Kitchen appliance firms see resurgence in demand from stressed households

They say kitchen improvement is likely to be a top priority in Indian homes; customers may also go for local products instead of Chinese-made ones

Kitchen appliance companies, which have been hit hard by the Covid-19 lockdown, expect a resurgence in demand in the second or third quarter of the year, as the domestic kitchens have been stressed during the lockdown period and kitchen improvement may be a top priority in households now.

TTK Prestige, the home appliance firm of the TTK Group, has said that in the last quarter of 2019-20, around Rs 70 crore worth of sales could not be executed because of the lockdown. While the results are expected to be announced on June 25, it has earlier informed the exchanges that standalone sales for the full year are likely to be slightly lower than the previous year, though profit after tax might be higher due to lower tax rates. 

Notwithstanding this, the company expects to end the quarter with profits after absorbing all idle overheads caused by lockdown during the second fortnight of March 2020. The company expects to see demand revival as and when the lockdown gets eased further. All of its factories have resumed operation after May 6, 2020.

"Domestic kitchens have been stressed during the past two months and it is expected that kitchen improvement will be the main agenda in homes in the next two quarters," it said. Over the last few years the company has strengthened its local vendors for the appliances portfolio and dependence has come down to 10 per cent of sales. Even for these Stock Keeping Units the company is developing local vendors so that it can cater to domestic demand in the near future, it said. It is also expecting to see export customers shift their sourcing to India from China and is in constant engagement with them, it said.

 

Butterfly Gandhimathi Appliances, a Chennai-based maker of pressure cookers, mixer grinders, non-stick cookware, electric rice cookers, LPG Stoves, juicer-mixer-grinders among others, has said the lockdown had a huge impact on its financials during the quarter ended March 31, 2020, with a loss of Rs 40 crore in revenue during the period. 

The actual revenue stood at Rs 110.6 crore, as compared to Rs 149.5 crore during the same period of previous year. Profitability was also impacted and inventory remained high. Sales of kitchen appliances for the company declined 3.6 per cent quarter-on-quarter to Rs 83.3 crore in Q4, from Rs 133.4 crore during the previous quarter, while on a year-on-year basis it has seen a decline of 27.2 per cent from Rs 114.4 crore registered during March 31, 2019. However, for the 12 months ended March 31, 2020, sales grew 0.7 per cent to Rs 517.8 crore from Rs 514.3 crore the previous year.

"There will be revenue loss in FY21 because of a very weak Q1 due to lockdown. However, we expect there will be better opportunities from Q2 onwards because of increased cooking in homes for safety," said the company adding that it has taken steps to reduce fixed costs to achieve breakeven in profitability. 

Its debt is also expected to go up during the year, but is expected to come down by March, 2021. The company is currently in talks with the banks to arrange temporary loans to tide over the situation and expect it to come back to normal by the end of the current fiscal year.

Says S Subramanian, Managing Director, Preethi Kitchen Appliances: “Covid has impacted all industries and Kitchen appliances is no exception. One good thing is that consumers are spending more time with family during lockdown. Both men and women are spending time in the Kitchen and experimenting with new recipes, leading to increased usage of kitchenware." 

Covid-19 has also brought a stark change in consumer behaviour both in urban and rural markets. Neighbourhood stores are gaining prominence as consumers move from destination shopping to local dealers. 

Subramanian says they are spending less time at the store and are more comfortable buying a trusted brand than exploring multiple options. There is an increase in the online search for recipes, cooking classes and appliances that can help them in their journey. 

"Strong brands with higher preference tend to gain during these times as consumers are less impulsive and more focused on what they really want. That said, the industry recovery is difficult to predict given the uncertainty that COVID -19 has shown but we hope for a speedy return to normalcy,” he adds.