TTK Prestige Limited (517506) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to the TTK Prestige Limited Q1 FY '21 Earnings Conference Call, hosted by AMBIT Capital Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Dhruv Jain from AMBIT Capital. Thank you, and over to you, sir.

Hello, everyone. On behalf of AMBIT Capital, we welcome you to today's 1Q FY '21 earnings call of TTK Prestige. We have with us the management of the company. Over to you, sir, for your opening remarks.

Yes. Welcome, everybody. As you know, we have had -- just had a very difficult quarter because of the COVID situation, wherein almost more than half the time was lost during lockdowns. And -- but the good news is that given -- our category seems to be doing quite well. And even though many of the channels were not functional during the period of -- after opening, in June, we have exceeded 90% of the June of last year in terms of demand, even though only 60-odd percent of the channels were working, which means that the existing channels, which we're working have done better, and we have managed to show a positive EBITDA during the quarter. We have used the quarter to do many initiatives to take the company forward. And during this quarter, while not reducing any manpower or not holding back any payments due to salaries, we have still managed to bring down the breakeven of the company. And by -- through improved efficiencies and some very good measures that we have taken. We have used digitization across the organization to see that the company is in a very good position to sustain the business in these times. And we are seeing that going forward, we are in a good position to take advantage of the channels that are already open as well as the channels that are going to open. I'll leave the floor to any questions now.

[Operator Instructions] First question is from the line of Avi Mehta from IIFL.

Sir, you have pointed to encouraging growth across channels that have opened in July. Could you share what percentage of channel is now open? And what growth are we trending at in July?

You're -- see, first, the channels that have not opened are the large modern format channels because the malls, as you know, have not opened. The general trade has opened in most markets, of course, with the lockdowns coming in on and off. Our own exclusive PXL channel has opened in the markets which have been allowed to open. And both these channels have shown a growth, actually a double-digit growth during this period. And e-commerce, of course, has surged ahead. E-commerce has been doing exceedingly well ever since it has started. And going forward, we are expecting that the modern formats will open slowly, and then we will probably get them back also. But so far, we are seeing that without these -- some of these channels, we are actually at 90-plus percentage of our normal sales, with less than 2/3 of the channels really open.

Okay. Okay. So with less than 2/3 channels open, you're already at 90% plus in July?

Yes. Yes.

Okay. Okay. And sir, that the things are still improving as we speak? Or how is that? Kind of because there have been vertical lockdowns that have been introduced recently. So I just wanted to kind of get that as well.

The new lockdowns are not so bad because most of the markets are allowing shops to open for a specific period during the day. Maybe they are having a couple of days lockdown like it is there in West Bengal, et cetera. But we are managing. We are seeing that when the stores are open, there is enough crowd in the market. People are looking at coming to the market and buying, and we are seeing some substantial offtake there -- with them. And the key measure I see is when we sell and if we are able to collect the money on time, it means that the money is -- that the sale is quite robust and sustainable.

Fair point, sir. And sir, second is, if you could elaborate, you have said 2 comments that I wanted your -- if you could elaborate. One is the channel changes in the post-COVID world, which you have done. And two, what are the various programs that you have undertaken to reduce this breakeven point that you talked about?

So I mean, online, clearly, from about 10% to 12% has now gone to over -- about 25% of our total sales during this period. But I think that is to do more with the buying habits which have come because of this fear of going outside. But even with the general trade because the modern format is closed, the business has moved to the general trade and to our own exclusive channels. So that is why we are looking at some good sales. In terms of the measures that we took, obviously, we are looking at enhanced productivities in our manufacturing. I'm very happy to report that all our 5 units are working as soon as the lockdowns opened in May. All the 5 factories are working. We have been -- we started with one shift because that was what was mandated. Now wherever necessary, we are able to operate multiple shifts also. We are in a position to keep the supply chain going. And we will be in a good position to come to the season.

And sir, this channel changes you're meaning and you meant the mix or you are doing something specifically for the channel as well? As -- you already just mean that GT, exclusive and online are the ones that we're giving? I just wanted to kind of confirm.

