TTK PRESTIGE LTD.

WHISTLING ITS WAY TO THE TOP…

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 INDEX
SL. No DETAILS PAGE No

1) EXECUTIVE SUMMARY 3

2) SITUATIONAL ANALYSIS

a) GRAND STRATEGIES 7

b) GENERIC 10

c) PORTFOLIO 14

d) PORTER’S 5 FORCES MODEL 22

e) PESTLE 27

f) CAP 28

g) SWOT 30

h) VALUE CHAIN ANALYSIS 33

i) SOLUTION/STATEGIES ALTERNATIVES 37

3) CONCLUSION 39

4) REFRENCES 39

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 EXECUTIVE SUMMARY

TTK PRESTIGE LTD.

A TTK Group Chennai based company, TTK prestige is one of the leading
players in the domestic kitchen appliances industry. Its product portfolio spans
from domestic cooking vessels to electrical appliances and has recently forayed
into modular kitchen designing. TTK‟s products include pressure cookers, non-
stick cookware, electrical appliances & gas
stoves all of which command high brand recall and a price premium over competitors.

 The company‟s topline has grown at 150%+ CAGR over the last 5 years.
Profitabilityalso improved and grew by 30%+ over the same time period. The
strategy for maintaining growth and improving profitability has been product
innovation, brand building and financial prudence

 The company has over the years evolved from being a mere pressure cooker
product brand to a full-fledged kitchen appliances brand. Its wide product
portfolio and wide spread retail initiative will help company grow faster than
the industry, while branded industry itself will grow at 5-6%.

 The pressure cooker industry, which has a penetration of mere 30-35% in India, has a lot
of scope of growth with increased availability of LPG & piped natural gas in the next
few years. While the non-stick cookware segment will grow on the back of

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 replacement demand, urbanization and growing health consciousness in cooking
styles.
 We believe the macro demographic trends in India will drive the growth of the kitchen
appliance industry per se. The company‟s vision for new business opportunities such as
modular kitchens and its product innovation provides good business visibility for the
company.

Mainstay Pressure Cooker Segment Growing at a Stable Rate

 Pressure Cookers is TTK‟s single largest segment which contributes around 54% to the
topline currently. TTK‟s pressure cookers are different from other cookers on account
of its outer lid-closing feature. This feature provides the user with some additional
cooking capacity vis-à-vis inner lid cookers

 The Indian pressure cooker market size is approx. 9 million pieces p.a., which is
equally divided between organized and unorganized sector. TTK enjoys 30%+ market
share in the pressure cooker market of which it is the market leader in the outer lid
market segment with 65% market share and 5% of its recently entered into and a
highly competitive inner lid market.

 The branded cookers market has been growing at 5-6% over the last 4-5 years while
TTK has witnessed volumes growth at 13-15%. We expect this segment to continue to
clock similar volumes growth over the next 2-3 years.

 Apart from that, TTK has introduced a niche product through the launch of pressure
handi a few years back.

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  TTK‟s strategy in this segment has been to innovate and give the user a better
product experience. TTK has introduced both aluminum and stainless steel cookers,
the latter of which has given boost to the overall average realization.

 TTK‟s product innovation, superior quality and product technology has

always enabled it to command a superior price realization over its peers. Prestige
cookers are targeted towards middle class and the upper middle class and enjoy a
3-5% price premium over other branded manufacturers.

De-Risking Business by focusing on the Non-Stick Cookware Range

 In a bid to de-risk its business from single product dependence TTK forayed into the
cookware segment. Over the years TTK has emerged as the market leader in the non-
stick segment. It was only recently in FY07 when the company was flushed with
demand and hence operated at 200%+ capacity utilization. TTK increased it‟s
capacity from 500,000 units to 1,800,000 units in FY08. TTK competes primarily
with local and regional players such as Premier in this segment.

 Growing urbanization, health consciousness in cooking styles of customers and the

segments unique ability for bulky sales (majority consumers do not buy a single pan
but a set of non-stick items) will help TTK to grow at a healthy rate. The life cycle for
the non-stick cookware is 2-3 years hence giving rise to a large replacement market.
Hence we expect the cookware segment to grow at a CAGR of 15-17% for the next 2-3
years.

Investing in setting up In-house Kitchenware (Electrical Appliances)

Factory in Uttarakhand

 Electric kitchenware is the company‟s third business segment and has been
growing much more aggressively than the other segment. This segment includes
all types of electric kitchen appliances such as mixer, toaster, chimneys, etc.
The company‟s strategy is mainly to offer complete range of kitchen appliances
while encashing on its existing retail network setup & existing brand which
symbolizes quality, reliability, and safety for all kitchen products for a housewife
 The finished products of this segment are primarily outsourced at present.
The growing demand for TTK‟s electric kitchen appliances has enabled this
segment to grow much faster. On the back volume growth the company plans to
set up its own unit in Uttarakhand at a cost of INR 11 crs. This will enable
TTK to control outsourcing cost, monitor quality and at the same time
aggressively penetrate this segment. It is important to note that the contribution
of this segment to topline has gone up in the last one-year from 13% to 17%. We
expect its contribution to go up to 20% once the new plant is commissioned by at
the end of this fiscal.

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 Evaluation and Outlook

 The company has over the years evolved from being a mere pressure cooker brand to a
full-fledged kitchen appliances brand. Its wide product portfolio and wide spread retail
initiative will help company to grow faster than the industry

 The pressure cooker industry, which has a penetration of mere 36% in India, has a lot of
scope of growth. While the non-stick cookware segment will grow on the back of rising
urbanization & growing health conscious trends. We believe the macro
demographic trends in India will definitely drive the growth of the kitchen appliance
industry

 TTK is one of the leading players in the Indian kitchen appliances industry.

