TOPIC Group 18

TTK Prestige Ltd., Bangalore The company claims that it is the market leader in kitchen appliances with urban markets especially in tier II cities exploding with demand for their products.

Who are its competitors? What are TTK Prestiges sales and profit figures for the last five years? How do competitors growth rates compare with TTK Prestige?

What are the plans of the company to enhance its growth rate? What suggestions can you give the company to outperform competition and grow at a rate much higher than recorded by it over the last five years?

ABOUT TTK Prestige Limited

TTK Prestige has become a household name and is a market leader in the kitchen appliance segment. TTK Prestige Limited is part of TTK Group. Over the past five decades TTK Prestige Limited, has emerged as Indias largest kitchen appliances company catering to the needs of home makers in the country.

TTK prestige originally started with manufacturing of pressure cookers. TTK Prestige Limited is one of the worlds largest manufacturers of Pressure Cookers and it has been forefront in introducing several innovations like Gasket Release System (GRS), Gasket Offset Device (GOD) and Double Locking System, all firsts in India.

The product range includes Pressure Cookers, Non-Stick Cookware, Rice Cookers, OTGs, Kitchen Hoods (Chimneys), Hobs, LP Gas Stoves, Coffee Makers, Kettles, Sandwich Toasters and many other small electrical appliances. TTK Prestige Limited also offers Modular Kitchen solutions with the widest range of options in terms of design, choice of materials, accessories and hardware. The company presently has manufacturing facilities in Hosur, Coimbatore and Roorkee and distributes from sales branches located across the country to cater to the needs of specific markets.

It is a market leader in a very nascent segment which is mainly categorized by unorganized players. In fact 50% of the pressure cooker segment is unorganized. It has a wide distribution network in which sales happen through direct dealers, authorised re-sellers, network of showrooms through 3 retail formats Prestige Smart Kitchen (offering all its products & solutions), Prestige Kitchen Boutique (for its foray into modular kitchens) and Prestige Life Style Store. It has 228 Prestige Smart Kitchen retail formats spanning 19 states and 136 towns. It is predominantly present in South India which is a outer lid pressure cooker market. TTK Prestige exports its products to USA, Europe, South Africa, Kenya, Australia, Singapore, Middle East, Sri Lanka and many other countries.

COMPANY HISTORY:

YEAR EVENTS

1955 - TTK Prestige Limited was incorporated as a Private Limited Company at Madras
under the name & style 'T T Private Limited' on 22nd October. The registered office was shifted to Bangalore & a fresh certificate of incorporation was obtained. - The Company became a deemed public limited Comp. on & from June 15th 1988 under the provisions of Section 43A of Companies Act, 1956. In 1984 the Company launched 'Prestige Pressure Pan'. In 1992, the Company successfully launched its product under the brand name 'Manttra' in the US market.

1990 - The Company foods division launched ready-to-eat snacks, Fryums, in India. 1992 - The Company issue 95576 No. of Equity Shares were allotted during this year as
fully paid up Bonus Shares by capitalisation of reserves in the ratio of 1 : 1.

1994 - The name of Company was changed from TT Limited to TTK Prestige Limited on
23rd June, & a fresh certificate of incorporation was obtained from the Registrar of Companies. - TTKPL commenced the manufacture of pressure cookers in 1959 with technical collaboration from Prestige Group, U.K. who are the pioneers in the pressure cooker business.

- The Company project for manufacture of Non-Stick Cookware with technical tie-up from Dupont, U.S.A. has progressed satisfactorily. - During the year, the Company allotted Bonus Shares at the rate of 1 share for every 3 shares held aggregating to 3,82,304 shares of Rs.10 each on 30th June. The Company also issued 30,20,000 Equity shares of Rs.10 each at a premium of Rs.80 per share to the residents including Financial Institutions & 3,00,000 shares of Rs.10 each at a premium of Rs.10 each at a premium of Rs.115 per Share were allotted to Foreign Institutional Investors.

