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India’s biggest cookware firm TTK Prestige is feeling the heat of recession in its overseas market, particularly the United Kingdom which it called a “disaster”.
TTK Prestige made about Rs. 98 crore revenue from exports to other countries including the UK. It has been a fast-growing segment in the last two years — the contribution has gone up from Rs. 71 crore in the financial year ending March 2021, when it was 3.5 percent of the revenue to 3.9 percent at the end of March 2022.
In April this year, the management had expected the revenue from exports to double i.e. hit close to Rs 200 crore by March next year. However, the recession struck and the optimism sharply dwindled within three months.
Speaking with CNBC-TV18, a day after its June quarter results, TTK Prestige chairman TT Jagannathan said the UK subsidiary is a washout this year.
“UK is a disaster. They are predicting a recession in this quarter itself and the pound has depreciated substantially to the dollar and the purchases are in dollars, so the UK economy is doing very badly. All our UK customers are doing badly,” Jagannathan told CNBC-TV18.
Overall exports are not encouraging as TTK Prestige’s other markets also face a slowdown.
“It is the same as it was in the past, but it is also slowing. There is a recession in the US, Europe, Japan and in the UK. So, orders have been cancelled. The export will come in lower but as a percentage to sales, it remains constant,” Jagannathan added.
TTK Prestige reported a 68 percent year-on-year (YoY) jump in revenue at Rs 600 crore for the first quarter that ended on June 30, 2022. In the corresponding quarter last year, the company posted a revenue of Rs 357 crore.
At an operating level, EBITDA stood at Rs 83 crore in the first quarter of this fiscal over Rs 43 crore in the corresponding period in the previous fiscal.
The stock was down 2.14 percent in the last five days and up 10.04 percent in the past month.
After taking an average price increase of about seven percent in quarter one of the current financial year, TTK Prestige won’t increase prices further as commodities have softened.
“In quarter two, we're obviously not going to take any price increases. The commodities have softened,” Jagannathan said.
TTK Prestige’s margins are expected to improve from the third quarter, Jagannathan responded.
“From the third quarter, it is not possible in the second quarter, because we're holding raw materials at a higher price. The margins will be closer to 16 percent.”
He expects to end FY23 with double-digit growth.
The company had acquired a modular kitchen company, Ultrafresh, and has plans to scale up the business to 10x. “We expect FY23 to be Rs 100 crore,” he said.
The company has Rs 900 crore in cash. “With Rs 900 crore in cash, we have to be on the prowl for acquisition,” he said.
TTK Prestige shares were trading at Rs 884.75 on BSE at 2.28 pm, down 0.86 percent, after opening at Rs 900.
For the entire conversation, watch the accompanying video