Point of Contact

Ms Garima, Senior Manager, Magppie

Mr Vivek Jain, Director Ice Cubes, Magppie
Mr Viren, Manager, Ice Cubes, Kirti Nagar Showroom, Delhi
Modular Kitchen Industry
Modular Kitchen is a term used for the modern
kitchen furniture layout consisting of modules
(units) of cabinets made of diversified materials
which hold accessories inside, which can facilitate
the effective usage of the spaces in a kitchen

Originated when the ideas for streamlining work
spilled over into domestic kitchen architecture
because of a growing trend that called for a
professionalization of household work during the
late 19
th
century.
An estimated Rs. 2 lakh crore kitchen furnishings market in
India
Source: IndiaRetailBiz interview of Vinod Jain, Magppie
Modular Kitchen Market Size:1700 crores
Less than 2% , market penetration
Large number of foreign and local players in the market trying
to establish their brand
All players trying to scale up their retail presence radically
Under a new method of defining 'affluence', based on lifestyle
and consumer durables ownership, Nielsen Company India
launched the Nielson Upper Middle and Rich (UMAR) Survey
which estimates a total of 2.5 million affluent household in
India of which 40% has modular kitchen.
Consumers need to be offered a complete solution such as
installation, after sales service and maintenance.




Magppie International
A 30 year old family run business.
Started with the business of rolling stainless steel.
In 1990, got into the fabrication business.
In 1998, brand Magppie was launched.
First design driven stainless steel home
accessories brand to be launched in India.
Presence in over 20 countries.
Forayed into retail with the opening of exclusive
boutiques.

Financial Summary
It is a family owned business and thus do not have external shareholders
The company has taken only long term loans. Thus it doesnt depend on banks for
its working capital requirements.
Sources of Financing : Magppie has an investments arm that has a strategic
alliance with Birla Sun Life Insurance.
The sales have increased to 450 Cr in 2009, showing a growth of 23.4 % year on
year.
Operating profit has grown by 18 % per annum. The reported net profit has grown
by 14.8 % (y-o-y). Thus, the expenses of the company (as percentage of revenue)
have increased, as the organisation has expanded.
Debt-Equity ratio (currently = 1.98) has increased over the past five years(2004-
2009) as the company has started expanding its operations rapidly.
The various turnover ratios (creditors, debtors, inventory turnover) have remained
nearly constant over the period of five years, indicating that the expansion has
been in line with the market demand for their products.


Ratio Analysis
Solvency Ratios (useful for long-term lenders)
Efficiency/activity Ratios (helpful to assess the efficiency and effectiveness of management)

Growth Trend Ratios 2005 2006 2007 2008 2009
Sales Growth 2.29% 11.19% 13.69% 24.44% 23.40%
Operational Profit Growth 0.11% 19.50% 3.33% 31.21% 18.40%
Net Profit Growth 4.25% 22.89% 1.78% 31.33% 14.20%
DuPont Analysis 2005 2006 2007 2008 2009
Profit Margin 11.31% 12.50% 11.19% 11.81% 12.35%
Asset Turnover 2.35 2.33 2.39 2.61 2.72
Return on Asset 26.54% 29.16% 26.74% 30.77% 33.56%
Liquidity Ratio
2005 2006 2007 2008 2009
Current Ratio 0.58 0.68 0.7 0.67 0.67
Quick Ratio 0.23 0.31 0.34 0.25 0.31
Inventory Turnover
8.51
8.65 8.9 8.56 8.57
Debtor Turnover
76.99
87.38 65.28 64.15 87.28
Avg. Debt Collection Period
4.68
4.12 5.52 5.61 4.12
Avg. Inventory Holding Period
42.32
41.63 40.45 42.04 42
Operating Cycle
47
45.75 45.96 47.65 46.12
Interest Coverage Ratio 2005 2006 2007 2008 2009
Operating Profit 3728212 4455263 4603547 6040278 7405846
Interest Expense 7,822 2,122 4,408 8,545 16430
Maggpie
Maggpie
Maggpie
Maggpie
Icecubes
A new venture of Magppie International.
Started in 2007.
Products are manufactured in India.
Modular Kitchen Range designed by a team of
Indian & Italian Designers.
One company owned showroom in New Delhi.
4 Franchisee showrooms (Lucknow, Jaipur,
Jalandhar, Kanpur )