1995 - The Company issued through Prospectus 28.95 lakh equity shares of Rs.10/- each at a
premium of Rs.80 per share, which included a firm allotment of 55,000 shares to Unit Trust of India.

1996 - During the current year, the Company has introduced Silver Stone range in selective
markets & the same is well received. The Comp. is also entering into Kitchen Tools Project & necessary technical tie-up is being finalised.

1998 - The Company introduced new models in the US market which have been received
well. The Company has also made an entry into the UK & Australian markets during the year.

2000 - TTK Group is close to finalising sale of foods division as part of its plant to exist the
non-core businesses. - TTK LIG, a joint venture between Seton Scholl Healthcare Plc & TTK Group is the world largest condom maker, manufacturing close to a billion condoms per annum. - The Company has launched Prestige Omega non-stick cookware.

2001 - The Company manufacturers of kitchenware, has launched a new range of vacuum
flasks with imported shells. - TTK Prestige has launched vacuum flasks with imported shells.

2003 - TTK Prestige Ltd has recast its debt portfolio by converting majority of its
borrowings into ECBs & FCNRB loans aggregating to US$ 9.5 million

2005 - TTK Prestige sets up 47th 'Smart Kitchen' in Pondicherry

- Company obtains License for 'Prestige' brand for use in USA. -TTK Prestige launches new product 'Prestige Nakshatra'.

What does TTKs past say?? COMPANY ANALYSIS

TTK Prestige has performed robustly in all its parameters over the last 6 years. Its impressive fundamentals in the past form a strong base for its future. The company has grown its Net sales with a robust CAGR of 23% over the last 6 years, showing a consistent increase in demand. The company has improved its margins over the years from an average of 8% to an average of 12% now. This, along with a strong reinvestment into business has helped it clock an impressive EPS CAGR of 73.8% over the years. The company has an average ROIC of 24.8% indicating efficient management of funds. In fact its ROIC has been witnessing an increasing trend over the years because of the companys constant effort to reduce its debt. In fact, in FY 10 the company moved to being an almost debt-free company with a meagre amount of Rs. 2 Cr. as debt. Trends in Sales for the last 5 years:

Year TTK(crs)

2005-06 137.3

2006-07 163.39

2007-08 186.11

2008-09 220.34

2009-10 516.8

Trends in market share for the last 5 years:

Year TTK (%)

2004-05 44.28

2005-06 44.26

2006-07 44.09

2007-08 46.47

2008-09 46.35

The companys top line has grown at 150%+ CAGR over the last 5 years. Profitability also improved and grew by 30%+ over the same time period. The strategy for maintaining growth and improving profitability has been product innovation, brand building and financial prudence.

The company has over the years evolved from being a mere pressure cooker product brand to a full-fledged kitchen appliances brand. Its wide product portfolio and wide spread retail initiative will help company grow faster than the industry, while branded industry itself will grow at 5-6%.

The pressure cooker industry, which has a penetration of mere 30-35% in India, has a lot of scope of growth with increased availability of LPG & piped natural gas in the next few years. While the non-stick cookware segment will grow on the back of replacement demand, urbanization and growing health consciousness in cooking styles.

It is believed that the macro demographic trends in India will drive the growth of the kitchen appliance industry per se. The companys vision for new business opportunities such as modular kitchens and its product innovation provides good business visibility for the company.

THE MAINSTAY PRESSURE COOKER SEGMENT TO GROW AT A STABLE RATE Pressure Cookers is TTKs single largest segment which contributes around 54% to the top line currently. TTKs pressure cookers are different from other cookers on account of its outer lid-closing feature. This feature provides the user with some additional cooking capacity vis--vis inner lid cookers. The Indian pressure cooker market size is approx. 9 million pieces p.a., which is equally divided between organized and unorganized sector. TTK enjoys 30%+ market share in the pressure cooker market of which it is the market leader in the outer lid market segment with 65% market share and 5% of its recently entered into and a highly competitive inner lid market. The branded cookers market has been growing at 5-6% over the last 4-5 years while

TTK has witnessed volumes growth at 13-15%. We expect this segment to continue to clock similar volumes growth over the next 2-3 years.

