Ladies and gentlemen, good day, and welcome to TTK Prestige Limited Q2 FY21 post-results conference call, hosted by Ambit Capital Private Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. 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, Mr. Jain.
Thanks. Welcome to the Q2 FY21 earnings conference call of TTK Prestige. We have with us the management of TTK Prestige, represented by Mr. T.T. Jagannathan, the Chairman; Mr. Chandru Kalro, the Managing Director; Mr. K. Shankaran, the full-time Director; and Mr. R. Sarangan, the CFO of the company. Thanks, and over to you, sir, for your opening comments.
Good afternoon. This is the Q2 conference for TTK Prestige. Regarding Q2, we've had a very, very good second quarter. We bounced back from the lockdown and so on, and we did not anticipate this, so, we could have done much better if we had had the stock or if our vendors had ramped up as quickly. But because of the lockdown, a lot of their labor had gone away to the various states, Bihar, Odisha, and so on. So, we could not ramp up quick enough, but we're happy with the result. I leave the floor open to questions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, you may press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. Anyone who wishes to ask a question, you may press star and one. First question is from the line of Disha Sheth from Ambit. Please go ahead.
Sir, am I audible?
Yes.
Yeah. Sir, I just wanted to check, what is your outlook for cooker and cookware, considering the environment?
Well, the cookware outlook is excellent, actually very, very good. The pressure cooker outlook also has improved dramatically since August, and we are seeing double-digit growth, in fact, near 20% growth for the last 3 months. I'm including October in this, in the first, first month of the third quarter. So, we're pretty buoyant about these two categories.
So, sir, when you mentioned the 20% growth, you are saying about pressure cooker?
Pressure cooker-
Yes.
Yes.
Cookware, both?
Yes.
Cookware will probably be more than 20%, if we can supply.
Okay. Sir, are the supply issues solved better than Q2?
They're, they're much better now, yes.
Yeah. Sir, secondly, I just wanted to ask last two questions. What is the market share of us in cooker, pressure cooker and cookware?
Well, in pressure cookers, our market share in volume terms are near 30%, and in cookware, we are over 35%.
Okay, and which was, how much it was last year?
Around similar, similar range only.
Okay. And sir, in terms of steel cooker pressure cooker, how many products, like, from the pressure cooker sales, how much is steel products and how much is the aluminum pressure cookers? Like, is it 75-25, or?
Around seventy/thirty.
Will be 70/30.
Yeah.
Sir, in terms of competitors, are they in the same line or they're still with more aluminum?
Sorry, say that again?
So, in terms of competition, I'm just trying to understand, is their mix around same 70-30 aluminum and steel cookware, cooker, pressure cooker or
I think our share in stainless steel would be higher.
Higher. Oh, cookware.
Sorry to interrupt you, ma'am. I'll request you to come back in the question queue for a follow-up question. Next question is from the line of Sameer Gupta from IIFL Securities. Please go ahead.
Hi, sir. I have a few questions. We will take one at a time. Sir, so the supply chain issues that you have highlighted in your press release, could you elaborate a little more on these? Was this an industry-wide phenomenon, or it was specific to your own? Because, sir, the peers in this field have seen pretty good growth this quarter, like Gandhimathi has seen a 20% growth, Crompton in its appliance business has seen a 30% growth. So, just trying to understand this July decline for you.
So, you know, when we opened from the lockdown, we... Obviously, no one had an idea of how the demand was going to pan out. And many of you know that in some cases, especially in the products that you just mentioned of Gandhimathi, which is pressure cooker, I mean, mixer grinders and gas stoves, for us, they are outsourced out of vendors. Now, our vendors had lost their labor during the lockdown, and they couldn't get them back because each of these places had very different quarantine rules, and it was very difficult for them to get back the labor. It took a good two or three months. And like that, Gandhimathi, for example, has their own manufacturing on these products. So, some of these problems came in.
So, we, by the time we actually stabilized, were well into the second quarter middle. That's where we were, you know, coming in. And, and also the fact that the demand was far higher than what we had anticipated, and therefore you are seeing this. That is why I am saying to you that you must look at the August to October period, which has been very, very robust for us during this period, and we are at a 20% level of growth after the things have stabilized.