Yes. GT, exclusive and online are the ones that are operational at this point in time. And what we have done is with the online platforms, we've had a full-fledged joint business plan done with them. And we are going as per that plan. There are a lot of digital initiatives, which we are taking with enhanced digital advertising. And the idea is to dominate the marketplaces that are open. On the other front, we've changed -- we've -- and we've gotten the channel financing for our distributors also to make sure that the collections happen. And we are also working very hard to see that their secondaries are also collected by working along with them. There are a lot of initiatives like -- since people can't travel, we've digitized a lot of our internal processes so that they can continuously service these channels.

And sir, these channel financing is done through our books or anything like that? Or no, nothing of that sort of? Is there a recourse?

No, no, no. We have got finance of NBFCs and -- to finance them. There's no recourse to us.

And sir, lastly, you said that you've optimized the inventory -- channel inventory. Does that mean that there would be a divergence between primary and secondary sales in the quarter?

No. I didn't say optimized channel inventory. What I said was we optimized our own internal inventories. Obviously, we needed to make sure that we are in a position to supply-demand. As soon as the lockdown opened, we did see a lot of pent-up demand. And we had stock for that because remember, we were locked down in the middle of March -- in March. So there was enough inventory. And subsequently, after the pent-up demand has been satisfied, we are -- our factories are in full flow. So there is no problem in terms of supply chain.

Sir, channel inventory is flattish, sir? Or how would you put that, sir?

Channel inventory in my mind would have reduced a little bit, but it is not in a very bad situation. It is quite healthy.

Next question is from Aditya Bagul from Axis Capital.

Sir, I have 2 questions. Firstly, just wanted to understand from a gross profit -- gross margin perspective. We've seen a reasonable drop in terms of gross margin. So can you allude what could that be -- what could be the reason for that? That's question number one. And question number two is, if you could probably talk about the 3 large segments that we have: pressure cookers, cookwares and appliances. How was the consumer behavior during the lockdown? Right now, what we're seeing in July, August? And what you envisage over a period of the next 3 to 6 months?

So the answer to the second part of your question first. When the lockdown opened, we saw a surge in electrical appliances. We saw in, for example, mixer grinders; for example, gas stoves; for example, baking products; baking products, in particular; cleaning products, in particular. There was a huge surge in demand for these. The nonstick cookware, there was a huge surge in demand. So the product mix per se has changed a little bit. But that's, I think, going to stabilize going forward back to its old levels as we go along. And therefore, because of the mix change, you will see that the material cost ratios have slightly gone up. But the overall margins that have gone down is because that the operating leverage has come down, given that we had only 1.5 months of operation. Otherwise, there is nothing serious that has happened.

Understood, sir. So the gross margins are purely a function of a product mix change in the favor of probably appliances?

Absolutely.

Exactly.

Yes. Understood. So sir, could you also elaborate a little in terms of how you are seeing the second half of the year pan out? What is the environment -- what do you envisage that the environment would be probably towards Diwali or later half? And secondly, if you could probably talk about, if you're seeing a difference between the northern part of India and the 4 southern states?

Second half sales, we're looking at being as good, if not better than last year because of the pent-up demand, the weddings and all that will move into second half. Chandru?

Yes. The weddings have all postponed to the second half. And so -- therefore, we are quite buoyant -- optimistic about the second half. Secondly, Diwali this year is in November and the right bang into the third quarter. So I think that is a good thing for us normally. The third thing that I'm seeing is if you look around during -- because of all these work-from-home and whatever has happened, and also -- I also believe that in most of the people's homes because they are not eating out, they're not going out on holidays, they're not going for movies, there's an increase in disposable money that is available with them. And so we are quite optimistic about our own categories. And if you see, most of the categories have bounced back even better than people had expected. So right now, it's all a question of how much portion of the market is open, how many channels are open. The demand, I don't think is going to be an issue, and the second half is going to be quite good.

And there's no big difference between north and south. There was in the beginning because south market was opened before the north market, but now it's evening out.

[Operator Instructions] Next question is from the line of Aditya Kondawar from JST Investment.

Sir, I had a question on the channel itself. And I think that has been answered. So thank you.

Next participant is Achal Lohade from JM Financial Service Limited.

