Cycle Pure Agarbathies: Of wings and prayers

(L to R): Vishnu Ranga, Guru Ranga, Anirudh Ranga, Pavan Ranga, Arjun Ranga and Kiran Ranga. The scions of the NR Group have been branching into new businesses rather than dividing the existing pie
Image: Nishant Ratnakar for Forbes India
 
We are sitting in Arjun Ranga’s office on the top floor of the ₹1,500-crore NR Group’s headquarters in Mysuru and he opens a box of sambrani cups, a readymade version of the charcoal and sambrani (a benzoin resin that emits a fragrance when burnt on charcoal tablets) that is ritually used during prayers. “In traditional homes, mothers would put coal, and then they would put sambrani powder on it and light it. What we’ve done is used modern technology and encapsulated it into a charcoal cup and it becomes an instant havan. It’s become a huge hit for us,” says Arjun, 43, MD, Cycle Pure Agarbathies, the group’s flagship that accounts for around 70 percent of revenues.

Cycle Pure Agarbathies plans to be a one-stop shop for everything in the puja room, not just physically, but also virtually. “We are already the biggest in agarbattis (incense sticks), so this is a natural extension for us,” he says, adding, “we decided to also get into services, we are going to launch purepuja.com, which is a one-stop solution for all your puja needs, you know, if you want to teach anybody in your family or you want to do some puja today, some aarti…”

The website and app not only list pujas with instructions to conduct them, but also provide all the ingredients required as kits. “With our app and kit, I have each and every item numbered, say, one to thirty, so item number one this is what it is, so the pujari actually says put item number two, put item number three, so the entire puja can be done with the app, and there’s a recipe for the prasad to make with the puja as well,” he says.

“Usually, prayer is what agarbatti is used for and we want Cycle to be synonymous with prayer,” says Arjun. “The cycle of life continues with Cycle agarbatti, when there’s a birth in the family or otherwise, when you are happy or sad you need god and you need prayer. And that’s the reason, you know, when anybody asks me how much do you sell, I don’t tell people we sell 12 billion agarbattis, rather I say we help six billion prayers a year. So imagine the mother who prays in the morning and says I want my child to be safe in school today… that’s what we are fulfilling, actually, that emotive need.”

Branding has been key to the company from the get-go. “In 1948, my grandfather [N Ranga Rao] started the company and within a year he researched and realised that to be successful in this business you need three key things: A differentiated product, a brand, and access to the market,” says Arjun.

N Ranga Rao decided on the cycle for his logo for its simplicity and appeal across languages. He also, almost immediately, set up a fragrance lab. “A differentiated product means you have to be innovative and you need to create fragrances. And that’s when he set up the perfumery lab in 1950. And because he was a voracious reader, he got a lot of international books and trained himself to be a perfumer,” says Arjun, whose father, NR Murthy, trained to be a perfumer and who himself has several fragrance creations to his credit.

Cycle Pure Agarbathies creates its own fragrances and has a library of around 500. The brand also has associations with cricket (besides owning the Mysuru Warriors franchise in the Karnataka Premier League; they also advertise during third umpire referrals, typically a time when nervous supporters pray for a decision to go in their favour), and has roped in Amitabh Bachchan as one of its brand ambassadors.

“We have maintained our market leadership for over 40 years now. Even with ITC and everybody coming in, they have not been able to deter us much. ITC launched almost 18 years ago and they are still number two. That said, Nielsen puts us at 20-22 percent of the organised market, and you know the issue is nobody knows how big the [market is] … it’s all guesstimates, yet where we are today is phenomenal in an unorganised fragmented category of product,” says Arjun.

An agarbatti in India is traditionally seen as an offering to god. By branding the product, the NR Group has moved it to an “indulgence”. Most religious people would want to offer the best for their worship, so a slight price premium is acceptable. “The brand has been built by relentless focus on a narrative (prayer is useful for every occasion) and a secondary association with cricket, which is close to a religion in this country. Price being almost the same in a commoditised category, consumers will prefer the brand they have heard of,” says Jessie Paul, founder and CEO of Paul Writer Strategic Advisory, a market services and advisory company.

Ripple Fragrances, another company under the NR Group, is a natural offshoot of their fragrance expertise. In 2001, Arjun recalls, when several big companies, including Hindustan Lever (now Hindustan Unilever), Nirma and SC Johnson, launched agarbattis, the family realised the companies were trying to get into the room freshener space. They decided to use their expertise in fragrances and explore the market as well. Led by Arjun’s cousin Kiran Ranga, 40, the group set up Ripple Fragrances in 2005, which, with its brand Iris, got into the highest end of home fragrance. “It took us a couple of years to establish that entire business opportunity and to concept sell and today I think we are the leader in that, there is no competition in India for Iris,” says Arjun. Ripple Fragrances has three brands, Iris, Lia and Stop-O that cater to varying needs—“from doing good to feeling good”, points out Kiran Ranga, MD, Ripple Fragrances, who has a degree in business and perfumery from the University of Plymouth, UK.

