The Hindu Business Line : Growth under pressure

Just a little over a year ago, TTK Prestige launched Nakshatra, its first inner lid pressure cooker, a market it had not been present in for 50 years, in North India. Why did it take so long for this company, synonymous with pressure cookers, to do that? Says Chandru Kalro, Executive Vice-President (Marketing), TTK Prestige, "That was because these cookers didn't come with a gasket release system till then, and we weren't about to compromise on a safety measure, so we waited till we innovated with them."

Throughout BrandLine's conversation with Kalro, innovation was one word that cropped up often. The necessity to extend its portfolio across the kitchen resulted in a major change of strategy in 2001. And that has meant many innovations - whether it was the pressure handi, the metal-spoon-friendly non-stick cookware, the split-level four-burner gas stove to make cooking on the burners at the back easier or the Indian-menu-friendly microwave.

TTK Prestige then as now had the lion's share of the pressure cooker market, but along with it, a growing realisation that the category no longer offered scope for the kind of growth it wanted. It wanted to grow at 30 per cent a year, while the category was growing only 7-8 per cent a year. With a major presence in that segment and a smaller presence in non-stick cookware, the company tied up with Softel (the ice-cream machine and appliances maker) in 2002 to market electric appliances including mixer-grinders. It was then a sourcing-led business model as pressure cookers were the core competence but after the tie-up with Softel, it expanded its vendor business and sold more categories including gas stoves, juicers and food processors.

The company mustered some growth though distribution was not easy - there was no single competitor but different ones depending on the category. Then it hit on the idea of its own retail channel, and thus Prestige Smart Kitchens were born.

"Every single category in retail was growing dramatically," says Kalro. "We found the consumer desired ambience, novelty ... and kitchen appliances were not conducive to that experience." This set off a chain of events - TTK Prestige opened the first Smart Kitchen in Coimbatore in 2003 to give its consumers this experience, and provide a setting for the breadth of its range; opening these stores necessitated more merchandise; sales to the trade grew as distributors also began coveting the products sold in the retail channel. The domestic business grew from Rs 93 crore in 2003 to Rs 213 crore in 2005-06. The number of Smart Kitchens stands at 179 across 108 towns.

It then got into high-end kitchen appliances by outsourcing toasters, kettles, coffee-makers, chimneys and hobs. Women don't want to spend too much time in the kitchen and are looking for gadgets that enable "unattended cooking," so then came in the electric rice cookers that were programmable and had the `surround warm' function to keep the rice moist - a benefit that was missing in others of its ilk, says Kalro.

The company has come to another significant stage in its life - from being a manufacturing company to a sourcing and retail company to a kitchen solutions company - for a few years now, it has been talking about selling modular kitchens, and may finally take the plunge next month by setting up a couple of large-format stores in the South, starting with Bangalore or Kochi. The concept is being test-marketed in Bangalore. A mid-range kitchen could cost between Rs 1 lakh and Rs 2.5 lakh, says Kalro.

Next month, TTK Prestige will launch a new marketing campaign to position itself as a total kitchen solutions company. Many of its products need to be demonstrated and aren't mass media-friendly - Smart Kitchens come in handy here. Funds for these activities have been hiked to Rs 50 crore in the last two years from Rs 10 crore a year, Kalro says.

The company is eyeing a turnover of Rs 300 crore this fiscal. With its new launches, it aims to earn 20 per cent more the year after. Right now, pressure cookers are its mainstay, contributing 50 per cent of the turnover. Non-stick cookware accounts for 20 per cent, stoves and mixer-grinders 12 per cent each and appliances six per cent. The company exports its products to the US (as Mantrra), to the Gulf region, South Africa, Sri Lanka, Bangladesh and parts of Europe. It is the original equipment manufacturer for a few pressure cooker marketers in the UK.

However, life is not all a bed of roses. "It's pretty complicated," says Kalro, adding that dealing with competition is complex as it differs depending on the product segment.

"When competition cannot be predicted in its behaviour and from where it comes, the brand has to behave in an amoebic manner," says brand expert Harish Bijoor of Harish Bijoor Consults Inc. Competition today is really "irrational," he says, and there is no method in the madness, which means the brand has to behave like an amoeba and morph into something else, which is what Prestige has done by moving from pressure cookers to kitchens, he observes.

The company is trying to improve customer service and needs better systems for sourcing and manufacturing, says Kalro, adding that it is putting in place an organisation to strengthen these departments.

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