Apart from that, TTK has introduced a niche product through the launch of pressure handi a few years back.

Though the scope for innovation might be limited in this segment, but the industry will see potential for growth from increased availability of LPG & piped natural gas in the next few years. It is believed that TTK will continue to clock higher growth on the back of the aggressive retail push, penetrating through new markets while garnering share from the unorganized players and growing nuclearisation of Indian families. Hence, this segment is believed to clock a volume growth of 10%+ for the next 2-3 years. TTKs strategy in this segment has been to innovate and give the user a better product experience. TTK has introduced both aluminium and stainless steel cookers, the latter of which has given boost to the overall average realization. TTKs product innovation, superior quality and product technology has always enabled it to command a superior price realization over its peers. Prestige cookers are targeted towards middle class and the upper middle class and enjoy a 3-5% price premium over other branded manufacturers.

DE-RISKING THE BUSINESS BY FOCUSING ON THE NON-STICK COOKWARE In a bid to de-risk its business from single product dependence TTK forayed into the cookware segment. Over the years TTK has emerged as the market leader in the non-stick segment. It was only recently in FY07 when the company was flushed with demand and hence operated at 200%+ capacity utilization. TTK increased its capacity from 500,000 units to 1,800,000 units in FY08. TTK competes primarily with local and regional players such as Premier in this segment.

Growing urbanization, health consciousness in cooking styles of customers and the segments unique ability for bulky sales (majority consumers do not buy a single pan but a set of nonstick items) will help TTK to grow at a healthy rate. The life cycle for the non-stick cookware is 2-3 years hence giving rise to a large replacement market. Hence we expect the cookware segment to grow at a CAGR of 15-17% for the next 2-3 years.

INVESTING IN SETTING UP IN-HOUSE KITCHENWARE (ELECTRICAL APPLIANCES) FACTORY IN UTTARAKHAND Electric kitchenware is the companys third business segment and has been growing much more aggressively than the other segment. This segment includes all types of electric kitchen appliances such as mixer, toaster, chimneys, etc. The companys strategy is mainly to offer complete range of kitchen appliances while encashing on its existing retail network setup & existing brand which symbolizes quality, reliability, and safety for all kitchen products for a housewife.

The finished products of this segment are primarily outsourced at present. The growing demand for TTKs electric kitchen appliances has enabled this segment to grow much faster. On the back volume growth the company plans to set up its own unit in Uttarakhand at a cost of INR 11 crs. This will enable TTK to control outsourcing cost, monitor quality and at the same time aggressively penetrate this segment. It is important to note that the contribution of this segment to top line has gone up in the last one-year from 13% to 17%. We expect its contribution to go up to 20% once the new plant is commissioned by at the end of this fiscal. AGGRESSIVE RETAIL EXPANSION Prestige Smart kitchen: This retail network offers all Prestige products under one roof. This network is spread across 19 states and 120 towns. The company plans to ramp it up to 220 from the current 196 outlets by the end of FY10. The contribution on this sales network to the revenue has gone up to ~15%. 3 years back pressure cookers primarily formed a major part of sales which now is equally divided amongst all segments.

TTK has taken the next step from being a kitchen appliances provider to taking up the task of designing kitchen for a housewife. TTK forayed into modular kitchens in 2005 but this segment picked up stream only in the last 2 years. Highly competitive with the presence of aggressive international players the company is taking the business forward slowly. The company is showcasing its modular kitchens through its exclusive. Prestige Kitchen Boutiques. Presently it has 9 such showrooms. Due to lack of visibility, we expect minimum growth for next 2 to 3 years but see high potential, as it is an early entrant in a foreign players dominated segment.