Great, sir. And this kind of a trend has not been visible in cookers, is it? Because cookers have actually seen a decline for the quarter despite this good growth. So, is there a similar problem you faced in cookers also in July?
Even the pressure cookers, and I'm talking about volume growth, has been in the region of 20% during the period of August to October. You see, we have to also-
Got it.
Yeah.
Got it, sir. That's very helpful. But what I was asking was, in July, the similar issue of labor was impacting our pressure cooker segment also, isn't it?
That is what I was about to tell you. We had to also realign our promotion. We have an exchange scheme which we had to realign to one month later because we had the lockdown, and we lost the month of April. So, it was also a promotion-driven issue, and that is why our growth started from August, because things had to come, fall in place from that month onwards. So, all categories have grown though.
Got it, sir. That's very helpful. And secondly, sir, this 20% kind of a growth, how sustainable do you think are these demand trends? I mean, is there an angle of pent-up demand here, or there is just because increased in-home cooking and demand for convenience products, will that offset or is it enough to offset? Because why I'm asking this is because even before COVID, our growth was growing in low single digits, and the overall macro in terms of purchasing power and income levels, that has only deteriorated because of COVID. So, how do you think these demand trends is sustainable?
Well, for the short term, it does seem like it's going on well. I don't want to comment on what will happen in the medium and long term.
Focusing on the next two quarters, long term, once the economy improves, we know measure will go back to the 18-19 situation. There will be further growth. I honestly, keeping my fingers crossed on that.
Got it, sir. And one last question, if I may squeeze in. This is particularly on the margin front, sir, and this quarter, actually, across players where there is a large unorganized component, we have seen a significant margin expansion driven by, you know, lower trade discounts, cash discounts and all. And we are not witnessing a similar kind of margin expansion in TTK and input costs, you can correct me if I'm wrong, in general, are on the benign side. So, what is happening on the margin side, sir, and any outlook you can share?
So, listen, we were very clear that we were going to protect the interest of all our stakeholders in the system. So, we have made no knee-jerk reactions, no changes to our pricing policy, no changes to our advertising policy. We haven't saved advertising money to shore up margins. We haven't thrown out people to shore up margins. We have done things to keep things as stable as ever, and I am sure our channel partners are appreciating the fact that we have not shortchanged anybody. In this entire process, even though we had a difficult time supplying, we were being as fair as possible to all channels so that we do not upset anybody. So, we have looked for stability and sustainability rather than any short-term gains.
Great, sir. That's very helpful, sir. Answers all my questions. I'll come back in the queue if I have any follow-ups. Thank you, sir.
Thank you very much. Next question is from the line of Achal Lohade from JM Financial. Please go ahead.
Yeah, thank you for the opportunity, sir. My first question was, you know, with respect to South versus Non-South, if you could comment about the recovery part and, specifically with respect to, you know, the cooker cookwares, for as in the rural growth.
So, we are seeing that the South is, relatively speaking, at a lower growth than the non-South. That is one thing. Secondly, we are also seeing that, relatively speaking, the lower Pop Strata, which is the class one town downwards, is seeing a higher growth than your metros. So, that is for sure. We, I think the rural market demand, which is getting satisfied out of feeder towns, we are seeing a very positive, well, development there also. Even from the online sales, we see that the smaller towns are showing a higher growth than the bigger towns. Those are the trends that we are seeing.
Any comment on the rural part for us in terms of the growth in absolute numbers, like, in terms of the mix, what is it? You know, the status of the tie-ups with the MFIs?
... So, as you correctly said, the rural, which I spoke to you, was the non-MFI part of the business. The MFI part of the business was not active for most of the quarter last quarter, because they were waiting for the moratorium to get lifted before they could start their operations. And remember that we were a piggyback product line for them. Their primary product line was to give loans for vocation. So, that has now started, and that is also looking good going forward into the Q3.
Right. Would you be able to comment on what has been the mix from the MFI in second quarter or first half?
It was zero last quarter, virtually nothing.
Okay.
But the good thing is that it started happening, it started coming into being towards the end of the quarter.
October was robust. October was robust.
Yes.
That's great. Sir, I wanted to ask... Sorry, I'm harping about the same question. You said, in the first quarter earnings call, you said July is looking good. So, I was curious that, you know, August, September, we are talking about 20% growth. What's-- had July seen a double-digit decline, a significant decline in the month of July?