Market Share (India)
Source: Mr Viren, Magppie
Ice Cubes Product Portfolio
Modular Kitchens






Price: Rs 4 lacs onwards
Constitutes about 95% of sales

Wardrobes






Price: Rs 1 lac onwards
Constitutes just 5% of sales
Competitor Analysis
Mostly Foreign Competitors.
Major competitors are Veneta Cucine,
Poggenpohl , Aran Kitchen World & Hacker
Kitchens.
None of the Foreign brands have
manufacturing facility in India.


Veneta Cucine
Present in India for the past 17 years.
27 company owned outlets.
Biggest player in the Branded modular kitchen
Industry.
40 models to choose from ,with finishes & colors
in over 300 combinations.
Price range starts from 6 lacs.
Delivery time is 4 months.
Life time warranty.


POGGENPOHL
Oldest & best known modular kitchen brand in
the world.
Present in 70 countries.
Three outlets in India (Mumbai, Bangalore and
Delhi)
Price range starts from 8 lacs
High build Quality
Delivery time is 3 months.
Warranty of 4 years.



Aran Kitchen World
Joint venture of Aran, Italy & Kitchen World,
India.
Have five company owned outlets (Delhi,
Bangalore, Coimbatore , Mumbai & Chennai).
Range starts from 4.5 lacs.
Guarantee of 1 year & warranty of 11 years.
Delivery time is 3 months.
Company Operations
Supply Chain at Magppie Ice Cubes
Raw material
imported from
Europe, Italy and
Germany.
Manufacturing and
assembly factory is
there is Kundli
(Sonepat), the only
factory in India.
The final product is
delivered to the
customer in 21 days
after the order is
taken.
Chip wood, particle
wood, boiling water
resistant plywood
imported from
Europe.
Drawer system
imported from
Germany.
The best
manufacturer is
targeted to achieve
best quality.
All measurements
are taken at the
clients site.
Suiting Indian Needs
Extensive research on the Indian
kitchen requirements.
Use Boiling Water Resistant
(BWR) Ply as a base material for
cabinetry, which is better suited
to the Indian climatic conditions
and cooking styles.
Brand Philosophy as a brand
creating kitchens that can be
heart of an Indian home
Better quality in half the price of
the foreign competitor.

Emerging Scenario
Expected growth rate for the industry is 14 %
for the coming financial year
Expected growth rate for Icecubes is 35-40 %
Indian manufacturers like Elevation, Godrej &
Prestige are coming up with modular kitchens
at much lower price


Decision Dilemma
Whether the company should continue to target the
luxury segment or the company should foray into the
low cost modular kitchen segment?

Whether the company should expand solely through
franchise model or through company owned outlets?

Strategic Intent
Mission: To produce kitchens by making a craftsman's expertise available
to new trends and to render design an accessible value.

Purpose: Making design accessible

Objective: To become market leader in modular kitchen industry

Goal: To increase its market share from 10% to 25% within 5 years.
Environmental Appraisal
Economic:




Technological:


Increase in per capita income
Increase in interest rates on home loans
GDP increase
Designing Softwares for Customization
Development of synthetic materials
Environmental Appraisal
Social:




Market and Regulation :




Status Consciousness
Rise in disposable income
Increase in on the move jobs
High competition from international
players
High market growth
51% FDI cap on single branded retailing
Organizational Appraisal
Marketing Related
Product Quality
Price
Brand Recognition
Promotion
Cost of capital
Reserves and Surplus
Finance Related
Operations Capability Factors
Production & Operations
Services
R&D System
Recommendations
Not to enter the low end segment.
They will have to compete with Indian Brands like
Godrej, Prestige whose brand perception is very
high.
The market for high end segment is increasing as
conveyed from the ETOP.
Existing operational & financial capability doesnt
justify this mode.
Itll not be in sync with the Magppies brand
identity.
Recommendations
Opening company owned Showrooms:
Since the brand perception of Icecubes is very low,
so they wont be able to expand rapidly through
Franchise model.