Maharaja's premium play

Maharaja, the kitchen appliances brand, has always been known as a low-priced mass market player. So why did one of the world’s largest appliances company, the $5.2 billion Groupe SEB having such premium brands like Moulinex, Tefal and the top of the line Rowenta, pick up a 55 per cent stake in Maharaja Whiteline Industries, a mid-sized Delhi based company?

Harish Kumar, the 50-something promoter of Maharaja, gives you the answer. He says Groupe SEB wants to straddle the entire Indian kitchen appliances market — products under the Maharaja brand name will continue to be for the mass market and the international brands for the premium segment. Kumar, who is now the CEO and managing director of the company, says “Our aim is to be the largest kitchen appliances company in the country. And our strategy is to straddle every segment of the market”.

Kumar says that the French appliances giant has over 20 product categories. In the initial stages, the plan is to bring at least three of its key brands and segment the market based on price related to design and quality. Maharaja will also add new products such as induction cookers, water heaters, and gas stoves, amongst others.

The company will launch select products such as electric kettles, heating appliances, electric irons, juicers and blenders under the Moulinex and Tefal brands. These will be sold at a premium of at least 15 to 20 per cent of that of Maharaja products. Rowenta products will be even more top of the with a premium of up to 20 per cent over the Moulinex brands.

The new strategy also includes a more aggressive distribution system as the same dealers who sell Maharaja products would not be able to sell the premium brands. So the company will push the premium products through modern trade and large retail outlets. For Maharaja products, Kumar is talking to partners to double the distribution line from 600 to 1200 in the next few months.

Kumar will also appoint about 100-odd dealers initially who will push the premium brands and at a later date may also look at exclusive stores in select outlets. These 100-odd dealers will be located mostly in the metros and the big cities, while the Maharaja dealers will go to smaller towns.

Yet there are some key challenges for Maharaja, and Kumar is clearly aware of them. The home and kitchen appliances industry operates in an overcrowded market with a host of national, regional and even local brands. And there is a flourishing unbranded market which offers products at rock bottom prices. Analysts agree that the entry barriers are limited as the technology is often available off the shelf.

Kumar says he will be able get over the problem by bringing in premium international brands where technology is key and where there is hardly any Indian competitor. It will also be able to get technology which will help him in improving his mass products too.

But Maharaja is conscious of the fact that the market for premium appliances is limited – so, of the Rs 2,000 crore turnover target over the next five years, only a quarter is expected to come from premium products. It is also aware that manufacturing rather than importing the premium international brands will reduce costs and of course expand the market. So Kumar says that the decision on local manufacturing will entirely depend on the kind of volumes that it sells. The thumb rule, he says, is local manufacture is viable only for products that sell more than 10,000 pieces a month.

Maharaja will spend Rs 50 crore for promoting the new products – that is 5-7 per cent of its turnover.

For a young man who started his business from a small office in West Delhi many decades ago, (he had earlier sold one of his companies to Electrolux), the SEB deal is covering a long distance indeed. Whether it will make him the country’s appliances king is of course a different story.