This story first appeared in DNA Money edition on Monday, May 20, 2013.
TTK Prestige, the maker of pressure cookers and kitchen appliances, is getting ready to enter India’s Rs 3,200-crore water purifier market where big names such as Aquaguard (Eureka Forbes), Pureit (Hindustan Unilver), Swach (Tata Chemicals) and Kent RO abound.
On Friday, a TTK official confirmed the development during an earnings call. “We will launch the water filter this fiscal.” No further details were divulged.
The TTK move comes amid industry estimates that the segment sales, riding compounded annual growth rate of 25%, will hit Rs 7,000 crore by 2015.
But TTK is facing testing times in the high-end kitchenware segment. Having tested the waters for more than one year, it has now decided not to push ahead with sales and distribution of World Kitchen’s brands “except Snapware” (which is range of spill-proof, nestable and airtight food storage containers made of plastic and glass).
T T Jagannathan, chairman of TTK Prestige, was earlier reported to be looking at Rs 50 crore in sales this year from the February 2012 partnership with the Illinois-based World Kitchen. The latter will now have to set up its own network to market and distribute its brands like Corelle, Corningware and Pyrex cutlery.
For the January-March quarter, TTK’s sales rose 22.3% on-year to Rs 289.46 crore. Operating income went up 32.5% to Rs 43.91 crore and net profit soared 42% to Rs 28.03 crore.
Growth in south India remained flat but rose 70% on-year in the rest of India (10% and 52% for the full fiscal respectively).
So, TTK has earmarked Rs 50 crore for capital expenditure this fiscal, while gross debt of Rs 115 crore is now being sought to be slashed to `60 crore by this fiscal end.
To de-risk, TTK is ramping up its presence in regions other than south India by appointing new distributors and setting up new accounts. This strategy has already helped boost activations 22.3% on-year during the fourth quarter. TTK is also stepping up advertising expenditure.
About future growth, the TTK official said, “Emphasis is being laid on our own brand retail stores focusing on non-south India markets. Currently, 65% of our stores are in south India and one-third elsewhere. That’s something we are planning to correct so that the proportion is in line with our turnover.”