 The company has seen topline growth of more than 20% over the last 5 years
with profitability also improving. The company‟s increased profitability are set to
improve its cashflows as the company is almost debt-free

 Company expect topline & bottomline to grow in the range of 15-17%+ for the next 2-3
years. Margins are set to improve on the back of product mix, insourcing of
electrical appliances and lower interest cost. At the current CMP (Current Market
Price) of INR 295.65/- the stock trades at 9.1x and 8.1x its FY10E & FY11E EPS of
INR 32.5 and INR 36.5.

Company Profile

Corporate Office
11th Floor Brigade Towers,

35 Brigade Road,

Bangalore - 560 025,

Karnataka.

Website: www.ttkprestige.com

Chariman: T T Jagannathan

Business Group: TTK

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 SITUATIONAL ANALYSIS

GRAND STRATEGIES

GROWTH

Why no one will give their Prestige cooker away….

Prestige like other brands like Bata, Godrej and Tata are part of growing up in modern India.
If you think of pressure cooker, Prestige is one name that will come to mind. That the
brand has managed to sustain loyalty over the many years is because as T T
Jagannathan, chairman of TTK group, says “We’ve always kept in touch with our
consumers and have constantly been innovating.”

During this current financial year for instance, it has launched a variety of products, one
being Prestige Deluxe cooker that has a pressure indicator, which the chairman says is a
result of customer research which indicated that cooks wanted to know when the cooker
could be opened. Recently, the group forayed into modular kitchens and launched its
trendy Prestige Smart Kitchen across major cities. There are 100 such stores planned.

Prestige started the chain of exclusive franchise stores with the following objectives: To
create a retail ambience for kitchenware and showcase the vast range the brand has to offer.
This was not happening in the multibrand traditional kitchenware outlet that was cramped and
far below expectations of the fast-changing customer.

TTK also wanted to have a one-on-one contact with the end consumers to understand their
needs better and to rekindle interest in an otherwise low-involvement category. The long-term
vision is to be the country‟s number one small appliance kitchenware company, so they had
to move on from being just a pressure cooker company to a cookware company.

There is very little differentiation in the category - beyond inner lid and outer lid and stainless
steel and aluminium - and, despite some innovations, like the Prestige Smart range of cookers
launched last year, the urban market is almost saturated, with some numbers only in the add-
on, replacement and gift segments. The rural market, while largely unpenetrated, remains the
preserve of unbranded products, which account for roughly 40 per cent of the value share of
the total market; besides, most villagers still use firewood. Kalro, Senior Vice-President
(Marketing) says. "When more and more people have LPG in rural areas, the first thing they
will do, hopefully, is buy a pressure cooker."

Penetration of pressure cookers in the domestic urban market is very high and the future
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growths have to come from rural households. There are rural households who have disposable
incomes but the impulse to buy pressure cookers or other kitchenware has not been generated
due to inadequate distribution reach. The company opened two Prestige Smart Kitchen outlets
in rural areas in Karnataka during the year under report and both the outlets have been
drawing good foot falls and are delivering good sales volume. TTK Group has drawn up a
strategy for rural retail foray to deliver all the products of the group relevant to the rural
customer. If this strategy works out well the Company will be a major supplier to these stores.
This will be in addition to TTKs stand alone rural smart kitchen outlets.

The company is continuously improving the internal control system in all the areas of
operation including the effective monitoring of Prestige Smart Kitchens established across the
length and breadth of the country. TTKs proposed new ERP implementation will further
improve the internal controls.

TTK Prestige is the first kitchenware company in India to receive the ISO 9001 certification
and the PED / CE certification by TUV, Germany. TTK Prestige Ltd is listed on both BSE &
NSE. The company presently has manufacturing set-ups in Hosur, Coimbatore and Bangalore
and 19 sales branches located across the country to cater to the needs of specific markets

Over the last few years, modern retail formats like large format stores, malls, super markets
and hypermarkets have started attracting huge foot falls especially in the urban areas. Some of
these outfits belong to one or more national chains. They cater to a variety of customer
segments at several price points. While this modern format currently covers hardly 3% of the
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 retail business this share is likely to become significant in the coming years especially in the
urban areas. The company is in the process of ensuring its presence significantly in these
modern format stores.

The Company recognizes the immense value of its traditional dealer network. Owing to a
dynamic trade policy which affords satisfactory return on investment to the dealer, the
contribution through traditional dealer network is also growing. The dealer network which
has been largely supporting the traditional product categories consisting of pressure cookers
and cookware is now stocking a larger range of TTKs products and the dealers are keen to
increase the shelf space of its products.

TTK witnessed a decline in the export sale during the current year especially in the US
market. However the sales in the non US markets are encouraging. There is a moderate
growth opportunity for pressure cookers in the non US markets. As pressure cooker is not a
significant part of kitchen appliance market in USA, the company is looking at opportunities
for tapping the high end cookware market in USA. If this opportunity can be exploited then it
affords an opportunity to increase the distribution for pressure cookers also in this market. As
the domestic economy is growing rapidly, TTK will be committing larger resources to the
domestic market and hence export opportunities will be considered only step by step to
optimize the overall earnings of the company.

FINANCES AND INTEREST RATE STRUCTURING

During the year there was no change in the equity capital. The company was
able to finance its growth through internal accruals without increasing debt
capital. It may be noted that over the last three years prior to the year under
report, TTK reduced its debt burden by over Rs.20 crores. There was a further
reduction in the interest burden as compared to the previous year by about
Rs.86 lakhs. The interest cost as a percentage to sales has dropped from 8.4%
two years back to 2.4% during the year under report

INVESTMENTS
The company further recapitalized its wholly owned subsidiary Manttra Inc by
investing
Rs.4.41crores.