As was mentioned, our schemes are such that we ran a scheme in July last year, and we did not run that scheme in July this year. So, there was a decline in July, but the same scheme we ran in August this year, which showed a double-digit growth.
Okay, okay, that is to do with the base then. Okay, understood.
That is correct.
Understood, sir. And just last question, if I may, with respect to exports. The exports have seen a good number. So, are things picking up, have you seen any new client addition? And how do we look at the exports from, let's say, for next couple of year perspective?
Unfortunately, for exports, our orders far exceed our capacity, and so, whatever capacity we have, we are diverting to the domestic market. So, we are putting exports on the back burner. Once we start building capacity, our exports could grow by double.
By when do you think we will be able to add capacities in next quarter?
Hopefully by end of December, early January.
Okay. What is the current utilization, would you be able to comment on for cooker and appliances?
Both 100%.
Understood. Great! I'll come back in the queue for further questions. Thank you very much.
Mm-hmm.
Thank you very much. Next question is from the line of Manish Poddar from Nippon India. Please go ahead.
Yeah. Hi, sir. Just want to understand two things. So, first was, have you all taken any price increase during this quarter or, let's say, in the month of October?
Not in the Q2, not in October, but yes, we have announced a price increase in November on some of our appliances.
So, would you be able to call that out? How much is it on blended basis?
So, on some of our products, like mixer grinders and gas stoves, the price increase is between 4.5 and 6%.
This sales pickup which was seen in Q2, do you believe this is end market retail sales or, you know, there was some amount of channel which was closed in Q1, so, this is the normalization of inventory which has happened in Q2?
No, no, no, no, no. This is, all of it is the retail sales.
Okay. Just one final one, if I can. Is that, how much is e-commerce contribution to our overall sales in Q2?
Twenty-five percent.
Okay. And just one offshoot to that is that do you see your category having material purchases during this, you know, this event done by the online players? Is it because generally your traditionally your category has not been, you know, too, you know, too online-oriented. So, I'm just trying to understand in this, you know, this month of October, when the online players were running a lot of, you know, this sale dates, does your category see significant demand during those days?
Yes, but we could not supply.
Okay. Okay, fine.
Mm-hmm.
Thank you so much.
Yeah.
Thank you. Next participant is Akshat Haria from Multi-Act. Please go ahead.
Hi, sir. Thank you for the opportunity. So, my question was that, you know, what percentage of our overall sales would be manufactured in-house, and what would be outsourced? This I'm asking with regards to, you know, because there is a very strong demand environment, and in such case, maybe the outsourced participants, the OEM, the contract manufacturers would be wanting to squeeze in some higher margins, because of this high demand environment. So, -
Let me disabuse you. Our contractors, our vendors are long-term vendors. They've been with us more than 10, 15 years, and they won't take it as a one-time opportunity to squeeze us. They will not, and they do not. And, to your first question, how much is in-house, how much is outsourced? About two-thirds, one-third.
Okay, so, we are not seeing any pricing pressure over there.
No, no, no. Categorically, no!
Okay, okay. Thank you. That's all, sir, from us.
Yeah.
Thank you very much... Next question is from the line of Nirav Wasa from Anand Rathi. Please go ahead.
Hello, sir, and thank you very much for the opportunity.
Sir, as I believe, we are seeing two new growth categories, that is, cleaning solutions and premium products.
Yes.
Would it be possible for you to share some outlook across both these categories, especially the premium products? The third one, I believe, is going to be the dinnerware category. How do you intend to expand these? I believe first two categories are already there in initial stages. By what time do you see these three categories playing a meaningful role?
So, if you look at the cleaning solutions, in fact, irrespective of the lockdown, they are positive vis-a-vis last year, and by a substantial margin. So, we are looking at some health-related, hygiene-related products that are doing exceedingly well. For example, our fruit and vegetable cleaners and things like that.
Mm-hmm.
We have many new products in the pipeline in that area. The other side, which you're talking about, the premium products, I'm not sure what you're referring to. I don't know whether you're referring to the Prestige Lifestyle store that we launched.
Yes.
