Gandhimati Appliances looks to expand pan-India
Gandhimathi Appliances, which makes gas stoves, pressure cookers among other kitchen products under the Butterfly brand, is a household name in south India and its also present in the western region. But it wants to break those shackles of a south-based company and become a national player.
December 13, 2012 / 16:51 IST
Nachiket Kelkar
moneycontrol.com
Gandhimathi Appliances, which makes gas stoves, pressure cookers among other kitchen products under the Butterfly brand, is a household name in south India and its also present in the western region. But it wants to break those shackles of a south-based company and become a national player."We entered north India this year and will enter east India next year. We are in talks with distributors in north...By FY2015-16 we will be a pan India player," VMG Mayuresan, deputy GM, production, told moneycontrol.com in an interaction.The company will also introduce new products and variants in north and east to boost its presence there, he said.Crisil Independent Equity Research says over the past year, its confidence in the company’s ability to expand its presence in newer markets beyond south India has increased. The company has already established a network of 1,500 dealers, Crisil said, adding, Gandhimathi plans to consistently introduce more than 15-20 new product variants each year.However, competition in the kitchen appliances space is intense, with established players like TTK Prestige, Hawkins and Sunflame also expanding and then there are many other small and unorganised companies too, which Gandhimathi will have fight with.Growth will also be driven by expanding its fledgling network of retail stores. Currently, Gandhimathi has just 4 stores, all in southern India. "We hope to have 8-10 stores by end of the current financial year. We will then scale up our retail expansion from FY14," Mayuresan added.This retail expansion will be across India and not just restricted to the south. However, he said that the retail stores, most of which will be franchisees, will only be opened in big cities. Expansion of the Butterfly range of products in tier II and tier III towns will be driven by distribution tie-ups.Its growth doesn't end here. The Butterfly wants to fly high in international markets too. The company recently opened a branch office in the United Kingdom, to tap into the sizeable Indian population in that country. It will forge tieups with distributors there so that its products are available across retail stores in the country.Gandhimathi is also eyeing Europe and the Gulf countries for exports. For now, the company will export kitchen appliances keeping in mind the needs of an Indian household. But in future, it would also look at making products that will target a wider audience, and not just Indians, he said.Exports contributed to just about 1 percent of its total sales of Rs 590 crore in the year ended March 2012. Mayuresan says its too early to talk about specific future numbers, but hopes exports will account 4-5 percent of its revenue by FY16.The company has pegged a capital expenditure of Rs 40 crore for this year and the first half of FY14.Gandhimathi's net sales in the first half of this financial year increased 28 percent year-on-year to Rs 210 crore. Mayuresan said the second half of the year will be much better than the first half helped by strong demand in the festive season (Oct-Dec).He refused to give specific growth figures, but said growth this festive season has been better than that seen in the previous year. Crisil expects Gandhimathi's revenue to grow at a compounded rate of 25 percent over the next two years.Meanwhile, apart from the organic growth, Gandhimathi Appliances is also open to acquisitions. Mayuresan said that like any other company, Gandhimathi will prudently look at any such opportunities, but there is nothing on cards for now. Anil Ambani-led Reliance Alternative Investments Fund had picked 13.7 percent stake in the company in March this year by investing around Rs 100 crore. Gandhimathi Appliances has no other capital raising plans in the near future, Mayuresan said. The stock was down 1 percent at Rs 321 on BSE in late trading on Thursday. It is down near 15 percent so far this financial year.nachiket.kelkar@network18online.com Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