Sir, my first question was, in the press release, you've talked about rural being soft. What we've been hearing is that rural is usually doing better than normal. So just thought of getting some more color from you on the rural front for us as well as the investors.

You see -- let me answer that question. You see, when we say rural, we mean what goes through MFIs. We don't mean the rural market per se. The rural market per se that has been dealt with by the tier 4 towns has been very strong. But the MFIs because of the moratorium and loans and so on, they have not opened up their loan books yet, and they're not giving new loans for the durable purchases, but that will start happening this month or next month. That's what we mean by rural sales are soft. It's the MFI-routed rural sales.

Understood. But otherwise, ex of MFI, I mean, how has been the trend in the tier 2, tier 3 towns?

Good.

Understood. Secondly, with respect to the A&P cost, has there been any reduction on a Y-o-Y basis with respect to A&P cost for the quarter?

Chandru?

Yes. This quarter, we've slightly reduced the A&P. Normally, what happens is we spend on a steady-state basis. We are happy to tell you that unlike other peer groups, we have continued to advertise. We launched a full-fledged exchange scheme during the quarter because we believe that was the need of the hour for many people as soon as people came out of the unlock. But in overall -- as an overall percentage, it was slightly lesser because the amount of time we had to advertise itself was lesser. But we have advertised in all media. We've advertised in newspapers. We've advertised in television. We've advertised in digital. Going forward, the advertising numbers will come to similar to what it was last year. But for the first quarter, I think this was a lesser advertising period.

So would it be fair, sir, that it would have gone down to, as a percentage of revenue, maybe around 4%, 5%? Or it was still percentage terms similar?

As a percentage of revenue, if I were to look at around 4%.

Compared to 6.5%, 7% in the base quarter in 1Q FY '22.

Yes. Yes.

If I say next year half, yes, correct.

Understood. Another thing was with respect to the employee cost. So how do we look at this? Is it entirely to do with the less incentives because of the lower sales? Or has there any cost optimization on the employee cost front?

No. Actually, what has happened is after we opened the factories, the casual labor was employed there based on the number of shifts that we were operating. So there's some contractual manpower that got reduced, which is what has caused the reduction in the employee cost.

Yes. And also remember that all travel has come down.

Yes.

Okay. With respect to capacity utilization, can you help us with the July capacity utilization, sir?

July, we are talking about somewhere near 80%.

80%. And when you say 2/3 of the market is open, I mean, is it largely the large retail format which is shut, which is driving this 1/3 reduction? Or it's more than that?

That and lockouts -- lockdowns. Every now and then, there's one. For instance, particularly the market in Bangalore is still in lockdown, and that's a very important market. So -- and we are not able to predict -- you can't -- we can't tell you exactly what percentage we lost because of lockdown because we don't know where it'll be lockdown, when it'll be in lockdown.

Right. And you mentioned about 80% capacity utilization, but as a percentage of, let's say, July sales of last year, have we reached to that number pre -- or rather last year July number? Or it's a little less than that?

July. You want July, that's around that -- this quarter?

Yes. I mean some of the companies are commenting about how the July month has been.

July month has been good, but I don't think we can give you numbers for this quarter.

Okay. Okay. That's fine. And with respect to the raw material prices, have you seen increase in the raw material prices in last couple of months as the commodity prices have moved up? And b, is there any plans of price increase? And if so, when and how much now?

Actually, our main commodity is aluminum. It has not moved up. It is rather flat. There's a marginal increase in stainless steel, but it's not enough to have a price increase.

[Operator Instructions] Next participant is Chirag Shah from Valuequest Investment Advisors.

Sir, my question was on cooker segment. So we have seen about [Technical Difficulty] decline in this quarter, and our competitor is...

Sorry to interrupt you. Your voice is breaking. May I request you to speak a little louder.

Yes. So sir, my question was on cooker segment. We have de-grown by around 59% in the quarter. When we look at your competitor number, their decline is around 30%. And in Q4, if I remember correct, you have said that our new range of such should do good in Q1, Q2 of this year because of -- we missed some channel filling at -- in -- at the end of the March. So we haven't seen any reflection of those in our numbers. So what has led to such decline? And how you look cooker segment doing going ahead?

