Kitchen appliance major TTK Prestige expects revenue from its contract manufacturing business to increase to 8-9 per cent by FY26 from about 2 per cent at present. In FY22, the company made revenues of Rs 2,532.15 crore.
To ensure complete capacity utilization, the company is working with major international brands for contract manufacture, Managing Director, Chandru Karlo, told businessline.
“We work with German, European, and American players. They prefer to do business with companies that comply with all the necessary standards, such as ISO, BSCI, and SA8000. No one else complies with all of them other than us,” he explained.
TTK Prestige has five manufacturing sites: Hosur, Coimbatore, Khardi (near Mumbai), Karjan (near Baroda in Gujarat), and Roorkee in Uttarakhand. It employs around 3,000 people across operations.
“Over the past five to six years, we have constantly upgraded capacity, invested in capacity expansion, and made efficiency improvements. So, there is enough capacity for the next 3-4 years,” he said. The company’s annual CAPEX spends are Rs 50 crore to Rs 80 crore.
Currently, it offers products in six major categories: pressure cookers, cookware, gas stoves, induction cooktops, mixer-grinders, and kettles.
These are big categories. We are leaders in all of them, other than mixer-grinders.” In terms of competing markets, he said they compete with Indonesia, Thailand, Vietnam, and Cambodia.
Make in India
Until some years ago, almost 25 percent of revenue came from products made in China.
“Somewhere in the first skirmish against China, we decided that this was not a sensible strategy and decided to move supply chains. Then, at the second skirmish, we put a hard stop. Today, none of our finished goods (in the portfolio) come out of China.”
The company has moved 70-80 per cent of the supply chain to India, though some components that are not available in the country are sourced from China.
Also read: TTK Prestige’s Q1 net up 111%
On achieving its revenue target of Rs 5,000 crore by FY26, Karlo said inorganic growth would account for Rs 1,000 crore, exports Rs 500 crore, and the existing business Rs 3,000 crore–Rs 3,500 crore.
“The only thing in our control is our existing business. Exports are a matter of multiple variables, and inorganic is how fast you can get acquisition. We have made some acquisitions. But I believe that we haven’t found anything that big for us to get to that Rs 1,000 crore. Money is available; however, just because money is available, we are not going to buy whatever we see.”
When making acquisitions, the company seeks out strategic value — a category adjacent to its main distribution, where they either don’t operate or aren’t as strong.
“A strong digital commerce company would offer me technological value. In light of this, we search for anything that enhances and improves our company. Getting something within the same product line or the same geography in the same category where we are, does not offer me anything other than a segmentation opportunity,” he said.