That is still work in progress. As I said, as we said to you, we've started off in Bangalore as a starting point and a test marketing point, and you will see some activity happening around those products in the next couple of months. Hopefully, after three months of that activity, we'll be in a better position to answer that question as to how much that is going to give us in terms of contribution to overall sales. Coming to the last point on dinnerware, yes, we've launched stainless steel casseroles as a start point. Too early to say how much that will do, but it's a nice category for us. If that succeeds, then we have many other things in the pipeline based on the success of this category to actually come back.
Again, we'll require a couple of quarters to decide how this is, because it's a sizable market. We'd like to do it carefully.
Thank you very much, sir.
Thank you very much. Next question is from the line of Charanjeet Singh from DSP Mutual Fund. Please go ahead.
Hello, sir, thanks for the opportunity. Sir, if you can give us some color in terms of what is the kind of market growth rate for the categories which we are in, during this last quarter?
Very difficult to predict. Very difficult, because the quarter is just over. Market growth rate you'll get only after surveys are done. It'll take about another 3 months or 4 months for us to get that data.
Okay, sir. And sir, what we have seen is that across companies, companies have, you know, got this time frame during the COVID or the lockdown time in terms of looking at their cost structures and, you know, maybe taking some actions in terms of rationalizing their cost structures, be it, you know, ad spending moving to digital or rentals, so, those kind of things. So, have you done any kind of those kind of exercise, while, you know, it's good to see that we maintained our level of, you know, operating levels, what we wanted to do, but is there a, you know, inward looking in terms of the costs which could have rationalized and then that benefit can come through?
Yes. Andrew? Yeah. So, so there are two parts to this. One is there have been several initiatives that we have undertaken in the company towards digitization, and if I would like to use that word. This is towards many of our processes, for example, transacting with our channel partners, for example, doing travel when it's necessary, otherwise keeping the work, keeping the job going, et cetera, et cetera. Our factories themselves have shown higher levels of productivity in these last few months . There is a lot that we are doing in terms of moving advertising to digital because of the way the market customer is also moving in that direction.
But we've also decided to keep the main structure going until these things start bearing fruit, because for us, in all these years, you will notice that we've had a very steep allocation to advertising and brand building, which has done us a good thing in the past. Unless we, these new initiatives start bearing fruit, we would not like to cut costs there.
Uh-huh. So, is there, you know, kind of a quantifiable number in terms of the benefit we can get from these cost rationalizations? Is there a targeted,
I can't give you that number now. We need those initiatives to bear fruit first. Let me answer that differently. We do not take initiatives to short-term cut costs. That is very dangerous for the long-term growth of the company. With the digitization efforts that we're taking, is to improve working, is to improve the efficiency and to improve the market access.
Okay. Okay, sir. Sir, and on the supply chain part, so now at what level of, you know, supply chain in terms of our vendors they are at, and do we foresee that all these things? Or are we trying to now have, you know, kind of a multiple vendors or sourcing alternatively? Are we working on that to some extent?
You see, we told the market that we will stop import from China in this quarter, second quarter. That added a double whammy to us, because as it is, the production with vendors was low, and then we stopped from China, so, we had to make that up. It is true that we did have shortages in the quarter, second quarter, but that has improved fairly dramatically. Now we're back to where we were, square one.
... Okay, okay. Fine, sir. If I can just squeeze in last question, on the MFI channel. So, do we think-
Can't hear you, can't hear you.
Hello? Hello.
Can't hear you.
Hello.
Come closer to the phone.
Hello, can you hear me, sir?
Yeah, now clear, we can.
Yes, sir. So, just on the MFI channel, do we think that the normalization can start coming from Q3?
Yes, it has started already.
Okay, okay. That's all for myself, sir. Thank you.
Thank you very much. Anyone who wishes to ask a question, you may press star and one. Next question is from the line of Bhavin Vitlani from SBI Mutual Fund. Please go ahead.
Yeah, thank you for the opportunity and, congratulations for good number amidst difficult time. I have a couple of questions. First, on the growth rate, if it will be useful, if you could break up month-wise, and what was the growth in the exit month of the quarter? You did mention that the growth in the last three months is about 20%.
So, if you're looking at August, we were about 20%. If you're looking at... We were at what?
No, much more than that.
If you're looking at August, I don't have exactly the month-wise, but August and September put together was 23%. October last year was the Diwali month. It was our highest month ever. On that, we've grown by 15%. Cumulative, August, September, October, is at about 20%.