It's not a decline. It's -- yes, the sale has declined. But I don't think there is any structural change. Svachh is doing quite well in the market. It accounts for more than 90% of our sale today in terms of our platform. We believe that -- we've also advertised during this quarter. I think it's -- I don't want to comment on how our competitor has performed. Maybe it's a function of many things. Their own internal promotions, maybe the way they have done with what they have done with the balance orders of the fourth quarter. There are so many factors that go in. At a retail front, we are seeing quite buoyant performance of our pressure cookers. There's nothing wrong with it. It's a question of ups and downs in the quarter. I think we should wait for some more time. This is not exactly a period where things have been normal.

Okay. But do you think we have lost some market share in the last couple of quarters? Or you still believe that we have been maintaining our share or our share would be going up?

I believe we have been maintaining our share. We may not have yet gained share, but I think we are maintaining our share.

Okay. And sir, as the second question on other category. So in Q4, again, you have mentioned that demand for cleaning solution, et cetera, have gone out of roof. But when we look at this quarter number, on a lower base also, we haven't seen much traction, and the decline is similar to what has happened to other category. So again, how we should read this performance here?

I don't think that is correct. Cleaning solutions, as a vertical, has done more than last year in this quarter for the same quarter, which...

I mean, 1.5 months.

And we had only 1.5 months to do that. In fact, it's the only vertical which has grown over last year.

So what has led to then decline similar to -- so overall 17 -- INR 10 crore revenue versus INR 17 crore, which is...

Which is affecting increase?

In other category, overall revenue is down by 41%, INR 10 crore versus INR 17 crore. So what if kitchen -- cleaning solution has done extremely well, what has led to the decline then?

Other appliances dropped there compared to kitchen appliances.

I don't know whether there's a classification issue here. But let me tell you that cleaning solutions has grown over the previous year in absolute numbers in this quarter.

Next question is from Tejas Sheth from Nippon India Asset Management.

Sir, any idea the markets which are under lockdown, are they getting serviced through e-commerce channel?

I think so, yes, definitely.

Okay. Then the 2/3 of market opening and we are recurring this kind of sale doesn't -- shouldn't matter, right? We should not be linking it to that because the same is getting service through e-commerce. So the demand is kind of channeling itself through other channels, right?

No.

No, no, no. Please don't misunderstand. You're quite right that if a market in Calcutta closes, certainly some people are buying through e-commerce. But it will start replacing markets that close, it's fair or not.

So sir, what I'm saying, a genuine demand, which needs to be -- get serviced, a person who really wants to buy something will go through other channels. So whether this demand is getting service through...

Just to interrupt you, there's a large percentage of population that still does not use the online channel.

Okay. Okay. No, then there should -- didn't have we surged in the online share from 10% to 25%?

There is also a large percentage that uses the online channel.

Okay. Okay. And any category of...

[indiscernible].

Okay, sir. Any category of the products, which are seeing a larger jump in the online channel sales?

It's across the board. It's across the board.

It's across board. Okay. And the margin profile for us in online channel is not lower than the brick-and-mortar, right?

No. It's similar to, let's say, the modern format channel.

[Operator Instructions] Next question is from Harsh Kumar Dhanuka from SAR Group.

Just wanted to understand, is there also -- because there's a lot of things we're seeing from a consumer behavior perspective, people going for less -- going for value products than for premium products. So any trend seen from that perspective?

I don't see such a trend.

In fact, if you ask me, people are going for brands which they are comfortable with by -- for aftersales service. And I think we score there.

Okay. Another piece in terms of products like fruits and vegetable cleaner and all of that. There's a lot spoken about post COVID and people are going for hygiene products. So any kind of spurt in demand or any response on that products? And are we moving into new SKUs on these -- anything on the sanitization or on the health side per se?

Yes. The fruit and vegetable cleaner, for example, has almost tripled during this quarter. And yes, we are working on new products in the sanitization space.

But do we see that -- expect that in this quarter, Q2?

I can't tell you that as of now because we haven't yet finished with the development.

[Operator Instructions] Next participant is Kunal Sheth from B&K Securities.

