Butterfly seeks to spread its wings in rest of India

To prepare for entry into new markets, Butterfly has increased its product line by three-fold

Butterfly Gandhimathi Appliances, the Chennai-based owners of kitchen appliances brand Butterfly, is in the process of establishing its brand pan-India. It has already to nine states in 2013, and will reach 28 states by the end of March 2014.

The company, in which Reliance Private Equity has invested around Rs 100 crore as growth capital in 2012, has also recently acquired a division of its associate company LLM Appliances. This enables it to secure the perpetual rights to the brand Butterfly, seen as a step to make its brand-play stronger.

Butterfly would now look to capture share in the north, west and east of India. For now, it has over 100 distributors in the north and the east and around 400 exclusive distributors across the country.

"This year, our major challenge is to make most of our products available in all the states and focus on earning market share in the north and east," says V M Seshadri, managing director of Butterfly Gandhimathi Appliances.

To prepare for entry into new markets, Butterfly has also increased its product categories three-fold (the number of products have increased from 88 to 500). Its portfolio includes gas stoves, wet grinders, mixer-grinders and pressure cookers.

The company's sales of branded products in FY-14 was Rs 508 crore, majority of sales from the southern states. The marketing spends for Butterfly has grown from Rs 2.5 crore in 2007 to Rs 48.6 crore in 2014.

It would be spending around Rs 70-80 crore for the year on advertisements, which is expected to increase an average of Rs 10 crore every year, considering the growth plans, says Seshadri.

The organised market for branded small appliances, including kitchen appliances, is around Rs 4,000 crore, while the total market, including unorganised players would be around Rs 8,000 crore, says Seshadri.

Butterfly acquired the domestic kitchen and electrical appliances division from its associate company - LLM Appliances on March 29, 2014. LLM Appliances is engaged in the procurement and marketing of the appliances under the trademark of Butterfly.

"The merger has made our brand exclusive for our company and this will help us in future operations. Now, we have plans, including the expansion of manufacturing lines for the products that were traded under LLM," says Seshadri.

It is expecting the facilities to be in place by the second half of 2017-18. Products such as induction cookers, rice cookers and electrical tea kettles would then be manufactured inhouse.

With the market expansion and new products, the company is expecting a 20-25 per cent growth in its topline from branded products. It is expecting to earn Rs 1,000 crore by 2016-17. By the time, the share of north and east India is expected to go up to 12-14 per cent, from last years' meagre 4 per cent.

"If the market condition is good, our growth will go up from this and we see the signs of favourable conditions, with sectors such as infrastructure expected to grow," says Seshadri. The company gets around Rs 330 crore in turnover from supplies to government, including the Government of Tamil Nadu's scheme for free supply of some of the home appliances such as mixers.