JOIN USThe name 'Prestige' instantly takes one to the kitchen of innovation, safety and trust. Enter the kitchen of any home, and one can see at least a product of the Bengaluru-based brand that has been retaining the No. 1 position for years now.
Who can forget the catchy line 'Jo Biwi Se Kare Pyaar, Woh Prestige Se Kaise Kare Inkaar' (One who loves his wife, cannot refuse Prestige), a phrase that has become inseparable from the minds of people.
The journey of TTK Group was started in 1928 as an indenting agency. T T Krishnamachari pioneered organised distribution in India, and he set up distribution for a wide range of products such as foods, personal care products, writing instruments and ethical products.
Immediately after the war, from 1950 to 1959, the company was importing and distributing Prestige pressure cookers. "We asked Prestige for collaboration, but they were not interested. But we convinced them to provide us its technology. They never had any joint venture or investment with us. It was only technology. But now, we are providing them our technology," says T T Jagannathan, Executive Chairman, TTK Prestige Limited.
"We decided to set up a factory in Chennai, but there was no power. Karnataka had surplus power in those days, and the state was inviting people to set up factories, and we started building our factory in 1957. It got completed in a couple of years," informs Jagannathan.
House-to-house campaign
It was not easy to sell pressure cookers in the 50s, as the concept was very new to people. While a pot took more than half an hour to cook rice, there was a pressure cooker that could do the same work in 10 minutes. "There were no ladies clubs or apartments, we visited house-to-house and demonstrated them," said Jagannathan.
The group started off by selling 65 pressure cookers a year across the country, and slowly the volumes started going up. Jagannathan joined the group in 1974 and that time, the cost of a 5-litre pressure cooker was Rs 99, and a 10-litre one was Rs 190. "In those years, the cost of aluminium was Rs 6 a kg, and today, it is Rs 218," says the executive chairman.
ln 1979, the company suddenly begun losing market share to competitor Hawkins. "I was in Lucknow at a dealer's shop, and I was shocked when he showed me 60 burst Prestige cookers," he recalls.
After investigating the reason behind the burst, Prestige came out with a cooker equipped with GRS (Gasket Release System). It ran an iconic campaign 'Jo Biwi Se Kare Pyaar, Woh Prestige Se Kaise Kare Inkaar' to regain market share and trust among people.
"Once it gets registered in people's mind that the pressure cooker is not safe, it takes years to change the perception of people regarding the brand. And that's when we ran the campaign," he says.
The campaign turned the tide of business, and Prestige continued its pressure cooker journey till 2000 when it decided to launch 'Prestige Smart'.
"In 2000, when we launched Prestige Smart, it bombed. Unfortunately, in a hurry, fundamental mistakes were made at that time and it set us back again. We had to take back three lakh pressure cookers and it was a big loss for us. We made changes and we stared exporting Smart, and till now, we are only exporting the product, and it is not for the domestic market," he informs.
Beyond pressure cookers
Also, during that period, both the Centre and state governments increased taxes of pressure cookers.
"Tax levied was 50% and the unorganised sector started growing. All other organised players including Hawkins had to face huge losses. We were thinking what to do now and started analysing why were we making losses. We realised that we were more dependent only on pressure cookers. So we thought of diversifying, and something in the kitchen would be the best bet," recalls the 70-year-old Jagannathan.
The market share of Prestige was 35% in 2003. Some of the first products it launched in 2003 were mixers and gas stoves. "Dealers refused to take our products. They asked, 'why do we need to take your products when there are brands like Butterfly and Sunflame in gas stoves and Preethi and Sumeet in mixers'? Then we decided to start our own stores - Prestige Smart Kitchen - and when we were selling them, dealers said, 'we will lose, if we don't sell Prestige products and then they started selling our mixers and gas stoves'," he says.
Currently, the organised pressure cooker market in India is around Rs 1,750 crore and Prestige enjoys a market share of over 28% in volumes, and over 30% in value terms.
In April 2016, TTK Prestige forayed into a new line of business by launching 'Prestige Clean Home'. With this, the company is expanding its offerings from kitchen solutions to the home cleaning space.
Prestige Clean Home comprises electric and non-electric range of innovative floor, air and water care products. While the response has been "too good", it looks at aggressive growth in the cleaning space in the coming years.
It has five manufacturing units. The company came out with a public issue in 1994, and as of Friday, the company's shares were trading at Rs 6,424.35 on the BSE.
Foray into European market
TTK Prestige acquired UK based Horwood Homewares for an undisclosed sum. It supplies over 2,000 table and cookware products across key European markets. "It's unfortunate that our acquisition happened a day before the Brexit vote, and instead of growing, we are flat right now," Jagannathan says.
It recently launched UK brand 'Judge' kitchen appliances in India. The new brand is part of Horwood Homewares, and it would cater to Tier-III, IV and V markets at lower price points. Prestige, which lost this segment to unorganised players, wants to recapture it through Judge.
"Over the longer term, its Horwood acquisition would also provide synergy benefits, which would enable it to boost revenue growth and improve margins," an analyst from ICICI Direct said.
"The key to the strong financial performance of TTK has been its ability to successfully transform itself from a company manufacturing pressure cookers to one of the country's largest branded kitchen appliances company. It has built a strong brand patronage and offers customers a bouquet of products in the kitchen appliances and cooking segment," the analyst said.
GST blow
Talking about GST, Jagannathan said in the GST quarter (Q2FY18), TTK Prestige grew 4%, whereas, Hawkins and Bajaj dropped by 15% and 29%, respectively.
"While it is 12% GST for pressure cookers, it is 28% for cookware and electrical appliances. For mixies and wet grinders, GST is fixed at 28%, which is unfair. While wet grinders are taxed 28%, which is used in South India for making idly and dosa, atta chakki used in North, is only 5%. We are making representations to the government and the Centre is saying that they will look into it," says Jagannathan.
From just manufacturing pressure cookers, Prestige has grown into selling more than 1,000 products and it bets big in the kitchen space. The group has set a target of Rs 5,000 crore revenue by 2022, and it aims to close the current fiscal with Rs 2,000 crore.