My first question is relating to the pressure cookers segment. Sir, what are the time lines for this ISI marking for the pressure cooker? And how do you see -- do you see any major benefits rising out of that compulsory marking -- ISI marking for industry as well as yourself?

I think the government has now pushed that date to February, if I'm right.

March.

Yes. So -- but yes, I mean, what the ISI would do is basically bring about some standards, but we are not very sure how they will implement it because they have to now build a full-fledged infrastructure for certifying factories. That's why probably they have also asked for time. But I think it's good that they will standardize this. It's good for us. It's good for everyone.

If they make ISI compulsory and monitor it so that all cookers have ISI, then the unorganized sector would virtually vanish. It will be very good for us. But you know what government is, they will -- that fellow will pay somebody and gets the ISI mark, and then they keep selling.

Okay. So basically, implementation is the question mark at this point in time?

Yes. Yes.

Okay. Okay. And sir, secondly, my second question is on the cookware segment. The cookware segment had large imports coming out of China, which were largely cheaper than Indian counterparts as well as unorganized sector. So do we see that trend changing, imports from China reducing in the cookware segment post -- and also unorganized players slightly suffering post COVID? Or you don't think that's going to happen?

Nonstick cookware imports are now discouraged because they have -- if you know, they have increased the duties for cookware imports into India. And after that duty increased, China no longer is competitive with respect to India on a cost basis. That is one. Second thing is, as far as Indian consumer is concerned, he is concerned about what goes into the nonstick cookware. And I think their brands will score over these unorganized players, and we have been seeing that nonstick cookware is going towards brands as we are going along.

Okay. And sir, how large was Chinese imports and unorganized markets in the nonstick cookware market?

In India, that kind of data is simply not available.

But is it safe to assume that large part of the market will be in unorganized and imports and organized will be still at a...

No. It is not safe assume that at all.

Less than 1/3 is in the unorganized space today in the nonstick cookware business.

And even that, it is now mostly Made in India.

Next question is from Manish Poddar from Nippon India.

Sir, just wanted to get 2 things. First is, from your view, how big is the online category before COVID for the segments you are catering to?

That's very difficult because the GMV is never disclosed fully. But I can tell you, relatively speaking, between last year and this year, you are looking at a doubling of what kind of goods they are passing through that online channel. Probably, they have gone up by 2, 2.5x post COVID.

In our category.

In our category.

And would you be reaching across PIN codes? Or right now, you're reaching only to certain parts of the entire country. Because I believe they don't sell really products where aftersales is not available.

We are reaching wherever Amazon delivers, which is 99% of all PIN codes in country.

The next question is [ Manoj Shah ] from [indiscernible] Investments.

My question is with respect to your like cookware and cookers in terms of appliances. So how much is manufactured at Prestige plant? And how much is contract manufacturing done in India? And how much percentage is imported? Maybe you can give a figure not for this quarter, for the whole last financial year FY '20?

So all our kitchenware products, which is pressure cookers and cookware is manufactured by us inside our factories, right? And all gas stoves, all mixer grinders, all induction cooktops are manufactured in India through our dedicated vendor base. The total imports from China contribute to less than 10% of our turnover. And you know we have made an official announcement that we are going to stop finished goods purchases after September from China. And we are, at this moment, busy moving all those production lines to India, tooling up. So that for the second half, we will start manufacturing through our vendor base. So the imports are virtually nothing. The only imports that will happen are probably a few components here or there.

Will it impact your manufacturing cost of production?

No. Our costs are quite competitive vis-à-vis whatever landed costs are there. So I don't think that should be any issue.

And how do you see the industry landscape changes in terms of this stand down on imports from the neighboring country and Aatma Nirbhar Bharat campaign? How do you see the industry changing?

It is good for make in India. I think the more we make in India, the better off we are. And I think we will be also in a position over a period of time to address exports because of this. So it's good for everybody. I think, overall, there is a very big anti-China sentiment in the consumer's mind, which is only getting worse. And moving production to India is going to do us good as a brand.

Like, sir, in your case, 90% is -- we are procuring either from your plants or from the contract manufacturers in India. So [Audio Gap] the unorganized, they're importing it from China or other countries, do you think we're going to benefit because of this? Or how do you see it?