The company has over the years evolved from being a mere pressure cooker brand to a fullfledged kitchen appliances brand. Its wide product portfolio and wide spread retail initiative will help company to grow faster than the industry. The pressure cooker industry, which has a penetration of mere 36% in India, has a lot of scope of growth while the non-stick cookware segment will grow on the back of rising urbanization & growing health conscious trends. We believe the macro demographic trends in India will definitely drive the growth of the kitchen appliance industry.

COMPETITOR ANALYSIS
TTK prestige has divided its business into two groups:

1. Traditional Business Group

2. Appliance Business Group

Traditional Business Group consists of product range from cooker and non-stick. Appliance Business Group consists of small electric appliances.

Major competitors for the two groups: 1. Traditional Business Group- Hawkins Cookers Limited, Kanchan International Limited. 2. Appliance Business Group- Bajaj electrical, Philips India, Panasonic Home Appliances India Company Limited. Usha International Limited and Khaitan are the other major competitors of TTK Prestige Ltd.

Financial and Non- Financial Analysis

Financial parameters used for competition analysis: FINANCIAL YEAR 10 (year end march 2010)
1. Sales and revenue 2. Market share 3. NOPAT

4. EPS 5. ROE 6. ROCE 7. Debt Equity Ratio 8. P/E Ratio

Company name Parameters

TTK PRESTIGE LIMITED

HAWKINS COOKERS LIMITED

KANCHAN INTERNATIONAL LIMITED

PANASONIC HOME APPLIANCES

1. SALES (crs)

516.8

285.56

34.66

135.10

2. PAT (crs)

52.43

36.84

0.0359

1.96

3. EPS

43.33

62.99

0.12

2.09

4. ROE

51.3%

112.3%

0.8%

10.5%

5. ROCE

69.18%

132.9%

8.7%

18.3%

6.DEBT EQUITY RATIO

0.11

0.32

7.96

0.23

7. P/E ratio

19.51

14.14

0.00

87.31

Market share of the above companies: TTK prestige limited has market share of 44.32% followed by Hawkins Cookers Limited with 24.5% of the market share. Third position is captured by Kanchan International Limited

which has a market share of 19.6% and lastly we have Panasonic Home Appliances India Company Limited with a market share of 11.58% of the total market.

ANALYSIS OF THE ABOVE FINANCIAL PARAMETERS:

SALES: As we see the sales figure, the highest sales are obtained by TTK PRESTIGE, that means the revenue generated by it is the maximum. 2nd position is held by Hawkins, followed by Panasonic and finally kanchan international limited.

EARNINGS PER SHARE: The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability.

Calculated as:

Earnings per share is generally considered to be the single most important variable in determining a share's price. It is also a major component used to calculate the price-toearnings valuation ratio.

It is the capital that is required to generate the earnings (net income) in the calculation. Two companies could generate the same EPS number, but one could do so with less equity (investment) - that company would be more efficient at using its capital to generate income and, all other things being equal, would be a "better" company. So we can see that the EPS of Hawkins is the highest and therefore the profitability of Hawkins is highest among all the four players. Even it can be estimated that same amount of income can be obtained with the less equity by Hawkins. TTK prestiges profitability is less than Hawkins but quite more as compared Panasonic kitchen appliances and kanchan international ltd.

RETURN ON EQUITY: The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested.

ROE

is

expressed

as

percentage

and

calculated

as:

Return on Equity = Net Income/Shareholder's Equity As we see the ROE is maximum for Hawkins so the profit obtained by Hawkins is highest with the money which shareholders have invested. The second highest profit is gained by ttk prestige with the money of shareholders. It is followed by ROE from Panasonic kitchen appliances and then by kanchan internationl ltd.

RETURN

ON

CAPITAL

EMPLOYED:

A ratio that indicates the efficiency and profitability of a company's capital investments.

