PE deals remain hot in Indian kitchens

The private equity investors who want to grab a major pie of Indian consumption story have found a new investment opportunity - Kitchen appliances space. The urbanisation of Indian kitchens as a r esult of mounting number of nuclear families as well as MNCs' interest for entry into Indian kitchen appliances space have made the sector a sought-after one for PE investors. 

 

During a week's span, TTK Perstige, the leading pressure cooker maker in India has received investments worth more than $40 million from global PE investor - Cartica Capital. TTK has a diversified product profile, with 37% of its revenues coming from pressure cookers, about 20% from cookware, and the remain ing from gas stoves and other appliances. 

 

According to experts, TTK's, a well-known brand in South Indian markets, plans an expansion to North Indian region. With the recent stake purchase, Cartica’s stake in TTK Prestige will go up to 5.68 per cent, making it the largest non-promoter shareholder in the company.

 

Farida Khambata, Global Strategist, Cartica Capital, said, "We believe the company will continue to gain market share in the non-southern regions and we expect strong long-term growth as disposable incomes rise and the organized sector continues to gain share from unorganized players.  "

 

According to reports, another kitchen appliances leader Sunflame Enterprises Ltd is in discussion to raise PE fund to meet its expansion plans. 

 

Last year, Reliance PE had acquired minority stake in Butterfly Gandhimathi Appliances by inves ting about Rs 100 crore. Similarly, Stovekraft Pvt Ltd, which operates through Gilma and Pigeon brands, raised funds from Sequoia Capital and SIDBI Venture Capital.

 

Vinmre Anand of Singhi Advisors said, "When the urbanisation comes into Indian kitchens, innovative appliances are considered as a necessity. The increasing demand for modern appliances has resulted a growth of 20 per cent per annum in the sector, which makes it attractive for investors." Singhi Advisors had advised the Delhi-based appliance maker Maharaja Whiteline to sell controlling stake to French Groupe SEB last year.

 

Similar to the expansion of TTK Prestige, all branded kitchen appliances makers are keen for a pan India distribution network with the outside funding. 

 

Mohit Bahl, Partner, Transaction Services, KPMG India said, "PE funding is needed for several regional players that have strong brands in their own space with an ambition to go pan- India. Also, the sector itself is seeing a shift from unorganised to branded, higher quality products, which is pulling further demand and makes it attractive for investors." 

 

Experts believe that MNCs who look for a strong foothold in Indian kitchen appliances space target the leading organised players in the industry. Apart from SEB's buyout of Maharaja Whiteline, global major- Philips had acquired Maya Appliances that sells its products under the Preethi brand in 2011. 

 

MNCs such as Fisher & Paykel Appliances, a New Zealand high-end kitchen appliances brand, and US-based Westinghouse Electric Corporation ha vealready entered into Indian kitchen appliances space.