During the first quarter of 2005-06 the investments made in TTK Services Private Ltd
was also encashed, which brought in cash of Rs.1.30 crores. With this TTK has dealt
with all its unrelated investments.

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EXPANSION AND CAPITAL EXPENDITURE
The company has during the start of the current financial year i.e. April 2008 commenced
commercial production of pressure cookers in the new facility created at Myleripalayam
Village near Coimbatore. The capacity has been established by adding new machinery as well
as transferring machinery that has been rendered surplus in the Bangalore facility. As
mentioned in the earlier director‟s reports, pursuant to right-sizing the Bangalore Unit is
being used a stand by unit as part of supply chain optimization measures. This standby use
will be phased out during the next twelve months.

TTK is also in the process of establishing a new manufacturing undertaking near Roorkee in the
State of Utharanchal. This unit will manufacture all types of pressure cookers and
cookware. Facility for assembly of other domestic kitchen appliances will also be
incorporated in this unit. As the demand for company‟s products exist in northern India a
manufacturing facility in the North affords logistical advantages and incidental cost savings.
Further, a unit established in the notified areas in the State of Utharanchal is also entitled to
excise duty exemption and income tax concession for a period of 10 years. This unit is
expected to commence commercial production during the course of the financial year 2009-
2010

All the above initiatives together with normal capital expenditure will result in a capital
expenditure spend of over Rs.20 crores spread over the financial years 2009-10 and 2010-11.

The Public Deposits aggregated to Rs.310 lakhs as on 31st March 2008. There were no
unclaimed deposits which remained unpaid as on that date.

As stated earlier, the manufacturing activity in the Bangalore Unit will be phased out during
the course of next 12 months and the land therein admeasuring around 2.85 lakh square feet
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will become available for development. The Board has a massive opportunity to take
appropriate decisions in dealing with this property in the best interests of the shareholders to
ensure considerable revenue windfall.

DEVELOPMENTS IN HUMAN RESOURCES

The direct employment strength stood at 724 as compared to 708 in the previous year.
Improved training and development programmes are in place to achieve improved
productivity in all departments. Industrial relations were cordial throughout the year. Your
company maintained its morale of human resource at the highest level, which enabled the
growth possible. The long term settlement with the union in the Hosur manufacturing
complex expires during
the financial year 2008-09. The directors must work toward concluding a settlement with
more thrust on employee productivity.

THREATS
In the domestic market the threat continues to be from the mushrooming unorganized players
and regional brands. These have two impacts namely commoditization of product categories
and unrealistically low pricing. Though there is high mortality of these players they tend to
impair the rapid growth of quality conscious branded players by putting their legitimate
margins under pressure. As has been the policy, the company continues to invest in
innovation, feature and value addition, customer education and brand promotion to stay above
these unorganized players.

The company operates in a single segment-Kitchen Appliances. The products include

Pressure Cookers, Non-stick Cookware, Kitchen Electrical Appliances and Gas Stoves,
although the company‟s revenue is still dominated by Pressure cooker sales. The company
needs to be less dependant on one product by aggressively promoting & consolidating rest of
its kitchenware products in the segment.

2007-08 2006-07
Domestic Export Total Domestic Export Total

Pressure
12249 1481 13730 9717 2463 12180
Cookers

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Non-stick
3542 32 3574 2424 43 2467
Cookware

Kitchen
Electric 2163 2163 1136 -- 1136
Appliances

Gas Stoves 2254 2254 1766 -- 1766

Others 1375 87 1462 1336 52 1388

Total 21583 1600 23183 16379 2558 18937

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In the export market, the influx of cheaper supplies from China continues to put pressure on margins
as well as expansion of sales.

Alternatives to combat these very problems are as follows:

Option :

1. Launch large-scale promotions to make consumers aware of advantages

of branded kitchenware appliances.

2. Employ cost-cutting methods to further lower prices especially during recessionary

pressure.

3. Investing more heavily in Research and Development so as to make more innovative

products to compete better.

PORTFOLIO ANALYSIS FOR TTK PRESTIGE:

One of the most popular aids to developing corporate strategy in a multibusiness corporation
is the portfolio analysis. Portfolio analysis is the wide set of tools to analyze elements of a
firm's product mix to determine the optimum allocation of its resources. Two most common
measures used in a portfolio analysis are market growth rate and relative market share.In
portfolio analysis top management views its product lines and business units as a series of
investments from which it expects a profitable return. The product lines/business units form a
portfolio of investments that top management must constantly juggle to ensure the best return
on the corporation's invested money. Two of the most popular approaches are the BCG
growth share matrix and the GE business screen.

The BCG MATRIX is a chart that had been created by Bruce Henderson for the Boston
Consulting Group in 1968 to help corporations with analyzing their business units or product
lines. This helps the company allocate resources and is used as an analytical tool in brand
marketing, product management, strategic management, and portfolio analysis. Each of the
corporation's product lines or business units is plotted on the matrix according to the 1>
growth rate of the industry and 2> its relative market share. Placing products in the BCG
matrix results in 4 categories in a portfolio of a company:

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1. Stars (=high growth, high market share)

- use large amounts of cash and are leaders in the business so they should also generate large
amounts of cash.

- frequently roughly in balance on net cash flow. However if needed any attempt should be
made to hold share, because the rewards will be a cash cow if market share is kept.

2. Cash Cows (=low growth, high market share)

- profits and cash generation should be high , and because of the low growth, investments
needed should be low. Keep profits high

- Foundation of a company

3. Dogs (=low growth, low market share)

- avoid and minimize the number of dogs in a company.

- beware of expensive „turn around plans‟.