Calculated as:

ROCE should always be higher than the rate at which the company borrows, otherwise any increase in borrowing will reduce shareholders' earnings. The efficiency and profitability of Hawkins is maximum as its ROCE is highest which indicates that the income obtained by Hawkins is more than its competitors on the total capital employed by the company. Whereas the lowest efficiency and profitability is of kanchan international ltd as its ROCE is the lowest.

DEBT EQUITY RATIO :

A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity. It indicates what proportion of equity and debt the company is using to finance its assets.

A high debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense. If a lot of debt is used to finance increased operations (high debt to equity), the company could potentially generate more earnings than it would have without this outside financing. If this were to increase earnings by a greater amount than the debt cost (interest), then the shareholders benefit as more earnings are being spread among the same amount of shareholders. However, the cost of this debt financing may outweigh the return that the company generates on the debt through investment and business activities and become too much for the company to handle. This can lead to bankruptcy, which would leave shareholders with nothing. The debt to equity ratio is highest for kanchan international ltd which means that the growth of the company mainly depends on the debt issued by the company. That is if company does not borrow debt then it can get in to losses which it experienced in the previous year. The debt to equity ratio is least for the ttk prestige which means that the financing of the company mainly depends on the equity capital and is very less dependent on debt.

PRICE - EARNING RATIO: A valuation ratio of a company's current share price compared to its per-share earnings.

Calculated

as:

In general, a high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E. P/E ratio is highest for Panasonic kitchen appliances which mean that the market is overvaluing this company and investors are very much attracted and interested in investing in it. It is followed by ttk prestige and Hawkins. The least P/E ratio is of kanchan international ltd which mean s that the investors are least interested in investing in this company as market is undervaluing the company.

Non- financial Analysis comprises of the following factors:

1. Market leadership 2. Technology position 3. International ambition 4. Geographical Distribution

1. TTK Prestige Limited is leading the domestic appliances industry with the largest market share of 44.32%, hence, is the market leader dominating in the Pressure Cookers industry and has a huge product range. It is followed by the second best player in the market i.e. Hawkins Cookers Limited which is the major competitor of TTK Prestige Limited. Hawkins is followed by Kanchan International Limited and Panasonic Home Appliances enjoy little market leadership with small market share as compared to TTK Prestige Limited and Hawkins Cookers Limited.

2. New technologies are continuously being developed in TTK prestige Limited. TTKPL commenced the manufacture of pressure cookers in 1959 with technical collaboration from Prestige Group, U.K. who are the pioneers in the pressure cooker business. For the

manufacturing of Non-Stick Cookware TTK Prestige Limited got into with technical tie-up from Dupont, U.S.A. Safety techniques like Gasket Release System and Gasket Offset Device add points in safe use for the beginners. TTK Prestige Limited is also the first Kitchenware Company in India to receive the ISO 9001 Certification and the PED/CE Certification by TUV, Germany. Prestige has been awarded with Selected Super Brand validated by Consumers and also it is the most preferred brand in Kitchenware segment. Hawkins Cookers Limited is a well known company for its new and innovative products. Also Hawkins Cookers Limited make pressure cookers that are pressure locked for safety like a jet liner door. But No technology has been imported for the last five years. Kanchan International Limited has a small market share in the domestic appliance industry but it has increased its focus on systems and processes towards international standards recently. Quality control across the entire product range is given top priority. There technology initiatives ensure that the manufacturing processes follow top quality standards across the world. All products in their non stick cookware are made as per the technical guidelines of DuPont. There was no technology absorption during this year.

Panasonic Home Appliances India Company Limited is engaged in the manufacture, import, marketing and sales of kitchen appliances and small domestic appliances. They have a strong technology base as the parent company is involved in consumer durables as well. It is present globally and hence has an easy access to technology. Company obtained technical assistance and knowhow from Panasonic Corporation Japan (KABU) through Panasonic Manufacturing Malaysia Berhad for the Development of Mechanical Jar Cooker and new model of Mixer Grinder. Company was able to develop Mechanical Jar Cooker and export models of lid cooker successfully with support of technical collaborators.

