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Levy has helped add to our bottomline, says executive chairman of TTK Prestige
Kitchen appliances maker TTK Prestige Ltd. the Rs. 1,800-crore flagship of the TTK Group has just reported bumper numbers for the second quarter with net profit jumping by 28% on the back of strong rural demand for its pressure cookers. In this interview with The Hindu at the company’s headquarters in Bengaluru, T.T. Jagannathan , executive chairman, took the lid off this low-profile company revealing its plans to enter cleaning equipment, on how rural demand is booming and how competition is easing thanks to GST. Excerpts:
When you say TTK Prestige, the first thing that comes to my mind is pressure cooker Because it is a legacy product. I have been in that business for 65 years. We are number one in gas stoves in the country, we are number two in mixies and grinders, we are number one in induction cookers.
How do you see the economy from your perch?
The rural empowerment has really helped us. The Ujjwala scheme and more than that, the direct benefit transfer scheme. We grew 300% in the rural. From about Rs. 13 crore to Rs. 40 crore in the first half. The economy is booming for us. Ujwala has made a huge difference. If you have a gas cylinder, you got to have a stove otherwise you are wasting gas. One of the first things we did was to make sure we reached our products there. So, we are reaping the benefits of that.
Competition is really hotting up, right?
The reverse is happening. Thanks to GST, the unorganised competition is reducing. There are three or four organised players. Hawkins, Butterfly, United. The rest are all unorganised. As the demand grows, you will have to expand. Where is the expansion going to happen?
Geographically it will happen all over the country. North East is doing very well. The only State which is not growing for us is Kashmir. Right now, cooker capacity is six million. This year, we will sell six million. We are building capacity this year. We will go up to 8.5 million by the end of this fiscal year. It is in Coimbatore and Vadodara. Cookware capacity will go up from 5 to 9 million. This will take one more year to do and we will be investing Rs. 200 crore.
Is rural demand concentrated in one part or is it all over the country?
All over. In Odisha, Bihar, Kerala. We found a unique way to get into the rural areas. These microfinance companies are not making much money on lending. So what they said was that they will sell consumer durables on EMIs. When they sell, they tell the borrower that instead of paying Rs. 20, pay me Rs. 40 a month. So, they sell the pressure cooker. We deliver it to them. And, we get the money from the finance company. Bharat Finance Inclusion Limited is the biggest one. There some 10-20 of them. They give us orders and we ship.
How do you plan to raise the money for expansion?
We have got Rs. 350 crore in the bank. Money has never been the problem.
How much do exports account for the revenues?
Just 5% but growing at 100%. Last year, we exported Rs. 37 crore this year we will export Rs. 80 crore. My target is Rs. 500 crore in three years. We will get there.
Which countries are you exporting to now?
[As many as] 132 countries, mainly to Japan and U.K. We sell a different pressure cooker there. The pressure cookers sold there do not whistle. By law, it should not. Whereas in India, if it does not whistle, nobody will buy it.
How are the rupee depreciation and oil prices panning out for you in terms of raw material prices?
While the rupee has depreciated, aluminium and stainless steel prices have dropped. So we have not been affected at all. In June, we took a price increase of 4%. We have had a fantastic quarter. Margin expansion was very good.
So, has GST helped you?
Enormously. Earlier, for example, on advertising you had to prove that it was for this product and then you got a set-off. So, we could not claim 80%. Or, we claimed and the department did not allow it. And hotel expenses, plane expenses… now everything they give you back. That itself has added Rs. 15 crore to our bottomline annually. Everybody is benefiting and growing at the same pace. We have warehouses in every State. We are closing some of them as with GST, there is no need to have so many. We will have probably 10 in the end out of 28. It will bring down the stocks also. We hear that you’re getting into cleaning equipment…
Our kitchen equipment business will get only organic growth. Because we sell every product in the kitchen. There is no new product being planned. If I want inorganic growth, it should be outside the kitchen. We don’t want to get into fans and geysers as it is B2B. So, we got into cleaning because the customer is same. In vacuum cleaners, there is only Eureka Forbes. There is no one big name in cleaning. There are 3M and others. If we want to be known as the cleaning solutions people, we have to have everything. When you think of cleaning solutions it should be Prestige.
Source : https://www.thehindu.com/todays-paper/tp-business/goods-services-tax-has-reduced-competition-from-unorganised-sector/article25355666.ece
