Cola bottler SLMG Beverages plans for a future ready organisation

Special Report

PSU shares: Back on investors’ radar

With markets stabilising, PSU shares are again being favoured by investors

Coalition Challenge
Up, Up and Up
Indian Elections and Markets


Private Equity




Corporate Report


The introduction of black pepper as an inter-crop in the sopari and coconut orchards, has enabled farmers to cultivate crops simultaneously

Skill Development

In 2020-21, the programme reached over 112,482 girls in urban and rural locations across six states in India, including 10,000 across Delhi


The event brought together stakeholders and changemakers to participate in a series of conversations on global trends and recent developments


The programme will focus on educating children on oral health and building awareness around the dangers of tobacco use


German BioEnergy enters Indian market

Published on Aug. 17, 2023, 11:54 a.m.

BioEnergy will showcase its innovative biogas technology in India


Ather looks to double its market share

Published on Aug. 17, 2023, 11:26 a.m.

Ather aims to produce 20,000 units every month, soon

Green Hydrogen

‘Kerala Hydrogen ecosystem a model for all states’

Published on Aug. 17, 2023, 11:06 a.m.

German Development Agency, GIZ is working on a roadmap for a green hydrogen cluster in Kochi

Renewable Energy

Adani Green eyes 45GW RE

Published on Aug. 17, 2023, 10:45 a.m.

AGEL set to play a big role in India’s carbon neutrality target