The chairman of Rialto Enterprises, makers of oral-care products for P&G, discusses with Sushila Ravindranath plans to expand the company beyond the production line.
Rialto Enterprises Limited, head quartered in Chennai, has been named as one of the 12 companies which are the top suppliers of the year 2016 by Proctor&Gamble. Rialto makes oral-care products for the multinational. “We have been recognised as ‘excellent business partner’ of the year for the last five years for our good performance. The latest is the Oscar of the awards P&G gives,” Rialto chief Chander Swamy said. P&G has 50,000 such external partners. They shortlist 12 companies making a wide range of products every year as their top suppliers. This time round we were the best of the lot. This is the first time an Asian company—an Indian company at that—has won this honour, says Swamy, also the CEO of the company.
Swamy and I are meeting in Peshawri, his favourite restaurant in the ITC Grand Chola. His units are in the suburbs of Chennai and it is convenient for him to meet there for lunch. We order a tandoori salad as a starter. “It gives us a sense of pride and happiness when we put the ‘made in India’ label on the back of the products which go to 90 markets in many parts of the world. We are P&G’s largest partner in the world for manual oral products (Oral-B). Our products match global quality standards. We are the only site in the world which produces IP-protected products. Third parties have never been allowed to do that. That is the level of trust we have built with P&G. ” Rialto manufactures from three sites, two in Chennai and one in Baroda.
For main course we settle down with Peshawri’s famous black dal, onion kulcha and tandoori aloo, all perfect for two vegetarians. Swamy tells me how Rialto happened. “In the 1990s, when P&G wanted to enter India, there were many roadblocks. The North American market for P&G was getting flat. The conglomerate started looking at China and India seriously. China opened its doors and started making many of P&G’s top ranking brands.
Swamy played a major role in getting P&G to manufacture in the country by setting up its first external business partner model. He began his career in advertising, then shifted to manufacturing when he started working for a joint venture between ITC and Tamil Nadu government to produce cigarettes. “This exposed me to the nitty-gritty of making and distributing FMCG products, quality control, logistics and many different aspects of the business. We were distributing a family planning product (Nirodh condoms) as well,” he says. Swamy then joined Chennai-based entrepreneur Ranjit Pratap, who was making electrical appliances (hair-dryers, kitchen machines, etc) for Braun AG-Germany.
“I found myself sitting next to the manufacturing director of Gillette on a flight to Germany and we started discussing how Gillette can enter India.” He managed to persuade Gillette to come to India and Rialto put up a plant for them. A few years down the line, Gillette got taken over by P&G, one of the leading manufacturers of tooth brushes and related products in the world. “We set up plants to manufacture oral-care products. The local partner provides the land, building and people. He does not have to worry about the business. P&G finds the business and provides the capital. We produce to demand and work at cost. It is a win-win situation for everybody.”
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P&G entered into this agreement with lot of scepticism. There were numerous checks and balances. “Our original order was to make 100 cases of tooth brushes, that too for distributing in India. Now, we do 1.2 million cases per year registering a growth of 20% year-on-year. Today, the entire manual oral care products for all the countries including the US are manufactured in India. We employ 900 people on our sites and 100 more are administrative staff and management. Many developments have taken place during these years. We have proved ourselves to be masters of low cost manufacturing. We teach our methods globally. Production lines are not fully automated. We use simple automation tools to improve productivity and quality” Swamy says.
“We have seriously worked on creating employment for the local youth. We hire students from the ITIs around our factory area and put them through our own training school. They are given a three-year apprenticeship. We hire them if they choose to stay with us,” Swamy tells me as he is polishing off the last kulcha. “The training material has been developed in all global languages. These are visual aids and you will find Indian youngsters speaking in Spanish and Chinese.”
Swamy started thinking seriously about what his units can offer to the world and hit upon packaging. “We decided that packaging will be entirely green. Packaging accounts for 60% of the cost. We took a decision ten-years ago to use only recycled products for packaging when going green had not yet become popular,” he notes with some pride.
I ask Swamy as we are trying to finish our kulfis, whether his units are really allowed to take any initiative. “Today, we are emerging as partners in the true sense. We offer solutions for selling. We don’t do project reports but present to the head quarters products we have developed. We have our own innovation department which works closely with P&G’s R&D centre. We don’t make anything with the local market in mind. When the drawings gets released by R&D, we send them specifications and action begins.”
He tells me as we are walking back what the Indian unit’s strengths are. “There is great potential for oral-care products. They are recession-proof. Sales have been good in spite of demonetisation. We take initiatives to make changes very quickly. Speed to market is another strength we have. Line change happens in one shift.”
So, what is next for Rialto? “Last month, when we had our annual dinner we discussed how to make success a habit. We will challenge ourselves. We will also challenge ourselves on every issue vis-a-vis competition. We will be better than ever in whatever we do.”