Creating Value Through Convenience-A case on Nilkamal Plastics

Nilkamal Plastics: Creating Value Through Convenience

Corporate Brand: Nilkamal, http://www.nilkamal.com/

Nilkamal is a company that successfully branded a commodity. Nilkamal is the market leader in the plastic molded furniture segment in India. The brand has a long history dating back to 1934. The company was founded by Mr. Vrajlal Parekh. Mr. Vrajlal Parekh started manufacturing metal buttons from his small factory. In 1950, he started producing plastic products and the company was called Standard Plastics. Nilkamal Plastics was born in 1956 and became an independent company in 1981.

Nilkamal is known for its plastic chairs. But the company is also a major player in manufacturing crates which are used for commercial purposes.

The Indian home furniture market is huge with a market size of around Rs 14000 crores. Majority of the market is in the unorganized sector. Nilkamal operates in the moulded furniture market which is around Rs 950 crores. According to reports, 40% of which is in the unorganized sector.

Nilkamal is a brand that popularized the use of plastic chairs at homes. Earlier households used to purchase only wooden /steel furniture. But Nilkamal was able to break that mindset. Nilkamal did this by creating good designs and also taking care of the quality factor.

Households earlier were averse to plastic chairs because it looked ugly and was not perceived to be strong. Nilkamal changed that perception by introducing well designed chairs .This was backed by heavy promotions using various media. In 2005, the brand moved from molded furniture to home solutions. The brand introduced knocked down furniture and also sofa sets, dining tables, baby chairs which became popular. The brand was slowly moving towards becoming a lifestyle furniture player.

In a market which was dominated by unorganized players, the brand building gave Nilkamal more mileage and also premium prices. The success of Nilkamal prompted many players to enter the segment. Since the designs could be easily copied, it was difficult for Nilkamal to sustain the growth momentum. Nilkamal is the market leader in the segment with a share of over 37%.But the market for moulded furniture has become stagnant.

The company also introduced a new range of office furniture brand Novella. During this time, the brand ventured into retail business by launching large retail format under the brand portfolio of home. These retail outlets showcased the new range of home solutions from the company.

Recently the brand also launched a range of plastic Cupboards and cabinets branded as Freedom. Nilkamal is a brand that is heavily associated with plastic furniture. The brand has a high credibility among the consumers. The major problem faced by the brand is that plastic is associated with cheap furniture and this has prevented the penetration of this product category into high -margin household furniture segment.

But I think there is a huge potential for Nilkamal in developing itself to a highly creative furniture company. As a consumer, I have often found branded furniture to be terribly overpriced for the quality it delivers. Branded wooden furniture are out of reach for many middle class customers. Plastic furniture lack the glamour and home makers tried to avoid these products. Hence there is a huge potential for affordable designer furniture. Currently this market is being captured by cheap imports from China. There is a flood of imported furniture which looks good and priced affordably.

Nilkamal have the brand equity to tap this potential. Although it is heavily associated with plastics, it could leverage that equity in creating an affordable range of home solutions to the Indian middle class.

Author: Prof. Suvendu Kr. Pratihari

suvendupratihari@gmail.com