3. TTK Prestige Limited exports its products to USA, Europe, South Africa, Kenya, Australia, Singapore, Middle East, Sri Lanka and many other countries. Products manufactured by TTK Prestige Limited meets every relevant global standard such as CE, GS, and UL etc. The companys US subsidiary Manttra Incorporation is growing at around 20% p.a. The Manttra brand pressure cookers are sold through US major retail chains like Wal-Mart, KMart, etc.

Hawkins has exported its products since 1974 to various countries in each of the six continents of the world. All Hawkins pressure cookers are listed by Underwriters Laboratories Inc., USA, and a not-for-profit institution testing products for public safety. Kanchans worldwide distributor network is now slowly expanding into the US, UK, Europe and Russia. Kanchan International has been into the expansion of international sourcing and domestic sourcing for small electrical and non-electrical appliances. Panasonic Corporation is a worldwide leader in the development and manufacture of electronic products for a wide range of consumer, business, and industrial needs. Through relevant, innovative and valuable ideas, Panasonic aims to continually enrich lives and contribute to the prosperity of societies throughout the globe. In Asia Pacific Region, Panasonic has a long standing presence beginning from its first factory in Thailand in 1961. Over the years, Panasonic's operation has rapidly expanded in the region.

4. TTK Prestige presently has manufacturing facilities in Hosur, Coimbatore and Roorkee and distributes from sales branches located across the country to cater to the needs of specific markets.

Hawkins has its headquarters at Mumbai in India. Its factories are in Maharashtra, UP and Punjab. It primarily caters to the domestic market and also it exports its products to around 60 countries hence it has a global presence.

Kanchan International Limited has its head office in Mumbai and its products are widely used throughout the nation. It has 3 divisions in Daman n one in Baddi. They were earlier marketing in Andhra Pradesh and Karnataka only but now it has also expanded to other states like Tamilnadu, Kerala, Gujrat, Rajasthan and Maharashtra. On exports front, it used to market its products hitherto in one country i.e. Sri Lanka, which was expanded to few other countries, namely, Nigeria, Kenya, Middle East Countries.

Panasonic Home Appliances India Company Limited is present all over the world and caters to the needs of the people from all the places.

What is TTKs short term outlook??

1) Capacity expansions to cater to future demand: The company has planned to double the manufacturing capacity at its plant in Tamil Nadu costing almost Rs. 100 Cr. This will be funded by internal reserves. TTK which has been predominantly present in the southern region is now taking all steps to tap northern & western India. For this it is planning a plant to manufacture cookware in this region to tap that market. 2) New & Innovative Product Launches to drive FY11 revenues: TTK Prestige launched 3 new products in the last quarter:
o

Apple range of Inner-lid Pressure Cookers to tap the inner-lid market and attract young households who look for stylish options to suit their modern kitchens with its unique design

Microwave Pressure Cookers to tap the wide penetration of microwave ovens especially in the domestic & international markets

Fresh range of Induction Cook Tops that run on electricity; saves energy and reduces the cooking time All these launches are expected to drive revenues in the short-term.

3) Fall in input costs: Aluminium and steel which constitute a major chunk of its input costs are on a downtrend right now. This will lead to a reduction in its raw material costs and hence is expected to improve profitability. With the economy recovering, consumption expenditure has also increased. Also, the company had given a good guidance for FY11 revenues.

What is TTKs long term outlook??

TTK Prestige has had an impressive performance in the past, clocking excellent growth rates in the last 6 years. It is the market leader in its segment and in fact is the one player providing complete kitchen solutions. But, now the urban market for pressure cooker has almost matured. In the wake of this, its competition with Hawkins becomes further cause for concern.

