As Finance Minister Nirmala Sitharaman presents her Budget on Monday, the grandson of a yesteryear finance minister has no expectations or demands for his sector. TT Jagannathan, Chairman of the Bengaluru-headquartered TTK Prestige Ltd, says, “As long as they don’t touch us, I’m fine.”

With the TTK group singed by his own grandfather, TT Krishnamachari, as the minister for commerce and industry in the 1950s (see box), Jagannathan is well aware of the impact of governmental action on corporate fortunes. “In the movie Fiddler on the Roof , the Jews ask the Rabbi, ‘How do you bless the Czar?’ He replies, ‘I will pray that the Lord keeps the Czar far away from us. That’s the blessing I want’,” he reminisces, tongue firmly-in-cheek.

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Keeping home fires burning: TTK launched a Prestige Lifestyle store in Bengaluru last June for a top-end range of home appliances

 

Recipes for growth

With things now going swimmingly for the ₹2,073-crore cookware giant, he doesn’t have to look elsewhere for support. Like for most companies, the first quarter of this financial year was a washout with sales dropping to ₹215.11 crore, compared with ₹389.86 crore in March 2020.

However, the September 2020 quarter’s revenue, at ₹597.4 crore, was better than the Sept 2019 revenue of ₹579.8 crore. Though, higher expenses dented the net profit — ₹62.17 crore (₹80.28 crore).

Says Chandru Kalro, Managing Director, “We knew that once the initial phase of the lockdown was lifted, everybody would be out buying. Fortunately we had stocks, and demand has been like a coiled spring.”

The lockdown last March hit TTK’s five factories, which till then were operating at 100 per cent capacity. Recalls Jagannathan, “It was difficult in the beginning because of the migrant worker problem, many of whom were on suppliers’ rolls. We too have a few but we paid them to stay where they were.”

Kalro says the company was prepared for the worst. “We recast our budget, controlled costs, conserved cash and took a decision which stood us well — (namely) that we were not going to unnecessarily reduce advertising.” The company figured that with people mostly home-bound, the kitchen would see quite a bit of action.

Sure enough, growth has come roaring back. Jagannathan says all categories are growing at 20 per cent or above, in spite of a price increase of over 12 per cent due to rise in input and packaging costs. In the case of pressure cookers, with manufacturers in the unorganised sector facing disruptions in supply chains, organised players like TTK are seeing a surge in demand; TTK now claims 40 per cent of the ₹1,700-crore annual market for cookers.

Moving up the value chain

The pandemic notwithstanding, TTK launched a Prestige Lifestyle store in Bengaluru last June for a top-end range of dishwashers, chimneys, hobs, air fryers et al. Alongside its 595 Prestige Xclusive stores, it plans to have three Lifestyle stores in Bengaluru and one in Mumbai. A few years ago, it launched the lower-end Judge brand of kitchenware as a flanking brand. With no advertising, the brand, which also sports the TTK Prestige name, retails only in markets where Prestige won’t enter.

Kalro explains that the Lifestyle store strategy is still a learning phase. “We are re-thinking the entire strategy, which is why we are rolling it out mostly in Bengaluru for now.” The company has to work out whether it needs two store brands since it already has an extensive network of Prestige Xclusive stores.

Meanwhile, the company is sourcing fewer finished products from China — from 30 per cent to barely two per cent now. That led to supply disruptions and the company struggled to meet the huge demand for sandwich toasters, ovens, rice cookers and air fryers after the unlock. “But we decided to invest in moulds and dies instead of importing from China. It slows us down a bit but the finished product cost is about the same; importing was a lazy way of doing business,” explains Kalro. And, of course, as with many other companies, TTK is seeing a spike in digital sales, which account for 20 per cent now.

Pan of action

TTK plans a ₹50-crore capacity expansion — from 6 million to 8 million pressure cookers; from 5 million to 12 million non-stick cookware; and doubling the present capacity of about a million for its newly launched stainless steel cookware.

As for funding, the company has a consolidated cash balance of ₹56 crore, at the end of the first half of FY21. Debt-free TTK also has ample reserves and investments of ₹473 crore.

However, Shyam Sekhar, Founder, ithought Financial Consulting LLP, says that the company’s operating margins and return on capital employed have been declining on these parameters since its best year in FY 2012. Operating margins, for instance, declined from 18-19 per cent in FY 2011 to around 14 per cent now, he says. “In terms of operational efficiency, 2011-12 was its best; if the company can improve its efficiency, things can be different for it.”

TTK had targeted revenues of ₹5,000 crore by end 2025 but, as Jagannathan says, the pandemic has delayed that to 2026.

A good cook, he says his three sons were fond of the birthday cakes he baked for them as kids, which they called ‘Appa’ cakes. Now, with the tradition continuing for his grandchildren, it’s ‘thatha’ cakes for them!