- deliver cash, otherwise liquidate

4. Question Marks (= high growth, low market share)

- have the worst cash characteristics of all, because high demands and low returns due to low
market share

- If nothing is done to change the market share, question marks will simply absorb great
amounts of cash and later, as the growth stops, a dog.

- Either invests heavily or sells off or invest nothing and generate whatever cash it can.
Increase market share or deliver cash

MARKETS:
The markets of prestige products can be mainly divided on the basis of some
common characteristics into urban markets and rural markets. Although the urban markets
are mostly saturated with low growth rates in the pressure cooker segment the rural
market is experiencing a rapid double digit growth rate with the penetration into rural
households being
the hope for this segment. TTK prestige forayed into the rural markets in FY 06 in
the modular kitchen segment in rural Karnataka and is drawing heavy footfalls in the
retail outlets. The modular kitchen and the electrical appliances markets are experiencing
a high growth rate in the urban markets. The non stick cookware segment is one in which
prestige has a strong position and although the urban market is saturated the rural market is
growing at
a high rate.
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Thus in the BCG matrix the products of TTK Prestige can be divided into stars, question
marks, cash cows and dogs according to the markets in which they are in i.e. according to the
urban and rural markets.

URBAN MARKETS:
STARS: NONE

QUESTION MARKS: Electrical appliances, modular kitchens

CASH COWS: pressure cookers, non-stick cookware

DOGS: Gas stoves

RURAL MARKETS:
STARS: Pressure cookers, electrical appliances, modular kitchens, non stick cookware, gas
stoves

QUESTION MARKS: none

CASH COWS: none

DOGS: none

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BCG MATRIX FOR TTK PRESTIGE: URBAN MARKETS

HIGH MARKET SHARE

RELATIVE LOW

HIGH

MARKET STARS
Electrical
appliance
s

ppliances
sss

QUESTION MARKS

GROWTH Modular
kitchens

LOW C CASH

Pressure
cookers

CASH COWS

Gas stoves
Non
stick DOGS
cookwar

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BCG MATRIX FOR TTK PRESTIGE: RURAL MARKETS

HIGH MARKET SHARE

RELATIVE LOW

HIGH

MARKET
GROWTH

Modular
Pressure
kitchen
cookers

QUESTION MARKS

Non
stick Gas
stoves
cookwa

STARS

LOW CASH COWS

DOGS
 GE MATRIX FOR TTK PRESTIGE:

In consulting engagements with General Electric in the 1970's, McKinsey &

Company developed a nine-cell portfolio matrix as a tool for screening GE's large
portfolio of strategic business units (SBU). This business screen became known as the
GE/McKinsey Matrix.

The GE / McKinsey matrix is similar to the BCG growth-share matrix in that it maps
strategic business units on a grid of the industry and the SBU's position in the
industry. The GE matrix however, attempts to improve upon the BCG matrix in the
following two ways:

 The GE matrix generalizes the axes as "Industry Attractiveness" and

"Business Unit Strength" whereas the BCG matrix uses the market growth rate
as a proxy for industry attractiveness and relative market share as a proxy for
the strength of the business unit.
 The GE matrix has nine cells vs. four cells in the BCG matrix.

Industry attractiveness and business unit strength are calculated by first identifying
criteria for each, determining the value of each parameter in the criteria, and
multiplying that value by a weighting factor. The result is a quantitative measure
of industry attractiveness and the business unit's relative performance in that
industry
COMPETETIVE STRENGTH

MARKET ATTRACTIVENESS

HIGH MEDIUM LOW

HIGH PRESSURE NON STICK
COOKERS COOKWARE

MEDIUM MODULAR ELECTRICAL GAS STOVES

KITCHENS APPLIANCES

LOW

Criteria for market attractiveness:

 Size of market

 Market rate of growth

 Nature of competition and its diversity

 Profit levels

 Ability to differentiate

 Impact of technology, the law and energy effeciency

Criteria for competitive strength:

 Market share.
 Management profile.
 R & D.
 Quality of products and services.
 Branding and promotions success.
 Place (or distribution).
 Brand loyalty
 Efficiency.
 Cost reduction.

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A.D.LITTLE MATRIX FOR TTK PRESTIGE:

The Arthur D Little (ADL) Strategic Condition Matrix offers a different perspective on
strategy formulation. ADL has two main dimensions - competitive position and industry
maturity.

Competitive position is driven by the sectors or segments in which a Strategic Business Unit
(SBU) operates. The product or service which it markets, and the accesses it has to a range of
geographically dispersed markets that are what makes up an organization's competitive
position i.e. product and place.

Industry maturity is very similar to the Product Life Cycle (PLC) and could almost be
renamed an 'industry life cycle.' Of course not only industries could be considered here but
also segments.

It is a combination of the two aforementioned dimensions that helps us to use ADL for
marketing decision-making. Now let's consider options in more detail. Competitive position
has five main categories:

 Dominant - This is a particularly extraordinary position. Often this is associate with some
form of monopoly position or customer lock.
 Strong - Here companies have a lot of freedom since position in an industry is
comparatively powerful
 Favourable - Companies with a favourable position tend to have competitive
strengths in segments of a fragmented market place. No single global player controls all
segments. Here product strengths and geographical advantages come into play.
 Tenable - Here companies may face erosion by stronger competitors that have a
favourable, strong or competitive position. It is difficult for them to compete since
they do not have a sustainable competitive advantage.
 Weak - As the term suggests companies in this undesirable space are in an
unenviable position. Of course there are opportunities to change and improve, and
therefore to take an organization to a more favourable, strong or even dominant
position.

