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Business – Maharaja Whiteline’s King-size ambitions

Amit Ranjan Rai

Small appliances maker Maharaja Whiteline hopes to double its growth tapping the unorganised market

Harish Kumar was merely 19 when he founded Maharaja Appliances 36 years ago. It was then a single-product company, selling mixers (or mixies, as they are popularly known). Maharaja rose to prominence when Kumar came up with idea of introducing a three-jar mixer which added to the housewife’s convenience in the kitchen. The idea clicked and Maharaja began to bite into the then market leader Sumeet’s share. The three-jar mixer gradually became a market standard.

Next, he was the vice-chairman for Electrolux Kelvinator India, having played a key role in bringing Electrolux to the country. That joint venture didn’t work out well — Electrolux pulled out and he too quit. Kumar says this gave him good experience in white goods — refrigerators and washing machines. He thus founded a white goods company called Gems two years ago which is primarily into cost-effective refrigerators and washing machines. He says the company should break even this year.

His bread & butter, of course, remains small appliances. Maharaja today offers over 65 products in some 18 small appliance categories and has a turnover of over Rs 200 crore. Kumar, the managing director of Maharaja Whiteline, now plans to grow his company to Rs 1,000 crore by 2012; he’s eyeing 50 per cent growth in the next two years over the current 18 per cent. “I’m still young, and I see a huge untapped market ahead of me,” he says and smiles. In the past few years, says he, the company has built the strength and capacity to address this huge market.

Growth opportunities
Kumar wants to take the market away from the thousands of local and unbranded players. “Their number is in the thousands, they are everywhere and they operate because there is demand. We target to wipe them off,” says he. The total size of the kitchen and small appliances market (excluding coolers and gas stoves) is over Rs 2,400 crore, of which as much as 60 per cent is unorganised.

Kumar points out several reasons why he thinks the unorganised market will not be able to stand competition from large players like him for long. With more disposable income in hand, consumers have become more quality-conscious and they demand value-for-money products. “Local players don’t follow any quality standard, they just don’t know what they are making. They are zero in terms of product innovation — they only know how to copy. Then they don’t adhere to any safety norm and run away when it comes to after-sale service,” says he and asks why would any one from socio-economic categories B and C, who now have slightly deeper pockets, go for such local products.

The company says that most of the key players in the branded market cater mostly to the upper and upper-middle income group segments. Their penetration below these segments is a bit low. That’s where Maharaja hopes to penetrate wide and deep. Says Maharaja Whiteline Assistant General Manager (marketing) Gaurav Bhutani: “We have identified government employees from SEC B & C as a big target group. After the Sixth Pay Commission, pay packets for employees in these segments have increased from Rs 8,000-10,000 to Rs 20,000 and more. So, while their capacity to buy things has improved, the prices of, say, a mixer-grinder has stayed where it was ten years ago at Rs 1,500, or only nominally increased. So that’s a market waiting to be tapped.”

Maharaja is confident that it will give competition, organised as well as unorganised, a run for its money when it comes to reaching out to this segment. The main reason behind the confidence, Kumar says, is the innovation and the effective pricing and retail strategies that back his products.

Innovation matters
Kumar says that innovation at the company didn’t stop with the three-jar mixer. “In most of our products, one will find some innovation or the other, which have been made keeping the needs of the Indian consumer in mind. Many have been introduced for the first time by us, we have a first-mover advantage in many products when it comes to technology,” he says.

That has happened, he claims, with ideation from the company’s strong R&D division in which he invests about Rs 4 to 5 crore a year. Besides, the company has a fully integrated plant in Baddi in tax-exempt Himachal Pradesh, which helps it to roll out end-to-end products in quick time. “Timing is of great importance in this industry. The rollout time for new innovative products needs to be fast. A customer will shift to an appliance only if he gets a benefit over other products and at a price that doesn’t pinch him. So our focus has been to provide innovative and value-for-money products that last long,” says Kumar.

Recently, the company introduced a mixer-grinder with eight functions which comes with onion-choppers, slicers, graters, shredders, chutney makers, liquidiser and so on. “Usually, one doesn’t find so many handy functions even on a complete food processor. We have patented this product,” says Bhutani.

Then the company claims to have developed small tilted-grinders in sync with the manual grinding style in Indian kitchens where the user tilts the container. Then there is a hand blender specially designed to make chutneys, rice cookers that can simultaneously cook dal and chawal. Since everyone can’t afford a washing machine, it has come out with a clothes washer at Rs 3,000. Kumar’s list is long.

“Our USP is that we offer a lot of innovative features and price them very cost-effectively. There is no point offering such features when the target consumer can’t afford it. You’ll find our prices 40-50 per cent below the top-end brands in the market with the same features,” says Bhutani. For instance, he says, the top-end full-apple juicer, mixer, grinder of rival brands costs around Rs 5,000 in the market, while Maharaja sells the same for Rs 2,500 to Rs 2,700. Rolling out products from a tax-exempt zone has been one of the key factors in keeping the costs down.

That has been, the company says, another of its strengths over branded players. “Besides, a large number of branded companies in this category are trading companies. They ask a lot of smaller players to make their products. These smaller players neither have the facility, nor the know-how and capacity that we have. So we surely will give branded players targeting higher income segments a tough fight,” says Kumar.

Earlier this year, Maharaja Whiteline entered new categories of water heater, gas stove and air cooler, and has plans to enter fans and lights the next year. With these new categories, Maharaja Whiteline would be addressing an estimated market of Rs 9,000 crore.

The company has kept its media advertising low key but strategically placed, keeping in mind its target audience. Post-Diwali, it booked 84 and 90 spots on India TV and Aastha TV, respectively, which have large Sec B and C viewership; it booked 31 spots on NDTV Imagine and five on Colors for popular serials like Bandini and Balika Badhu. “We cannot go for high-pitch advertising; we operate on thin margins. But we focus a lot on below the line activities on the retail front,” say Bhutani.

The focus here is on traders and dealers with whom the company has tie-ups; it offers them various incentives to push its brands. “They know in a retail store that is 300-500 sq ft, they cannot keep 20 brands, so they go for four or five brands from where they can earn better returns.” The company has been active with shop-in-shop arrangements which ask for sales commitments from dealers, besides road shows, catchment marketing and so on. Maharaja Whiteline has a pan-India presence (350 distributors and 22 branch offices), but it is more active in the north and west. It plans to strengthen/ realign itself in the south and east next year.


October 27, 2009 - Posted by | Uncategorized |

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