Nilkamal: A firm mould

The Parekhs of Nilkamal have, over nearly four decades, built a brand that’s become synonymous with plastics

A few years after Nilkamal was set up in 1981, Sharad Parekh, then 37, found himself following a milk van all the way to the Worli Dairy in central Mumbai. Now 75, and managing director of Nilkamal, he had been on the lookout for new growth avenues. Operation Flood had led to a mushrooming of dairies and he wanted to see if Nilkamal could enter the market for plastic milk crates, which was a huge emerging opportunity. His persistence paid off and, by 1983, Nilkamal got an order for plastic crates, opening up a new business line.

The 1980s and the 1990s were when plastics began to be used in a whole host of applications due to the availability of high density polyethylene in India. Heated, injected into moulds, cooled and then solidified, these plastics are strong and durable at a far lower cost than metal. Plastic buckets replaced metal ones. Foldable metal chairs at wedding venues made way for lighter plastic ones that were easier to transport. Office chairs and suitcases have also gradually moved to plastic.

A host of unorganised players emerged but a few brands were built. Since then Nilkamal, Supreme Industries, and Wimplast (Cello) have emerged as trusted names. Be they plastic chairs, tables, office furniture or industrial crates, the Parekhs of Nilkamal have an almost four-decade history of innovating and entering new lines of business with unfailing regularity.

In a market in which brand loyalty and pricing power are not necessarily strong, they have worked to make the name recognisable and trustworthy. This is clear from its enviable growth record from the time it listed in 1991. Revenues have since climbed from ₹5.09 crore to ₹2,160 crore, a compounded growth of 25.1 percent over 27 years. Though the business is heavily dependent on raw material prices, it has healthy operating metrics. At ₹123 crore in profit in the year ended March 2018 and a market cap of ₹1,900 crore, the company generated a return on equity of 14.5 percent. This is commendable, given that Nayan Parekh, president and executive director (material handling), acknowledges, “There are zero barriers to entry. It is a combination of many factors that results in a moat.”

“ There are zero barriers to entry. A combination of many factors results in a moat.”

 

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http://www.forbesindia.com/article/family-business/nilkamal-a-firm-mould/52573/1