From here the strategic position of an organisation can be established. Managers then need to
decide upon the best strategic direction for the business. For example they might use a Gap
Analysis. According to ADL, there are six generic categories of strategy that could be
employed by individual SBU's:
 Market strategies.
 Product strategies.
 Management and systems strategies.
 Technology strategies.
 Retrenchment strategies.
 Operations strategies.
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 STAGES OF INDUSTRY GROWTH

COMPANY’S EMBRYONIC GROWTH MATURITY AGEING

COMPETITIV
E POSITION

DOMINANT PRESSURE
COOKER

STRONG NON STICK

COOKWARE

FAVOURABL ELECTRICAL GAS

E APPLIANCES STOVES

KITCHEN
ACCESORIES

TENABLE MODULAR
KITCHEN

WEAK

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Porter’s5forcesmodel:-

Porter referred to these forces as the micro environment, to contrast it with the more general
term macro environment. They consist of those forces close to a company that affect its
ability to serve its customers and make a profit. A change in any of the forces normally
requires a business unit to re-assess the marketplace given the overall change in industry
information. The overall industry attractiveness does not imply that every firm in the industry
will return the same profitability. Firms are able to apply their core competencies, business
model or network to achieve a profit above the industry average. A clear example of this is
the airline industry. As an industry, profitability is low and yet individual companies, by
applying unique business models, have been able to make a return in excess of the industry
average.

Porter's five forces include three forces from 'horizontal' competition: threat of substitute
products, the threat of established rivals, and the threat of new entrants; and two forces from
'vertical' competition: the bargaining power of suppliers and the bargaining power of
customers.

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The threat of substitute products or services
The existence of products outside of the realm of the common product boundaries increases
the propensity of customers to switch to alternatives:

 Buyer propensity to substitute

 Relative price performance of substitute
 Buyer switching costs
 Perceived level of product differentiation
 Number of substitute products available in the market
 Ease of substitution. Information-based products are more prone to substitution, as
online product can easily replace material product.
 Substandard product
 Quality depreciation

The threat of the entry of new competitors

Profitable markets that yield high returns will draw firms. This results in many new entrants, which
eventually will decrease profitability. Unless the entry of new firms can be blocked by incumbents,
the profit rate will fall towards a competitive level (perfect competition).

 The existence of barriers to entry (patents, rights, etc.)The most attractive segment is one
which entry barriers are high and exit barriers are low. Few new firms can enter and non-
performing firms can exit easily.
 Economies of product differences
 Brand equity
 Switching costs or sunk costs
 Capital requirements
 Access to distribution
 Customer loyalty to established brands
 Absolute cost advantages
 Learning curve advantages
 Expected retaliation by incumbents
 Government policies
 Industry profitability; the more profitable the industry the more attractive it will be to new
competitors
 Internet era; today competitors need only a website to enter a market
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The intensity of competitive rivalry
For most industries, the intensity of competitive rivalry is the major determinant of the
competitiveness of the industry.
 Sustainable competitive advantage through innovation.
 Competition between online and offline companies; click-and-mortar -v- brick-and-
mortar
 Level of advertising expense.
 Powerful competitive strategy used by a company which can intensify competitive
pressures on their rivals.
How will competition react to certain behavior by another firm? Competitive rivalry is likely
to be based on dimensions such as price, quality, and innovation. Technological advances
protect companies from competition. This applies to products and services. Companies that
are successful with introducing new technology are able to charge higher prices and achieve
higher profits, until competitors imitate them. Examples of recent technology advantage in
have been mp3 players and mobile telephones. Vertical integration is a strategy to reduce a
business' own cost and thereby intensify pressure on its rival.

The bargaining power of customers (buyers)

The bargaining power of customers is also described as the market of outputs: the ability of
customers to put the firm under pressure, which also affects the customer's sensitivity to price
changes.

 Buyer concentration to firm concentration ratio

 Degree of dependency upon existing channels of distribution
 Bargaining leverage, particularly in industries with high fixed costs
 Buyer volume
 Buyer switching costs relative to firm switching costs
 Buyer information availability
 Ability to backward integrate
 Availability of existing substitute products
 Buyer price sensitivity
 Differential advantage (uniqueness) of industry products
 RFM Analysis

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The bargaining power of suppliers
The bargaining power of suppliers is also described as the market of inputs. Suppliers of raw
materials, components, labor, and services (such as expertise) to the firm can be a source of
power over the firm, when there are few substitutes. Suppliers may refuse to work with the
firm, or, e.g., charge excessively high prices for unique resources.

 Supplier switching costs relative to firm switching costs

 Degree of differentiation of inputs
 Impact of inputs on cost or differentiation
 Presence of substitute inputs
 Supplier concentration to firm concentration ratio
 Employee solidarity (e.g. labour unions)
 Supplier competition - ability to forward vertically integrate and cut out the buyer

Newentrants
Prestige cooker is a brand of the company TTK which is known for its food kitchen utensils.
The threat of new competitors is one of the forces of Porter‟s model which in this case is less
because of the cost advantage they provide to their customers on various sizes available in the
market. It has established superior production operations and processes due to experience,
patents and exercise huge control on particular inputs required for production, such as labor,
materials, equipment, or management skills. On the other hand new entrants would have to
undertake huge capital investment to build out their networks and match the scale advantage
of established companies. This is especially true as Prestige Cooker is already in fierce
competition with other more established brands like Hawkins, kanchan, Jaipan. Increasing
urbanization and fast-changing demographics have led to a growing demand for additional
homes, which in turn have increased demand for kitchen appliances. TTK Prestige has
evolved from a pressure cooker company to a total kitchen solution provider. It has
refurbished its product portfolio by introducing gas stoves, mixer-grinders, domestic kitchen
appliances, non-stick cookware, chimneys, hobs, and modular kitchen solutions.