N Ranga Rao came from a family of teachers but had an entrepreneurial drive from his youth, something that seems to have passed on to the next generations. The second generation was encouraged to explore different businesses and the third generation, after having returned from their studies abroad, has consciously been given a separate vertical to handle and manage.

“When I looked at my options, there was something that was very exciting. When you see something that is doing well, you are excited to come back,” says Kiran, adding, “we were very clear that when people of the third generation came back we would each head a different company, which has also helped us.”

“The NR Group has seen the value of building brand recall, and investing in advertising and marketing ahead of the curve. They could have easily ended up as yet another small scale agarbatti manufacturer except for this focus on brand. Second, they have avoided the usual transition pitfalls of family businesses and have been successful in encouraging the next generation to start their own business rather than divide the existing pie. Even more usefully, one of the new ventures is in an adjacent business which will benefit both the brands,” says Paul.

It was the same drive that brought Vishnu Ranga, Kiran’s brother, back too. “Being a family of entrepreneurs, there is the urge to come and do something. For me it was always to build a business, to build something that would leave a legacy. Building new things is something that is exciting for me. And seeing my uncles and dad taking the plunge… they always inspired us to come back and do something.”

The Mysuru manufacturing unit of Cycle Pure Agarbathies, the NR Group’s flagship

Vishnu, 34, MD, Vyoda (an agri-tech startup) and Senzopt (a company in the IoT space), returned after his undergrad studies at Purdue University and, at 24, started managing Nesso, a flower extraction firm that was set up in 1979 to supply natural ingredients for France’s fine fragrance industry. The youngest of the cousins, Vishnu handled Nesso for about four years before going back to do his MBA at Cornell University and, after his return, has two startups under him.

Meanwhile, Anirudh Ranga, 34, son of Murthy Ranga and Arjun’s brother, manages Nesso, which, in addition to flower extraction, got into herbal extraction six years ago and is now looking at the functional food space. “I remember going with my father to the fields to pluck flowers in the morning using torch lights,” recalls Anirudh, adding, “We have three manufacturing plants all close to flower cultivation regions.” The decision to get into herbal extracts was taken before he came into the company in 2010, but since then he has been heading the company and it has been growing at a CAGR of 25 percent.

As the second generation went about building and expanding the business, they also realised the importance of succession planning. “Both Murthy and I were attending succession planning seminars or workshops, because then itself we knew succession was a tough thing unless planned properly,” recalls Guru Ranga, chairman, NR Group. “In fact, Murthy felt it was so important that Arjun and Pavan, too, were told to attend similar workshops at Harvard. We knew that succession was the mantra in those days, that is the potential area of conflict, that is the reason we started attending,” he adds.

The decision to not have two people in the same company was also taken around the time the third generation came in. So while Arjun took over the agarbatti business, Pavan Ranga, son of Guru Ranga, got into Rangsons, an electronics system design and manufacturing (ESDM) company, started by the second generation 25 years ago, because, as Guru Ranga says, “We saw potential growth in this, in electronics, particularly hardware, and Pavan was entrusted with that responsibility.” In early 2015, the Hyderabad-based engineering services company Cyient (formerly Infotech Enterprises) acquired a 74 percent stake in Rangsons Electronics. Today, the Rangsons portfolio includes Rangsons Schuster Technologies, a maker of aviation tubes and hoses, and Rangsons Defence Solutions. “We’ve been a significantly high-growth company. We’ve been growing at a CAGR of over 35 percent,” says Pavan Ranga, 42, MD, Rangsons Technologies.


—Jessie Paul, founder and CEO, Paul Writer Strategic Advisory

At the Rangsons office, a huge cycle logo hangs above the entrance while a model of an aeroplane hangs from the ceiling on one side. The Rangsons companies account for some 30 percent of group revenues, and Pavan reckons they have the potential to hit ₹1,000 crore in five years.

Whatever the vertical they are heading, agarbatti remains close to everyone’s heart. “Agarbattis are bread and butter, this is what has made us who we are,” says Pavan, adding, “Because agarbatti has been in our blood for so many years and generations, that is an area we all have significant expertise, which means fragrance, perfumery, FMCG, brand management, distribution management, this is where our core is.”

The ethos of the incense stick seems to pervade all that they do. As Anirudh puts it, “It’s inherent to the nature of agarbattis, we feel like we are doing something good, we feel we are selling something pure, something that belongs in the puja room and so we want to run the companies in that fashion as well.”