The Hindu Business Line : Faber bullish on kitchen chimney segment

FABER Heatkraft Industries Ltd has virtually set the kitchen chimney market in India on fire by slashing the entry-level kitchen chimney price by about 20 per cent and the decorative kitchen chimney price by 40 per cent.

While the company hopes the price cut will help cover its flanks against unorganised players in the market, particularly those who bring in cheaper imported chimneys, it also believes the move will enhance the brand value of Faber in the electric kitchen chimney market, which is getting hotter with the entry of such multinationals as Electrolux and Whirlpool.

Faber's decision has come at a time when there is a growing demand for designer kitchens, particularly among the upwardly mobile urbanites, who want to make kitchen-related chores less taxing.

Mr P. Bhutada, Managing Director, Faber India, responding to questions from Business Line, described the business strategy the group has adopted to capitalise on the changing consumer trend. Excerpts.

What was the reason behind the price cuts in the entry-level and decorative chimney segments?

The new plan aims to revolutionise the kitchen chimney market by offering international quality product at a highly affordable price. The company has slashed the price of its entry-level kitchen chimney to create a mass market for the product, which has a market size of 1.25 lakh pieces a year.

Faber would like to achieve higher sales volume. It has been able to cut prices in the decorative segment too due to the advantage Faber enjoys — it is the only company in India with a modern manufacturing facility in Pune. Faber has started manufacturing decorative chimneys too in its Pune plant, so neither the unorganised sector nor the other small players who are importing the products can match this cost advantage.

With the entry of other big brands such as Electrolux and Whirlpool, this segment of kitchen appliances market is set to witness hectic activity in the near future.

Has the price cuts been effected all over the country? Faber has slashed its prices across the country. By making international quality electric kitchen chimney available at more affordable prices, Faber achieves multiple objectives — we create a mass market for kitchen chimneys, which hitherto is considered a high value product and is bought more for aesthetic values than utility purpose. We intend changing this perception. This will also expand the market for kitchen chimneys in the smaller towns. By offering international quality kitchen chimney at such a low price, we will create entry barriers for those unorganised players, especially importers, who sell inferior quality chimneys to the mass market.

What is the annual growth in terms of percentage?

In the organised sector. only Faber and Electrolux are there. If we consider the decorative segment, then Faber is the market leader with more than 50 per cent market share. With the slashing of prices, Faber anticipates a major jump in its sales of low-end chimneys. Now, the company sells 25,000 low-end chimneys, which constitutes 15-20 per cent of its total chimney sales. But with the slashing of prices, this volume (low-end chimneys) is expected to go up to 50,000 in the current fiscal i.e. January to December 2005.

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