1) TTKs increasing presence in every segment of kitchenware: TTK Prestige is the only player who straddles the entire kitchen space. Pressure cookers account for only one sixth of the kitchenware market, whereas kitchen appliances and

modular kitchens account for around 20% each and TTK is a major player in these 2 segments. TTK Prestige is witnessing a shift in its revenue segregation and is increasing its presence in the kitchen appliance segment. Its Kitchen electrical appliance segment has increased from 7% in 2005 to 20% right now, whereas Pressure cookers have decreased from 60% to 46%. This shift is expected to enhance its presence in the whole kitchen space and contribute to revenues significantly.

2) Focus on Untapped Potential in rural India: 90% of urban India already owns a pressure cooker whilst barely 22% of rural India owns a pressure cooker. Now, the demand from urban India is expected to be predominantly from upgrading. Looking at this, TTK Prestige has decided to tap the rural market. To tap the rural market, TTK Prestige has formed a new business model involving NGOs and self-help groups to sell pressure cookers to rural India. The initial investment will be by the company while the management will be by NGOs. The company hopes to boost its revenues from the rural market with the help of this model. 3) Innovative Product Launches to tap certain targeted segments with wide penetration: a) TTK is the first to produce a microwave pressure cooker in India and is the worlds first CE marked microwave pressure cooker. In fact the company has applied for worldwide patent for this product. This product is expected to make cooking faster by around 30-40% than any other vessel in a microwave. Right now the penetration of microwave ovens in domestic markets 30-is very low. With the % of working women growing, increasing urbanization and nuclearization, this product is expected to have great demand in future. It is expected that the microwave ovens segment will grow by around 30% over the next few years. Also, in international markets the demand for microwaves exists. This product is expected to drive the growth of its revenues in the coming years, if it captures the market in a big way.

b) Unique-shaped Apple range of Inner-lid Pressure Cookers to specifically target the north and east markets(predominantly inner lid markets) and to attract modern, young households.

c) Launched induction cookers to tap the rural market i.e. they run on electricity and saves energy and cooking time. But again, the viability of this project is questionable looking at the availability of electricity in most villages; where electricity is available only for a certain time period and most of the times is erratic.

4) Competitive Advantage over Hawkins:

TTK & Hawkins compete mainly in the pressure cooker segment. TTK is present mainly in South India and caters to the outer-lid market, whereas Hawkins is predominantly present in north catering to the inner-lid market. Lets have a look at the areas in which TTK scores over Hawkins

Though the market share of both cannot be ascertained precisely, TTK Prestige has a market share of over 50% (approx) in the branded market.

TTK has been enhancing its presence in the kitchen value chain, whereas Hawkins is only into pressure cookers and cookware. Due to this Hawkins is a much smaller player (in term of sales) in comparison with TTK.

TTK has a distribution network which includes direct dealers, authorized retailers and its own retail outlets in 3 formats; one for housing all its solutions & the others for modular kitchens. This increases its brand presence in the eyes of the consumer. Hawkins does not have any retail outlets Coming up with innovative products like microwave pressure cookers, apple shaped cookers etc. a) The fluctuation in the raw material prices of steel and aluminium which constitute around 50-60% of cost. b) Also, the company has plans of entering into the construction business, where it is planning to build a combination of residential and office space as its first plan. The company is expected to come out with more clarity on this business venture in FY11. The real estate industry is yet recovering from recession and usually this industry recovers a lot of debt. Also, this is a completely different business line the company is venturing into, which is a cause for concern. The segment that the company operates in i.e. Pressure cookers and kitchen appliances makes cooking faster and simpler. Increasing consumption expenditure, growing % of working

women, and a shift from non-branded to branded products and a shift from joint to nuclear households is expected to drive the demand for kitchen appliances and pressure cookers. Also, every household has multiple pressure cookers with variance in sizes. With rising incomes, people prefer branded over unbranded products. This will further drive demand.