We are going to benefit because of this because there are many non-tariff barriers that the government is continuously coming up with. Last year, they clamped down with ISI on all motorized appliances, which means you cannot import anything. Slowly but surely, that is what the government is doing on various categories of products. And I think we have an edge over others because we have started this movement 3 years ago.

[Operator Instructions] Next question is from [ M Balachandran from Goldstar Investments ].

Yes. I have 2 questions. One is regard -- on this issue of pent-up demand. Now you have 2 types of pent-up demands, one which -- where the customer has the money ready to buy, but the channel is not able to deliver. So that's just a question of time. If not this week, next week. The other type of pent-up demand is where people are not able to buy because credit facilities are not available. Now could you throw some color on this pent-up demand, which you're forecasting where credit facilities are not available and how you expect this to turn out?

As far as the urban market is concerned, today, credit facilities are freely available. In fact, Bajaj Finserv has made a statement saying their lending has come down because there's no demand for credit facilities.

Okay. And my other question is regarding metal prices. Now people in the metal business are forecasting increase in metal prices. What is your own take on this? And how do you think it will affect us?

I don't think that I can predict any metal prices. I've been in the business for 45 years, and I have never got it right. As far as we are concerned, if metal prices go up, we put our prices up.

[Operator Instructions] Next participant is Achal Lohade from JM Financial Services.

Can you help us -- on the export front, you've been positive for a while. So where are we on the export? Are you seeing even postponement out there? And yes, is there any country or customer, which we can look at incrementally which can...

Achal, honestly, let me tell you, export is going to be limited by capacity. The demand is there today. And the process of building more capacity is to cater to the export.

Okay. But given our capacity utilization is less than 100%, right? I mean we are at 80%, so what is the limitation in...

No, no, no. One minute. 80% as a company. 90% of our exports is cookware. There we're producing to 105% of capacity.

Right. So what is leading to a delay in setting up, I presume -- I mean we have the locations, right? Or you have to put up a greenfield now?

No. No. We've got all the -- we've got the space. We've got the land. We've got the building. We've got everything. Achal, when I get up in the morning, and I say, hey, set up a dancing light for 5 million people, it doesn't happen by that evening.

I know. I know. But -- I mean, what kind of time line one should look at? And what kind of exports momentum we should really build in the numbers? Would it be...

We're looking at doubling exports from last year. And it will probably start around the third quarter.

Okay. And is it to any particular geography? Or...

No. No. It's across the geographies.

Across geographies. That's great. Number two, with respect to -- quite a few companies are talking about online to off-line format where the local vendor actually services the demand generated online. Is there anything we have worked on? And if you could give some color on the same?

Chandru, would you like to talk about omnichannel?

Yes. We are working on a national omnichannel. We've already conceived the whole project. As we speak, we are on course to putting that in place. It should take us 3 to 4 months to put everything in place. You know we have a nationwide outlet base of our exclusive outlets, which we will use as this -- for this omnichannel. We are also looking at WhatsApp-assisted e-commerce for hyper local delivery. Both these are underway as we speak. It should take us between 3 to 6 months to put everything in place.

Right. The other question I had with respect to online, is there any differential product or pricing strategy out here? Or it's the same products which are available off-line are available online?

So we have 2 types of things. One is we have online exclusives, which we then will talk to the platforms and create for those platforms, which they sell. They also sell the range because both the platforms have realized that if they don't keep the range, it's not going to be right. And both are selling, therefore. We do have exclusives as well as the range. As we speak, we have also made sure that the pricing is common across channels for the range, which is common across channels. And the exclusives is a separate pricing.

Got it. And just last question. With respect to stainless steel, a, have you seen any significant pickup in the stainless steel vis-à-vis the aluminum cooker cookware? Or it's not much of a difference between the 2?

See, over a period of time, stainless steel has started gaining ground, especially in pressure cookers. That is one. Even in cookware, there's a lot of value-added cookware that is starting to come up in stainless steel. And as you know, we have just commenced a full line in Gujarat for stainless steel cookware right now. And we are also getting into manufacture of Tri-Ply cookware in stainless steel, which is also happening. Having said all this, this year has been a pleasant surprise on nonstick itself for with aluminum-coated cookware. So overall, the cookware business is looking very buoyant.