Competitive Rivalry

The competitive struggle is fought through price, advertising and promotion spending and
direct selling efforts. Prestige Cooker is affecting its rivals by its price and the technology of
being balanced cookers all through the world containing aesthetic styles and better
technology efficient. TTK controls more than 60% of the pressure cooker market thus actions
of other companies affect the market share of it but the growing need for cookers tend to
moderate competition by providing scope for growth to the company. Thus fierce competition
does exist but at the moment Prestige, with its variety of ranges seems to have advantage of
price, distribution, perceived quality and thus, market share. TTK Prestige pioneered the
concept of pressure-cooking in India. It has introduced many new concepts in pressure
cookers like new shapes, non-stick pressure cookers and pressure indicator, which have now
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become standards for other manufacturers which makes difficult for other competitors for
rivalry.

Bargaining power of buyers

When the buyers purchase in large quantities then buyer can use their purchasing power as
leverage to bargain for price reductions. The switching costs are low so buyers can play off
the supplying companies against each other to force down prices. As mentioned earlier, the
retail chains are exercising sufficient power over major brands of cookers. Prestige at present
has many outlets; the company has entered the fast growing retail space with its exclusive
„Smart Kitchen‟ outlets, which has helped in boosting brand image and demand. TTK
Prestige is aggressively expanding the number of exclusive outlets, which is expected to go
up from 164 in 92 towns to over 200 outlets by the end FY07. The change in the family
structure in India is clearly reflected in the reducing number of persons per household, which
has fallen from 5.7 persons in 1971 to 5.3 in 2001. Going forward, we expect the trend
towards nuclear families to intensify, with the average number of people in a household set to
fall to 5.1 by 2011.India is also fast moving from an agriculture-based to a services-driven
economy.

Bargaining power of suppliers

Suppliers are weak as the company has the opportunity to force down input prices and higher
quality inputs. TTK Prestige is having a huge turnover, nearly half of which comes from its
pressure cooker, so it could threaten to enter the suppliers industry and make the inputs as a
tactic to lower down the prices of the input.

Also, it must be remembered that TTK not only has its manufacturing plants but also the
capability of importing with research and development units as, for the urban woman,
whether she is a working woman or a housewife, the pressure cooker has become
indispensable. The trend of pressure cooker has grown so widely that people from rural are
also using the pressure cookers as even the government is stressing upon these people to use
pressure cookers so that usage of liquid petroleum gas can be lessened. Its varied variety and
its design which are very common and known to many people makes usability very easy
which tends the people to purchase, also for its long time sustainable in the market makes
them the first priority to purchase.

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Threat of substitutes
TTK Prestige cooker provides cookers with different sizes like pressure cooker, pressure
kadai, pressure handi etc; therefore the threat of having substitute is reduced as customer can
buy according to his own preference within the same brand. Also, for the price conscious
customer, who might migrate to cheaper, TTK prestige cooker, has low range or the low cost
brand variant. Some brand concern persons who think that prestige cooker pressure is a low
class cooker might shift to other brands like Hawkins, kanchan or Jaipan, as these come with
some very good western aesthetic designs. The threat is minimal as Prestige has some
flamboyant designs where all the utensils and other cookware are matched with to increase
the uniqueness.

PESTLE [Political, Economic, Social, Technological, Legal and

Environmental Profile]

PESTLE analysis factors are Political, Economic, Sociological, Technological, Legal and
Environmental. The PESTLE analysis examines each factor to assess what their impact or
potential impact on the organization. In this way, they can prepare strategically for any
changes that need to be made in the organization or simply to have the awareness of the
external market to give them a competitive edge over other firms in the industry. Examples
of each PESTLE analysis factor are:

 Political: what is happening politically with regards to tax policies employment laws,
trade restrictions, tariffs
 Economic: what is happening within the economy i.e. economic growth/ decline,
minimum wage, unemployment (local and national), credit availability, cost of living,
etc.
 Sociological: what are occurring socially i.e. cultural norms and expectations, health
consciousness, population growth rate, career attitudes.
 Technological: new technologies are continually being developed. There are also
changes to barriers to entry in given markets
 Legal: changes to legislation. This may impact employment, access to materials,
resources, imports/ exports, taxation etc.
 Environmental: what is happening with respect to ecological and environmental
aspects.

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EXTERNAL EXTERNAL FACTORS AFFECTING ORGANISATION
FACTORS

POLITICAL GOVERMENTS TAX POLICYAND OTHER SUBSIDARIES FOR USAGE OF

PRESSURE COOKERS

ECONOMIC INFLATION, RECESSION/ DOWNTURN, COST OF INPUTS

SOCIAL URBAN INDIA TRENDS TO EAT OUTSIDE

TECHNOLOGICAL ISO CERTFIED AND WITH US HELP TECHKNOWLEDGE KNOW HOW CAN
BE TRANSFERED

LEGAL MANTRAA- VARIANT OF COOKER WHICH IS EXPORTED TO US, AND

LESS LAYOFF AT THE TIME OF RECESSION

ENVIRONMENTAL STRINGENT SPECEFICATIONS FOR MAINTENANCE OF PRODUCT

QUALITY, AND OTHER METALLURGICAL MEASURES

Competitive Advantage Profile [CAP] of TTK Prestige Pressure

Cooker brand in India

 TTK Prestige pioneered the concept of pressure-cooking in India. It has introduced

many new concepts in pressure cookers like new shapes, non-stick pressure cookers
and pressure indicator, which have now become standards for other manufacturers.
Over the years, it has launched many unique and innovative products.

 TTK which was only into cookware now has around 33% of its revenues coming from
kitchen appliances.

 Company recognizes the immense value of its traditional dealer network. Owing to a
dynamic trade policy which affords satisfactory return on investment to the dealer, the
contribution through traditional dealer network is also growing.