Sure. And any color on the performance of the newly launched Svachh brand ? What percentage of the total portfolio it is now, and how are you seeing the growth rate because of this new introduction that we have seen?
95% of our sales of pressure cookers currently is in the Svachh platform. The 5% is there because if there's any old stock left over, we probably are clearing that stock. The platform has met with a very good success. We've used this platform as a distribution enhancer in the non-south markets, in all, in some of our relatively weaker geographies. We've added several new towns in a big way. We've done specific promotions to add 2,000+ outlets in the last single one quarter. And we are looking at, we, we're looking at our all-time high energy cooker sales in October. So, we are looking at a very good situation here, and going forward, we think it will, it will continue that way.
Sure. Great. On the appliances side,
Come closer to the phone, please.
Sure. So, is it better now?
Can't hear you, no.
Oh, okay. That's okay. So, is it better now, sir? Can, can you-
No, come closer to the phone.
Sir, I'm as close as I can get, sir. Maybe I'll come back in the queue, sir.
Okay.
Thank you very much. Ladies and gentlemen, anyone who wishes to ask a question, you may press star and one. Next question is from the line of Devang Patel from NAFA Asset Managers. Please go ahead.
Sir, my question was on receivables. Did we have any problem in collecting money from the debtors? Because the debtors have gone up, even though our Q1 sales was not that great.
I'm sorry, the debtors have come down dramatically from about 48 days to 32 days. Where did you get that information?
Sir, I'm doing on an absolute-
The absolute number would be high because our August, September sales were very high. But in terms of the aging of the receivables, it's probably at its best in the last five years.
35 days.
It's at about 35 days, which is brilliant. We have had no problems at all in collections. They've been very robust.
Thank you. That's all. Thank you.
Yeah.
Thank you very much. Next question is from the line of Bhavin Vitlani from SBI Mutual Fund. Please go ahead.
Hope I'm audible. Would it be useful if you could give more color on the appliances segment, the growth within the categories and how do you see over the next one year? That, that is all.
I would suggest we wait for a quarter before we can put any color on these things. We can tell you that all our core categories are growing extremely well in the trade and in our channel partners, and it's been a very good situation. How this is going to continue, I think we need one more quarter for that.
Sure. But for the quarter gone by, if you could give us some color on the growth in the mixer grinder?
We have grown, we have grown, overall, we have not grown because we had a certain, proportion of the rural MFI channel, which did not work this year, this year. We also had certain large format sales last year, which was not there this year. But if you look at our general trade sales, we've grown by 45% in mixer grinders. We've grown by high double digits in gas stoves. So, if you're looking at some of the other products, like induction cooktops, we've grown by 47% this year. If you're looking at, kettles, it's almost double. So, how this will sustain, I don't know, honestly.
Sure. Thank you for taking my question.
Thank you very much. Next question is from the line of Shrinath V from Bellwether. Please go ahead.
Just want to understand the role of online going forward.
What are our market shares in the e-com segment versus general trade? So, just wanted your views on that, sir.
So, we believe that the consumer has gravitated towards online after the COVID issue, and I think that trend is going to continue. You are looking at more and more people shopping online and going outside less and less. Having said that, I think, we continue to be leaders in the online platform as well, largely mirroring our offline market share on that side.
Okay, so, we do have similar market shares both in online and offline. Okay, great.
Yes.
Uh, the-
You will know that we were one of the early people off the block to have e-com fulfillment centers. We have five of them across the country, so, we've invested quite substantially in the online business.
Got it. Sir, also wanted to understand the unorganized to organized shift. Given the kind of difficulties in many categories and unorganized sectors faced, are you, as the festive season kicks in, this is the peak shopping season in South. So, just want to understand, are you seeing the reemergence or some of these factories reopening, or have they not come back to the market after leaving the market in April, May, June?
No, they have started coming back. Many of them have started advertising as well as you might be probably seeing. But I think in the minds of the consumer, I think it's way beyond just price today. The lockdown told them that buying a good brand gives them the assurance of good after-sales service. So, I think over a period of time a gain of brands, not just TTK Prestige, but good brands in this post-pandemic world.
Thank you, sir. That's all from my side.
Thank you very much. Next question is from the line of Achal Lohade from JM Financial. Please go ahead.