Right. How -- would you be able to give some color. Just last extended question on the same in terms of the mix from stainless steel in cooker and cookware, sir?

For us, it is still 85-15. But we expect stainless steel over a period of time to go up slightly.

And that is the same for cooker and cookware, both?

No, no. For cookers, it is much more than that. For example, in cookers, it is about 35% is now stainless steel.

Next question is from Charandeep Singh (sic) [ Charanjit Singh ] from DSP Mutual Fund.

Sir, my question is on the kitchen appliances front. If you can just help us understand any new product categories within kitchen appliances, which should be keen to bring in? Plus, in terms of the service aspect during this now lockdown or in this time, how we are managing that, specifically in the kitchen appliances?

So I'll answer the second question first. On the sixth day of the lockdown, which was in March itself, our CRM started working, our call centers started working, and our agents started taking calls from home. We quickly set up a home-based support system for people to get technical support to solve problems over the phone, if possible. And we kept the calls pending only if that was not possible. The spare parts supply right across the country has been made available. We've used again electronics, I mean, the technology to make sure that the turnaround times for spare parts and everything else is done properly. And our service is well -- in fact, the customers have appreciated how much we have done during the lockdown and post the lockdown immediately. We've even run van services wherever it's required, where complaints had become more after the lockdown. So customers have really appreciated us for that.

And sir, within the kitchen appliances, which are the new product categories which are we looking at? And we have also been hearing some of the other players ramping up on the kitchen appliances side very aggressively, and it has been a success on their part. So have you seen any kind of a market share push in these categories?

No. I think we have launched enough new products in the last year. This year also, we have launched in the first quarter several new products. We are not launching new categories, but we are launching new innovations within the same categories because we are present in -- across categories, I don't think there's any category where we are not present as far as appliances are concerned for the kitchen. And you know, during this quarter, we've also launched a new retail format called Prestige Lifestyle, where -- we've launched in Bangalore with some specific built-in appliances as well.

[Operator Instructions] Next question is from [ Nikunj ] from LIC Mutual Fund.

Yes. My question is regarding that in the press release, we've mentioned that during this quarter, we have launched approximately 38 new SKUs. So with respect to these SKUs, you have mentioned that they were mainly for the [indiscernible] part. So were they centric to the urban population or this was 1 step for our realization of growth through the rural and export market. If you could throw some light over there? And going ahead, are we going -- what would be our strategy of launching new SKUs for the rural and export market, sir? This was my question.

So the new SKUs that we have launched during the quarter are to enhance the range of the existing categories. These cater to the entire domestic market. It is not that we've launched anything specifically for rural. Because what we are seeing increasingly is that the rural consumption is mirroring the urban consumption in a large way, unless it's a very cheap product where we don't operate. So these products go across the board, and that's what we are expecting. It's not that we are highly urban centric or very premium or anything like that. As far as exports are concerned, we develop products depending on what the buyer wants to buy from us and then give it to them, in cookware and cookers.

Okay. So from the export point of view, we are targeting cookers and cookware. Should I assume that?

That is right.

Okay. So going ahead, say, in FY '21 for second half, what are we currently -- what kind of SKUs are we likely to bring in for the export market, the kind of demand you are seeing from the samples you have given to the exporters -- export market? So on that side, if you could throw some light.

There are many such lines we are developing for them. It's difficult to give you that information at this point in time.

Next question is from Shreyas Bhukhanwala from Canara Robeco Mutual Fund.

So sir, my question is more on the costing side. So considering the current situation across various heads, we would be looking at cost savings, which would be kind of more sustainable as well. So any thought on what kind of margin benefits we can derive from these sustainable cost savings?

Right...

Margins are totally dependent on top line. So if the top line grows by more than 10%, your margins expand. As far as we are concerned, the pricing of our products is built on a raw material cost plus. And so there is no much difference between whatever we do and what we're going to do. If you -- but if the margins have to go up, you'll have to have top line growth of more than 10%.