 Penetration of pressure cookers in the domestic urban market is very high and the
future growths have to come from rural households. There are rural households who
have disposable incomes but the impulse to buy pressure cookers or other kitchenware
has not been generated due to inadequate distribution reach.

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 The company is also into the modular kitchen segment, which is the single largest
brand.

 The company‟s current installed capacity in pressure cookers is 40 lakh units. But as it
is running only at 50 per cent of its capacity, there is room for scaling up production
with demand expected to rise in the coming years. The company will enjoy higher
revenues as the market grows in size with no additional capex/interest.

 Company is continuously improving the internal control system in all the areas of
operation including the effective monitoring of Prestige Smart Kitchens established
across the length and breadth of the country. Company‟s proposed new ERP
implementation will further improve the internal controls.

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SWOT analysis

SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses,
Opportunities, and Threats involved in a project or in a business venture. It involves
specifying the objective of the business venture or project and identifying the internal and
external factors that are favorable and unfavorable to achieving that objective.

A SWOT analysis must first start with defining a desired end state or objective. A SWOT
analysis may be incorporated into the strategic planning model.

 Strengths: attributes of the person or company that is helpful to

achieving the objective.
 Weaknesses: attributes of the person or company that is harmful to
achieving the objective.
 Opportunities: external conditions that is helpful to achieving the
objective.
 Threats: external conditions which could do damage to the objective.

Identification of SWOTs is essential because subsequent steps in the process of planning for
achievement of the selected objective may be derived from the SWOTs.

First, the decision makers have to determine whether the objective is attainable, given the
SWOTs. If the objective is NOT attainable a different objective must be selected and the
process repeated.

Matching and converting

Another way of utilizing SWOT is matching and converting. Matching is used to find
competitive advantages by matching the strengths to opportunities. Converting is to apply
conversion strategies to convert weaknesses or threats into strengths or opportunities. An
example of conversion strategy is to find new markets. If the threats or weaknesses cannot be
converted a company should try to minimize or avoid them.

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are
important to achieving the objective. These come from within the company's unique value
chain. SWOT analysis groups key pieces of information into two main categories:

 Internal factors – The strengths and weaknesses internal to the

organization.
 External factors – The opportunities and threats presented by the
external environment to the organization.

The internal factors may be viewed as strengths or weaknesses depending upon their impact
on the organization's objectives. What may represent strengths with respect to one objective

30
may be weaknesses for another objective. The factors may include all of the 4P's as well as
personnel, finance, manufacturing capabilities, and so on. The external factors may include
macroeconomic matters, technological change, legislation, and socio-cultural changes, as
well
as changes in the marketplace or competitive position. The results are often presented in the
form of a matrix.

SWOT analysis is just one method of categorization and has its own weaknesses. For
example, it may tend to persuade companies to compile lists rather than think about what is
actually important in achieving objectives. It also presents the resulting lists uncritically and
without clear prioritization so that, for example, weak opportunities may appear to balance
strong threats.

SWOTANALYSISOFPRESTIGE

S (Strength):

1. The product is treated as a matter of prestige which gave good brand image
2. .Pioneers in this industry,
3. Prestige has the largest range of pressure cookers in the country,
4. with years of trust, reliability and safety as our hallmarks,
5. Price of these cookers ranges in all income group people.
6. Customers review

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W (weakness):
1. Unable to reach huge sales volume.
2. Lacking in high diversified segmentation. .
3. Hawkins provide neck to neck competition in terms of market share.
4. No innovative marketing strategy been adopted so as grab the market.

O (Opportunities):

1. Currently the season which is going begin is marriage season so new families form they
can target those customers in bulk pack.
2. They are declining the direct promotion to attain good market.
3. Capture the range of market namely low-medium users.
4. They have mudra communications as their marketing agent which is a good opportunity to
explore.
5. Safety techniques like Gasket Release System” and the “Gasket Offset Device” add points
in safe use for beginners

T (Threats):

1. Competitors future cookers are being planned to manufacture with Anodized aluminum.
2. Wide range of availability of competitors products.
3. The expected moving of high income group towards the black berry of Hawkins is nearly
threat.
4. Launching of anodized cookers in front challenge before all pressure cookware.
5. Unbranded cookers in market are swallowing 50 percent of market share.

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 VALUECHAINANALYSIS

The value chain is a systematic approach to examining the development of competitive

advantage. It was created by M. E. Porter in his book, Competitive Advantage (1980). The
chain consists of a series of activities that create and build value. They culminate in the total
value delivered by an organization.

PrimaryActivities.

Inbound Logistics.
Here goods are received from a company's suppliers. They are stored until they are needed on
the production/assembly line. Goods are moved around the organisation.

Operations.
This is where goods are manufactured or assembled. Individual operations could include
room service in an hotel, packing of books/videos/games by an online retailer, or the final
tune for a new car's engine.

Outbound Logistics.
The goods are now finished, and they need to be sent along the supply chain to wholesalers,
retailers or the final consumer.

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Marketing and sales

In true customer orientated fashion, at this stage the organization prepares the offering to
meet the needs of targeted customers. This area focuses strongly upon marketing
communications and the promotions mix.

Service.
This includes all areas of service such as installation, after-sales service, complaints handling,
training and so on.

INBOUND LOGISICS

MARKETING AND SALES

The dealers and distributors played a very important role in success of prestige. The dealers
and distributors are dealing with the prestige products alone.

Prestige strongly believes in trade partners and is committed to strengthen them and prepare
them for the challenges ahead. With the current trend of organized retail growing, prestige
believes as the leader in the segment. They educate and instigate change in the trade partners
and help them get to next level.

Prestige smart kitchens have been one of the most innovative marketing moves by prestige.
PSK was conceptualized to do three things. To improve the visibility in terms of display the
entire range of products, to improve the distribution of our new products and to offer the
customer right ambience to shop and educate and communicate the right things about
prestige.

