TTK Prestige, among India's largest publicly-held kitchen appliances companies, has cal-led off an ambitious pact with Illinois, US-based kitchenware company, World Kitchen, hardly an year after the pact was signed.
Senior company officials of TTK Prestige confirmed the move to dilute the agreement and said that the sale of the products of World Kitchen through the TTK Prestige network was not up to the mark and hence they have decided to move away from the pact. However, one of the product lines from World Kitchen will still be sold through TTK Prestige.
World Kitchen, best known for its Corelle, Corningware, and Pyrex brands of kitchenware product, had entered into the pact with TTK Prestige during early 2012 and TTK Prestige was hoping for sales of at least around Rs 50 crore during the first year of operations and doubling by end of second year. "However, the sales were only in the range of hardly Rs 10 crore during the first year and we have decided to end a significant portion of the distribution pact," a senior official of TTK Prestige said. Both the companies had earlier indicated that going forward, TTK Prestige would also be looking at manufacturing some of World Kitchen products in India.
This move by TTK Prestige comes at a time when the company has been facing stiff winds in its sales in its primary South India market and has been trying to weather out the trough by cranking up its efficiencies. Net profit dropped by 16 per cent to close to Rs 26 crore, while sales grew by a little over 1 per cent at Rs 313 crore for the quarter-ended June 2013, as the power crisis in Tamil Nadu continued to affect the sales of the company and also due to a higher base effect.
The company was also hit by the depreciating rupee as a good quantum of its raw materials are imported. TTK Prestige, to overcome this aspect, has been putting in place a Rs 325 crore capital expenditure plan which will reduce its dependence on imports to a large extent.
TTK Prestige, best known for its range of pressure cookers, has been over the past few years innovating and now has a presence across the kitchen, ranging from pre-cooking to food preparation to kitchen supplements and kitchen hardware. In addition to this alliance with World Kitchen, TTK Prestige has been looking at various other similar pacts with global players to introduce a range of high end brands in cookware, storeware, water filters and gas-tops.
The stock of TTK Prestige lost a good 3.5 per cent to close at Rs 3,482.10 per share on NSE on Tuesday.