Sure. But there would be some fix to where probably we would have -- either we have -- if we have improved our efficiencies or look to curtail some expenses going forward?

You are quite right. We normally tend to pass that on to the market.

[Operator Instructions] Next question is from [ Manoj Shah ] from [indiscernible] Investments.

My question is, can you shed some light on the servicing of the cooker and cookware and the appliances, how do you do it? And are there any plans to capture these services segment of cookers and cookware from the unorganized sector, like service centers one the mobile vans, et cetera. Any thoughts or any plans as of now we are doing?

See, we have authorized service centers across the country, right? We have more than 500 of them today. We have more than 3,000 feet on street. These are all integrated through a CRM software. Today, you can register a complaint through your phone, through the Internet. And I think in the next 2 months, you can even do it through WhatsApp. All of these are done, depending on the product line, either as a carry-in service or a home service. We have one of the best turnaround times in the industry.

And so having vans, we actually go home and do service.

Yes. See, as a user of your product, so sometimes we face these kind of problems. And when I went to some of your stores also, they told me to visit our service center, which is very far off to go. So it doesn't make sense for me to go there. So from that angle, as a customer point of view I was asking this question because...

You should not go to your dealer. There is a national toll free number, which has been advertised extensively. It's on your box or so, whatever product you bought. And if you call that number, you will get service if needed at home.

No. No. Other problem comes with you is that -- if I go to any other than the TTK facilities, I'm not sure the quality of the product or the valve, safety valve he is putting in or the handle or anything other than that. So as a customer, I want that only the -- for instance, TTK brand product should be put in or part should be replaced. So I'm coming from that angle that, okay, that the service center of the company or a mobile vans, which can help the customers, they can get a quality replacement parts. So that you have done...

You've not listened to me. You've not listened to me. I said, if you call the toll free number, they will pass you to the closest service center, who will, if required, come home and service with the regular genuine TTK spare parts.

[Operator Instructions] Next question is from [ Anshum ] from Bryanston Investments.

Last -- in the last call, we said that we are hopeful that we should be able to maintain our revenues at FY '20 level despite COVID in the current financial year.

No. We did not say that. We said for the second half. You're not listening properly.

Okay. So what does it -- how should we then look at our 5-year vision to double our revenues between FY '20 and '25...

Obviously, we have -- that will be impacted. We'll have to go back and start looking at these. We don't know how the markets are going to behave post COVID. There -- is everything going to change? Is nothing is going to change? We'll have to wait a year or so to see and then regrow our ability to our plant.

Okay. Okay. So this definitely pushes out our target to double the revenues.

Will it impact? Bring it closer.

Next question is from [ Sanket ] from VEC Investments.

Hope all is well at your end. Just wanted to check one of our peers in the cookers says, their numbers have reported about 30%, 35% drop on the top line, whereas we've reported about 60%. Could you throw some light, any particular reason why we've kind of had a far severe impact on our cookware space -- cooker or cookware space?

See, it is -- you know that this particular company which you are talking about normally has a very high fourth quarter, right, which was truncated because of the lockdown. And how they have come back and how they have built the fourth quarter numbers into the first quarter, I don't know. I don't want to take a position on that. Our spacing of quarterly sales is different from that company, and therefore, it is -- our behavior is also different. You can be very, say, rest assured that nothing much has changed as far as the market is concerned or the relative strength of the 2 brands are concerned.

And please look at annual numbers, not weekly or daily or quarterly numbers.

Sure. Sir, I'm looking more at a year-on-year comparison, Q1 FY '19 -- FY '20 versus...

For that quarter?

Yes, yes, yes.

The problem is that the way they space out their sales over their 4 quarters is different from ours. One quarter, we'll be less than them. Another quarter, we'll be more than them. Look at the year.

Ladies and gentlemen, that will be the last question for today. I will now hand the conference over to the management for closing comments.

Do you want to do it? Or...

Let Shankar do it.

Thank you all for participating in this conference. And we do have a very positive outlook for the remainder of the year. And probably, we'll meet you with more positive performance for the next quarter. Thank you.

Thank you very much. On behalf of AMBIT Capital Private Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.

Thank you.

Thank you.