TTK Prestige was up and about in trade yesterday with a 7 percent gain, although the stock has cooled off today. In an interview with CNBC-TV18, TT Jagannathan, Chairman of the company discussed how business is progressing this quarter.
Demand scenario is looking better and there is a large rural push, which is aiding demand, he said.
It is a pleasant surprise that the rural market is doing well, he added.
The company has launched a range of kitchen appliances under UK brand.
We will grow in the high double-digits on a goods and services tax (GST) adjusted basis, said Jagannathan.
Speaking of the water purifier segment, he said that this segment is very underpenetrated. India requires to purify the water at every level, so we have started with a non-electric water purifier which is the largest market in terms of size.
We will be adding products in the water purifier segment, he further mentioned.
On capex plan, he said that we are contemplating capex now.
Below is the verbatim transcript of the interview.
Latha: How is demand shaping up, is it looking better than the previous two-three years?
A: Yes, certainly it is looking better and there is a large rural push too that is accounting for that.
Latha: Would you say that rural demand is the surprise for you? It is doing much better than previous years and is it even better than urban demand?
A: It is not a surprise. We were expecting this. Lot of government policies, the Ujwal scheme, the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) and so on, there is a lot of rural money now and we were expecting this so we were prepared for this. I won’t say it is better than urban markets but I would certainly say, it is a pleasant surprise that the rural markets are doing well.
Sonia: I wanted to ask you for your key segments cookers, appliances, cookware, where are you seeing the maximum amount of demand coming from?
A: Uniformly, across all segments. Largely in the high ticket items, new innovations, which has helped us increase our margin percentage.
Sonia: When you talk about high ticket items and innovations, you launched a range of kitchen appliances, you also have forayed into the home segment, so have your new segments done as well as you would have expected and what is the growth rate looking like over there?
A: It has done better than we expected. You cannot compare growth rates. When you grow from one to two, it is 100 percent growth. These are new segments. So we have to wait and see. It is 100 percent growth.
Latha: I wanted to go to that rural demand point where you used the words pleasant surprise, you had a great run in the 2000s, up until 2013, year after year, you churned-out growth over 25 percent. Is it looking anything like that?
A: I believe it will get there. This year, in fact, it is looking good. If you adjust the GST, we will grow in the high double digits and it is looking good.
Sonia: You also had a range of new launches recently, you launched a Tattva range of water purifiers, you have the domestic electric mop that you guys launched. I am just trying to understand a little bit about this water purifier segment and some of the other segments that you have gotten into, what kind of scope do you see and what kind of investments would you be making in future for further new launches?
A: Water purifier segment is very underpenetrated. India requires purification of water at every level, urban, rural and so on. So we have started with a non-electric water purifier, which is the largest market in terms of size, not in terms of money, but from there we will be adding products in the water purifier segment.
Also, it is a very competitive segment. So we are hoping to do well, let us see what happens.
Sonia: The investments that you would be making in this segment?
A: I cannot predict that upfront. We are making significant investments in water purification.
Latha: What is your capex plan, are you producing much above your capacity now that you will have to contemplate capex?
A: That is correct. We have almost reached our capacity now and we are contemplating capex now.
Latha: How much might that be, any ballpark numbers at all in terms of what you might invest?
A: It will be over a period of three years. We are working on the numbers. We should be ready with the numbers by April and it will be over a period of three years.
Latha: Two final questions on margins, where is the demand coming? Is it in the higher value-added products and the more expensive products or are you seeing any equal demand for the more mass products?
A: Both are happening in the urban areas, it is high ticket products and in the rural areas, it is the mass-market products. So both are happening.
Latha: What about margins in some raw material have gone up, will they improve, will they stay where they are, I think you need about 12.5 in the first half?
A: Yes. We believe it will improve.