| Maharaja
Appliances to resurrect Gem refrigerators
12 November 2007
Maharaja
Applainces is planning a slew of new white good launches and plans to rewsurrect
the regrigerator brand of the yesteryears, Gem. By Venkatachari
Jagannathan
Chennai:
In the battle for shelf space in the consumer's household, the New Delhi-based
Rs300-crore consumer Maharaja Appliances Ltd has chalked out a two-fold strategy. The
first is to expand the product range of the Rs150-crore small appliances Maharaja,
which sells the Whiteline brand of products. The
second is more ambitious; To get into the bigger white goods segments competing
with the Korean majors like LG and Samsung that have a strong grip over the Indian
market. The Maharaja
group will launch its Gem brand of colour televisions, liquid crystal display
screens, refrigerators, washing machines, air conditioners, audio and video products
through Empire Home Appliances Limited. "We
want to be present in every household and in every room in a household,"
says Harish Kumar, group managing director. Resurrecting
a comatose brand
Acquiring the popular yesteryear's refrigerator brand
Gem from Electrolux a couple of years back, Empire Home has soft launched refrigerators
in North India with the tag line `Gem of your life.' Explaining
the rationale for acquiring a dead brand and resurrecting it in a fiercely competitive
market, Kumar says, "There are around half a million Gem refrigerators that
are running in North India. The brand has good equity and recall amongst the public
and traders. Further the brand name is small and its meaning is understandable
by all, unlike many other brands in India." But
today the purchasing decisions are taken by young couples who are more familiar
with Korean and Japanese brands and who do not attach much importance to nostalgic
memories associated with brands popular in their childhood. Emphasising
on a brand vintage would succeed only if the brand continued to exist without
a break. It is doubtful as to how the brand Gem resonates with today's youth.
So,
wouldn't it be better for the group to launch an entirely new brand than rebuilding
a past brand? Replies
Kumar, "The Indian consumer is conscious of performance. We have seen the
coming and going of couple of Chinese brands. Similarly some premium priced consumer
durable brands are finding the market tough. With our products under Gem brand
we are confident of satisfying Indian consumers." He
also says that distributors and retailers have expressed confidence in the brand
and that is important in this business. "One
should look at the reason as to why a brand went out of the market, opines Ramanujam
Sridhar, chief executive officer, Integrated Brand-comm Pvt Ltd, a Bangalore based
communications consulting company. "If it was due to lack of advertising
power or distribution problem, then a company has a chance to succeed if it addresses
them effectively." In
addition, to successfully resurrect a brand, a company should differentiate its
product with that of the competition either in terms of price or product features. "Gem
is being positioned as a value-for-money brand. The pricing will be close to competition
but the products will offer more functionality," says Kumar. Empire
Home has budgeted Rs20 crore towards brand promotion and has roped in television
star Shweta Tewari as its brand ambassador. The
company will soon launch the first 240-litre side by side refrigerator. Investing
around Rs100 crore the company has setup a state-of-the-art manufacturing facility
at Baddi in Himachal Pradesh to make one million refrigerators and two lakh washing
machines per annum. The
colour televisions, LCDs will be sourced from Beltek India in which the group
has acquired 50 per cent stake for an undisclosed sum. Kumar
expects Empire Home to rake in Rs150 crore this year. "This will be the first
year of commercial operations for the company. The times are good for the consumer
durables industry as the government is abolishing the central sales tax and slashing
the customs duty which in turn would reduce the cost." Expanding
the Maharaja Whiteline range
Meanwhile flagship company Maharaja Appliances
will shortly launch products under cooling, heating and lighting appliances categories.
The company
will start selling room coolers, popularly referred to as desert coolers, ceiling
fans, geysers, instant water heaters, auto-ignition gas stoves, steam irons and
compact fluorescent lamps. While
the strategy seems to develop the company into another Philips or Bajaj Electricals,
Kumar strongly disagrees with the suggestion. "Our
competition does not have our product range. They are absent in one or two categories.
Further we make our own products unlike others who source the products from contract
manufacturers." With
the test marketing of geysers getting good market response the company will go
all out in the market early 2008. According
to Pawan Chadha, general manager, the domestic geyser market is around 12.5 lakh
units per annum registering an annual growth of 17 per cent. "We hope to
sell around 1.5 lakh units during the second year of operations." Maharaja
Appliances will target builders and other institutions for its geysers apart from
the retail market for its decorative as well as plain storage geysers. "Our
geysers will have water temperature indicators," Chadha adds. The
company will make instant water heaters in 1-3 litre capacity and storage geysers
in 10-50 litres. The
company has invested around Rs10 crore to make geysers and coolers. The later
will be soft launched next March. Speaking
about the potential for auto-ignition gas stoves, Chadha says there are around
4 crore gas stoves that are over 20 year old but still in use. "It is time
for these stoves to be replaced," he adds. In
the juicer-mixer-grinder segment Maharaja Whiteline brand commands 22 per cent
market share. The company has launched two premium mixies taking the total number
of models to eight. Interestingly,
the company's washers or washing machines without a drier have a good demand in
limited markets. "The washers priced around Rs3,000 per piece and we sell
around 5,000 units per annum," Chadha says. In
order to cash on the festive season sales, Maharaja Appliances has signed up South
Indian actress Trisha as its brand ambassador, who will feature in a new television
commercial shortly. Tie
up with LPG dealers
Reaching 16,000 retailers through 254 distributors
in India, Maharaja Appliances is trying to deepen its market penetration further
by tying up with the two major petroleum marketing companies, Hindustan Petroleum
and Bharat Petroleum. Under
the deal 9,900 cooking gas dealers (5200 dealers from Hindustan Petroleum and
4700 from Bharat Petroleum) will distribute small appliances from Maharaja. While
the tie up with cooking gas dealers makes sense for pushing auto ignition gas
stoves, would households buy mixies or iron boxes from a gas dealer, who in the
past thrust gas stoves to those applying for new connections. "Consumers
in big cities may not buy iron boxes or ceiling fans from gas dealers. But in
rural and semi rural areas, a gas dealer has a good relationship with his consumers.
Households will not say no when the dealer starts selling home appliances."
explains Kumar. The
scheme envisages gas dealers having to log-in to the petroleum companies' website
and place their orders for home appliances. Maharaja
Appliances will send the goods directly to the gas dealers with an advice to the
oil companies. The
dealers will mark up the price and sell the goods while the oil companies would
get a commission from Maharaja Appliances on the value of orders placed by their
gas dealers. While
the accent is on increasing the branded product sales, the Maharaja group has
not lost sight on its original equipment (OE) business and is targeting around
Rs100 crore in revenues. According
to Kumar, the group is getting enquiries from domestic and overseas retail chains
for small appliances.  In
addition group company Beltek India will source products like washing machines,
air conditioners and other products to be sold under Beltek brand. The group is
targeting neighbouring countries for its washing machines and air conditioners.
If
all goes well as per his plans, Kumar expects the group turnover to touch Rs400
crore this fiscal, a step towards his target for the next fiscal is ambitious
Rs750 crore.
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