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Deal chefs drawn to changing Indian kitchen

Reghu Balakrishnan  |  Mumbai 

With consumer appliances segment growing at 30% yearly, firms begin scramble to enter.

With changing lifestyles, are changing considerably and that’s spicing things for appliance makers. Seeking newer opportunities, partnerships or acquisitions seem to be a preferred method to enter the fast growing market or take on strong incumbents to raise market share

In a significant deal, French home appliance maker Groupe SEB had acquired 55 per cent in Maharaja Whiteline, the Delhi-based electrical appliance maker, last month. In January 2011, Philips had strengthened its Indian presence by buying out Maya Appliances, that sold products under the Preethi brand. The deal was supposed to be clinched at Rs 400-450 crore.

Deepesh Garg, managing director of O3 Capital, said, "The consumer appliances segment in India is growing at a compounded annual rate of 30-plus per cent and is still fragmented, for historical reasons. This, clearly, provides an opportunity for two-three large players to create leadership positions, especially in segments like kitchen appliances.”

According to data from VCCedge, four merger and acquisition deals took place in the kitchen appliances segment last year, against none in 2009 and 2010.

Says T T Jagannathan, chairman of the TTK Group, one of the leading players in Indian industry, “The concept of the Indian kitchen has changed completely. From an old concept of a small corner room, the kitchen is moving to become central in houses. The increased individual interest in cooking causes entry of more multinational corporations, launching modern equipment.”

TTK Prestige Ltd, the maker of cookers and kitchen appliances, had announced plans to buy Italian firm Bialetti’s ailing Indian unit, Triveni Bialetti Industries, to expand production capability. “There are a lot of foreign players interested in the Indian kitchen appliances market and at least 20 players are in talks with us for entry,” Jagannathan added. However, he refused to disclose details.

Agrees Garg, “There is a lot of inbound interest in the space from large global players, keenly looking to acquire platforms in the growing Indian markets that can provide access to regional or pan-India distribution, local management talent and relatively strong brand recall with consumers.”

Some deals in home appliances & kitchen space in 2011
Date Target Buyer Deal value ($ mn)
19-Dec Industries  Groupe SEB
18-Nov Aran KitchenWorld India  Kreon Financial Services 
Sep 30*   Triveni Bialetti Industries  TTK Prestige  6.05
1-Jan Maya Appliances Koninklijke Philips Electronics NV 76.28
Source: VCCedge; *A case where an Indian company acquired a foreign one

Last month, Kreon Financial Services Ltd, a non-banking finance company (NBFC) based in Chennai, acquired a controlling stake in Pvt Ltd. The latter is a joint venture between Aran World, an Italian modular kitchen firm, and Chennai-based Bohra Kitchens of the Bohra Group, with 49 per cent and 51 per cent stake holdings, respectively.

Last month, Fisher & Paykel Appliances, a high-end kitchen appliances brand from New Zealand, entered the Indian market, joining hands with Shivam Industrial Corporation as retail distributor. Similarly, Westinghouse Electric Corporation, the US-based $2.6-billion consumer durables firm, entered India by launching its kitchen appliances last November.

Apart from global majors, private equity investors are also coming in to tap the booming market in India. Mayank Rastogi, partner, PE and transaction advisory services at Ernst & Young, said, “This is an interesting category for investments, as it has all the attributes an investor looks for -- replacement demand, GDP growth playing into increasing the target consumer set, as well as greater spending power with existing consumers, scope for consolidation and roll-ups in the industry, and ability to differentiate through brands.”

In 2010, Stovekraft Pvt Ltd, which operates through the Gilma and Pigeon brands, raised funds from Sequoia Capital and Sidbi Venture Capital.

First Published: Thu, January 12 2012. 00:42 IST