See turnover exceeding Rs 500cr in FY10: TTK Prestige

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See turnover exceeding Rs 500cr in FY10: TTK Prestige

India's largest provider of kitchen appliances, TTK Prestige, has forayed into production of safer and energy efficient induction stoves. In an interview with CNBC-TV18 its MD S Ravichandran, MD spoke about the company's business plans and the road ahead.

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Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » RELATED NEWS TTK Prestige Q3 net profit up at Rs 15.33 cr ALSO READ See latest News about TTK Prestige See previous management interviews See what other Experts & Brokerages are saying about TTK Prestige TTK Prestige BSE | NSE 29/05/12 Are Mutual Funds betting on TTK Prestige?

Q: Have you invested in this kind of a demand boost that you are expecting for this new product both in terms of marketing reach as well as in terms of production capacity?

A: We have just built a factory at Uttarakhand in our Roorkee unit 2, which will be commissioned before March 31. We will be making the induction cook-tops from our factory.

It's a very large facility. Therefore we expect to boost the capacity there in the years to come. Secondly, last year we did test marketing of this product, and we are now rolling it out. Very soon you will see new commercials of this product, which is more of a generic kind of demand generation. So we will take the lead, we will be the first off the block and we expect to benefit from that.

Q: What are you expecting by way of revenues and more importantly margins because there will be a lot of initial marketing expenses as well as this plant coming on stream. How would your margins pan out in FY11? Can you give us a margin number, net profit or an operating profit margin for FY10 as well?

A: The margins are a function of how we allocate our marketing expenses and advertising expenses because we allocate different products in different years. So it's very relevant for us at least to try and say that the margin on the new product is going to be low or high.

We believe in working on average margins and I believe we will be at the top end of the margin percentages that we work on in our products.

Secondly, in terms of the year that is going to end soon, we will stick by what we had put out as we will exceed Rs 500 crore turnover. We will double our earnings per share (EPS) and our margin, and EBITDA should be in the range of about 14.5-15%.

Q: Can you tell us how much exactly have you spent for this entire project and where have you got the funds from?

A: The plant has been setup at a cost of Rs 11 crore and that is already on a land that we own. Therefore it's purely plant machinery building etc.

In terms of advertising expenses, we spent a bit of money on press last year to try and generate awareness. This year we are going into television ads where we will be investing quite a bit of money. It is difficult to put an amount to it.

It's going to be a basket of advertising that we will do but induction cook-top advertising will be at the centre stage of our advertising campaign this year.