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| Edited By: Ashish K Tiwari |Source: DNA |Updated: Mar 22, 2018, 02:30 AM IST
TTK prestige is a pioneer in the pressure cooker industry. We used to import pressure cookers initially from Prestige UK and then we started manufacturing ourselves in 1959. We took the brand door-to-door and established the concept of pressure cooking in India. From 1959 to 1992, we were primarily a pressure cooker company. We then launched non-stick cookware in association with DuPont 1993 and for the next seven years were well-known as a pressure cooker and cookware company. In 2000, we told ourselves that the Prestige brand was worth much more that what it is delivering for the company. We made a small start with appliances in 2001 with gas stoves and a few other electric products through dedicated vendor network at that time. In 2003, we decided to look at a very high growth situation. We put together a strategy to be able to grow at 30% annually and went aggressively in terms of brand building, extended ourselves in the entire kitchen space and did everything that was needed. While we had the products, we also needed distribution and that's when decided to build our own network of retail stores and used it as a strategic and tactical growth driver. We then started bringing out between 60 and 100 products every year and for the next 10 years, we actually grew by 27% compounded annual growth rate. That was a high growth phase wherein the company grew from Rs 100 crore in 2012 to Rs 1,300 crore today. Through this entire period, the focus has been on innovation, to get better products, understand the consumer's pain points and bring out solutions rather than just products.
'Jo biwi se kare pyaar, woh Prestige se kaise kare inkaar', was our best-known marketing line which was long forgotten. So we decided to bring it back in a modern context wherein the wife was buying herself instead of the husband buying it in the previous context. That's when we got celebrity couple Abhishek Bachchan and Aishwarya Rai to endorse the brand which has taken off really well in the last five years. Our marketing spends have been steady irrespective of good or bad years and today the brand is probably the most salient in this domain of appliances. Today, we hold leading position across product categories.
We have been spending 6.5% of sales on just advertising. And promotions are over and above in a similar proportion.
The way we look at it is, ours is not a 'me too' journey and our products are highly differentiated with lots of value-adds. We have been the stock market darling and shown profits that have never been shown in this industry. Obviously, it's become a segment of interest to other players who want to get in and take a share of this pie. But most of them have not gone on this innovation route and are just trying to milk the market opportunity. For us, more competition means more opportunity because everybody tries to expand the market but best brands will really win. Of course, the market is challenging and keeping you on the toes. There lies the challenge and I think we have delivered so far.
We have actually improved share. Now there is some benchmark to compare against. The customer today is more intelligent, well-informed and has great access to information. And therefore, in this game, once the price barrier is gone, then only the better product / brand wins.
It depends on which category you are speaking about. More mature categories like pressure cooker, mixer grinder and gas stoves will have more urban penetration mainly because of availability of LPG and electricity in these markets. Rural channels are not as well developed as they should be because the infrastructure is not as well developed. But, what we are seeing is since we have a very extended distribution up to tier six towns which are really the feeder market to rural. While we don't track them extensively, I am sure there is good traction happening across these towns because our research shows the rural counterpart is as aspirational as urban. Having said that, rural dynamics will obviously be different than urban in terms of buying behaviour. We work with a lot of NGOs, micro-finance companies for the rural market.
We ensure that everybody in the chain must make money while the consumer sees enough value in the product. So margin trends are good though they have come off from the high-growth years. Having said that we are still one of the most profitable in the industry in terms of ebitda margins which are in the 11-12% region. It used to be 14-15% earlier the but has come off a bit because the growth has come off a bit as well.
As a company, we owned the Prestige brand only in India. We wanted to address the export market and believe that we have built enough manufacturing capacity which is currently under-utilised for the domestic market. If we were white-labelling products and sending them out, obviously the margins will be low and in branded products, margins are higher. The idea, therefore, was to acquire a brand outside to be able to make this company global. So, we bought a company in the UK that has four brands mainly catering to the UK market. We are looking at how to take that further out into the European markets.
We have recently entered the cleaning solutions category. Our core target audience is the housewife and we want to cater to her needs in the kitchen area. Cleaning the house is also her domain and we were seeing that there wasn't any credible brand addressing all the pain points in that area. So we have launched a huge array of products in the cleaning solutions space – both electric and non-electric. And we are hoping it will be a very big growth segment for the company in the future.
