Detergent cakes face washout

Consumers move increasingly to oil-based soaps as detergent soaps get costlier

The washing soap and detergent industry is undergoing major rehaul, as the supremacy of detergent cakes is being challenged by oil-based washing soaps.

In an interview with Business Standard, industry sources said the price of all petro-products had been rising due to a rise in petroleum prices.

This had impacted detergents as well. In the last two years, an increase of 25 per cent had been registered in the price of detergents, bringing their prices close to those of oil-based soaps.

This had led to a switch in consumer preferences from detergent to oil-based soaps. For the last two years, the few oil-based washing soap makers, who had not switched over to detergents when every one else did, are having a great time in the market, as detergent makers struggled to make two ends meet.

Although oil-based washing soaps are still more expensive then detergent cakes, nevertheless, the shift to oil-based soaps is quite significant.

To cash in on the emerging situation, said Naresh Manchanda, managing partner, PSM group of companies, about 20 new units for oil-based soap manufacture had come up in the last two years in Kanpur and Lucknow, with a total capacity of 200 tonnes per day.

PSM has been in the business of oil-based washing soaps for close to five decades now. PSM has seen a major boost in its sales of oil-based soaps. It has already come out with a new semi-transparent soap, Ghadar, which is attractively packed.

Similarly, 'More Detergent' too has come out with an oil -based soap and has been rewarded with immediate success.

Yet another attack on the detergent industry has come from within. This is due to a large influx of new players, who have earned surplus money either through biri trade, as in the case of Shyam Biri or through shoe-manufacturing, as in the case of Lakhani, or Raj Ratan Sarees, in case of sarees.

There are many players who have entered the detergent industry in Kanpur and are sustaining their production and marketing by taking three months' credit.

This has spoiled the market, and popular-brand detergent makers are hardly earning anything these days. Thus detergent powders are still bringing in income, but as far as cake-soaps are concerned, people have switched over to oil based soap.

As for the future, all will depend on the duty structure. The edible oils attract a Customs duty of 85 per cent, and linear alkyle benzene, a raw material for detergents, attracts duty of 31 per cent, of which 16 per cent countervailing can be realised through the modvat, reducing the effective rate to 15 per cent, if this duty rates continue to, prevail, then the scope for further growth of the oil based soap industry will be limited.

However if the duty on the imported oils is reduced, then the oil based industry is likely to experience a boom , Like of which has not been seen before, say industry analysts.EOM.