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After three years of successful operation and over 100 stores PSK today offers that edge
over the competition, which cannot be replicated. Besides the three benefits, that PSK
offered, contributes 12% of the revenue. It has prepared to take the challenges of organized
retail.

PSK has instigated the nearby traders to keep the entire range of products. The same traders
were not ready to stock and sell the entire range. This has actually resulted in prestige
increasing its market share for its entire range in that area dramatically.

They have plans to expand the stores across the country. The concentration would be on the
tier 11 cities in south India and tier 1 in non south markets. By the end of this fiscal they shall
be 400 in numbers with 80000sq.ft of retail space.

Outbound Logistics.
The goods are now finished, and they need to be sent along the supply chain to wholesalers,
retailers or the final consumer.

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SERVICE

The Pressure Cooker Centre has been supplying and servicing pressure cookers since 1968
when we started in a little shop in West Perth, Western Australia. With a devotion to a
quality service to our customers, our business has expanded to the point of supplying pressure
cookers now, on a daily basis, to all corners of Australia, New Zealand, various countries
throughout SE Asia (including Thailand, Philippines, Malaysia, Indonesia) and beyond and
spare parts to all corners of the world. The "little store", now in Subiaco, WA, still provides
the personal friendly service that helped us grow to a truly National dimension.

We specialize in Pressure Cookers and their Spare Parts and have sourced quality products
from around the world (several brands are exclusive to the Pressure Cooker Centre) so that
we can offer you a complete choice of quality pressure cookers for all budgets.

We also carry a select range of quality kitchenware and kitchen accessories so that we can
offer you world renowned top-of-the-range cookware and kitchenware. You will find a large
range of SILAMPOS saucepans, stockpots, frypans, steamer sets and double boilers. This
top-of-the range cookware with Thermoplan base (guaranteed for 25 years) is made of the
finest 18/10 stainless steel and is imported directly from Portugal. The Silampos cookware
range is of excellent quality, design and finish and is offered to our customers at the lowest
retail prices. We also offer exclusive to Pressure Cooker Centre, the top quality SILIT
cookware from Germany with its unique SILARGAN ceramic non-stick and scratch-proof
coating, and ZWILLING HENCKELS knives also from Germany and much more. Goto
Kitchenware.

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 STRATEGIC ALTERNATIVES/ SOLUTIONS

The main issues for Prestige pressure cookers are regarding the threat from other kitchen
ware products, ensuring growth in kitchenware market, differentiating its products further so
as to fend off competition.
Alternatives to combat these very problems are as follows:

Option 1. Launch large-scale promotions to make consumers aware of advantages of

variant pressure cookers released by prestige

2. Employ cost-cutting methods to further lower prices while discontinuing

unsustainable products

3. Investing more heavily in Research and Development so as to make more

innovative products to compete better

4. With the improved research and development EXPORTING to USA according to

their standards may prove to be advantageous

Recommended Strategy

In spite of all the aforementioned strategies would help Prestige compete, grow and sell
better, the best option for now would be to employ cost-cutting methods to decrease prices
further. This would not only ward off the significant competition from other players like
Hawkins, Jaipan and Kanchan but would also help in wooing the 80% of the consumers of
India who rely on pressure cookers. It is our understanding that the vast rural sectors
subscribe most to the cookers as they are seen to be cheaper and efficient than normal
cooking methodology. By employing cost-cutting methods this price difference and the
associated perception can be bridged to increase Prestige market share. It is also imperative
for the brand to discontinue the products in its portfolio that are not doing well. Pouring
money into promotion of products that aren‟t selling in the market is unwise Increase in sales
and market share while further cutting down costs, is also likely to increase TTK Prestige
Pressure cooker profit margins which at the moment is a luxury that none of the competing
others players enjoy. Similarly with more revenue, the rest of the strategies and alternatives
can be easily implemented post evaluation to find the best practices to make TTK Prestige
growth in India both, sustainable and profitable.
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Conclusion
By studying products of TTK Prestige India specifically its cooker brand, we have been able
to analyze the brand, the value it has created, the products, the variants, the problems faced
specifically by the brand and those faced by the industry as a whole in recent times. We have
been able to evaluate to an extent the strategies that are conspicuous to us while noting
whether implementing these strategies have helped Prestige or not. In light of our study, we
have been able to formulate certain solutions to the issues identified by us, while
recommending the most suitable on for a variety of reasons. All in all, it is certain that
Prestige brand of pressure cookers, backed by the parent company TTK Ltd. is here to stay
and its market share is only bound to soar with the definite shift towards packaged cookers by
the rural and urban population given to the growing density.

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REFRENCES
 TTK_Prestige-Techno_Research_Report. Pdf

 TTK Prestige report.pdf

 www.prestigecookware/State-of-art-Microwave-ovens-
launched-by-TTK-Prestige.html

 www.a-review-of-the-royal-prestige-hy-cite-corp-income-
opportunity-579302.com

 www.annual-report-ttk-prestige-2008-2009.html

 http://www.prestigesmartkitchen.com/

 http://www.mouthshut.com/product-
reviews/Prestige_Pressure_Cooker-925003557.html

 http://corporategifts.easy2source.com/ttkprestige/productpr
ofile2.htm

 http://www.thehindubusinessline.com/iw/2009/10/19/stories/2
009101950210400.htm

 http://pressure-cookers.blogspot.com/2009/05/prestige-
pressure-cooker-cheap-solution.html

 www.hawkinscookers.com/downloads/pc_catalog.pdf

 http://www.reviewstream.com/reviews/?p=25542

 http://www.americanchronicle.com/articles/view/105565

 http://www.reviewcentre.com/products2171.html

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