Felling, smuggling of sandalwood trees force maker of Mysore Sandal soap to import oil from Australia
BENGALURU: For the last 107 years, Karnataka Soaps and Detergents Limited (KSDL) has enraptured the state with its sandalwood soaps. However, dwindling sandalwood tree cover in the country, apart from the need to serve diverse customers, has prompted KSDL - the maker of iconic ‘Mysore Sandal’ soap - to reimagine its strategy, with an investment of Rs 500 crore.
KSDL claims to be the only manufacturer globally to use natural sandalwood oil for soap production, justifying its premium price tag. But rampant illegal felling and smuggling of sandalwood trees in Karnataka has compelled the company to explore other geographies for a steady flow of the most important raw material -- sandalwood oil. The company is importing the oil from Australia. Last year, it imported 4,000 kg and will increase it to 7,000 kg this year.
Simultaneously, the government has started a plantation drive, signing MoUs with 700 farmers in Karnataka, translating to 4,000 acres of land to grow sandalwood. “Earlier, sandalwood, wherever it was grown, was state property. Now, the government has removed that clause, and facilitated farmers to grow trees in their own fields. They can sell the trees to the forest department or KSDL after a 20-year period (when the trees are mature enough to yield wood),” said MB Patil, Large and Medium Industries and Infra Development Minister.
The company’s roadmap includes expansion, modernisation and diversification, with a vision to secure Rs 4,000 crore turnover by March 2026, he said. The plan includes expanding to other markets with new offerings, cultivating a robust raw material supply chain and manufacturing base, and entering new product segments. Around 81% of KS DL’s sales come from South India, on the back of Mysore Sandal soap, while the East contributes 9%, West 6%, and North 2.5%. It now wants to improve its presence beyond South India, and will launch soaps of lime, turmeric, lavender, neem, rose, jasmine, and transparent, priced at Rs 20, primarily aimed at North India.
KSksDL is also scouting for 3-4 contract manufacturers to outsource production for that market. “Our legacy demands that we maintain premium quality. But responding to evolving customer needs, we are embarking on this diversification, launching soaps in the popular category,” said KS DL MD Prashanth PKM. In the foreign market, predominantly Europe and West Asia, KS DL will launch an improved version of its super-luxury offering Millenium - ‘Millenium Gold’ - priced at Rs 1,000 for a 100-gm bar. KS DL is also eyeing a new soap facility in Karnataka, but the minister refused to divulge details.
Wood to Water
To sustain business over a long period, KSksDL is entering the mineral water space, with the brand ‘Mysore Sandal’s Aqua’. “It’s basically a diversification beyond soaps, to enter segments with customer necessities,” Patil said. The company will start producing and packaging drinking water at a defunct oil distillation unit in Shivamogga. The company will also monetise a part of its Bengaluru premises by establishing a commercial complex for offices, for which a blueprint is ready. The mega roadmap will see an investment of Rs 500 crore, Patil said. “We expect our turnover to cross Rs 2,000 crore by April 2024,” said Prashanth. For FY2022-23, KSksDL logged gross sales of Rs 1,375 crore, a 25% growth over Rs 1,104 crore in FY2021-22, with soaps contributing a major part. Last year, KSksDL saw its net profit rise 16% y-o-y at Rs 160 crore, over Rs 138 crore the previous year.