Yeah, thank you for the follow-up opportunity, sir. Just wanted to understand in terms of the supply disruption, would you have any estimate as to how much sales we would have lost in second quarter?
As of September, we were carrying forward INR 70 crore of orders, which we could not fulfill.
So is it fair to say that the sales are not really lost permanently, but just the-
No, that most of that sales, most of that sales will not happen, because, for example, if there was... If there were orders online during the sale date, that sale is gone.
Okay. Okay,
But we will be carrying forward orders in October also.
Understood. And, yeah, any particular categories where we had supplies interruption, which was major one, or it was across the board in appliances?
No, largest in cookware.
Cookware, I was under the impression that most of that is in-house production.
It is all in-house production, yes, but there's a huge shortage. We have a capacity to produce 400,000 pieces per month. Last year, we sold about 3,500,000, which is roughly 300,000 per month. Now, the demand is 600,000 per month.
See, let me tell you this way, the even the export orders had multiplied during this period, and we had a huge demand situation in India as well. And therefore, all of this coming together put huge pressure. I mean, luckily for us, we had large opening stocks, so we managed for some time. But now, towards the end of the quarter, we obviously couldn't handle that kind of demand. We have sold our highest ever sales of pressure cookware in this quarter. We've crossed more than 2 million pieces, actually. But yes, we could have sold even more.
So, that's more on the short capacity, I would say. But yeah, like you said, supply disruption. I imagine that is for the vendors.
One second. It's not just our suppliers. For example, I need handles, which I don't make in-house. I need my handle supplier to give me handles.
I need glass plates.
I need glass plates. Now, those are downstream suppliers who weren't necessarily at their full capacity because they lost their labor. That's what we were trying to tell you.
Right. Understood. Understood. So, vendors for our raw material or consumables as well as the finished goods?
Yes, yes.
Exactly.
Understood. Understood. And with respect to... So, that, would that be the case even for the competition or, or wasn't that the case as such?
I think you should ask the competition.
And inform us also.
In terms of the CapEx, what is the number we're looking at for FY21, FY22 broadly, and how do we plan to, you know, deploy our cash flows, given the significant cash we have in the balance sheet?
Well, I suppose we will be spending about INR 50 crore in terms of CapEx for 2021. And, we're looking at acquisitions, we're looking at all kinds of things for the cash that we've got. Plus, we've just declared that an additional dividend today.
Right. Right. And just one more comment, if you could, also comment on forward, where are we in terms of the recovery? I know, the numbers are, positive for the quarter, but we've seen that the base has been fairly weak for a while now. So, how do you look at, that acquisition?
They were doing brilliantly, brilliantly in the, in this year, and then this damn, COVID happened. So, they've gone into the second lockdown in Britain for a month, so, we'll have to wait to see how this pans out, but they're doing very well compared to last year.
I think, I think more than anything else, I think that that company has completely transformed itself in terms of its online presence. For example, it's actually set up a very good online marketing and sales setup, which is why the company is doing exceedingly well at this point in time in England.
Any targets you could talk about? Like, what kind of revenues or something we could look at?
The second lockdown has allowed us, I mean, has completely removed any guidance prospects from our side on that front over there.
Got it. Got it. That's helpful, sir. Thank you so much.
Thank you very much. Anyone who wishes to ask a question, you may press star and one. Next question is from the line of Disha Shah from Anvil Share and Stock. Please go ahead.
Hello? Hello.
Disha, go ahead. Your line is on talk.
Yes. Yeah, sir, we wanted to ask that...
We can't hear you.
Disha, your voice- You've gone off the phone.
Hello. Now, is it fine?
Yeah, your voice is still breaking.
Sorry. Now, I think it's getting better. Okay, sir, so wanted to ask, September, August sales were up 23%. So, I was not, I was not understanding why our sales are up only 22%, while... Because so July was down double digits, and what is the reason? I, I was not getting it.
Okay, let me explain, try and explain that again.
Yes.
We normally have a major trade promotion as a follow-up to the first quarter sales in July every year. This year, we lost the month of April and half of May, so that trade promotion was not run in July. It was announced well in advance that it would be run in August. So, therefore, the sales shifted from July to August. That is why I'm telling you this period of July, August, September. I mean, I mean, August, September, October.
Okay.
It was primarily because we had to rephase the trade promotion because of the lost one month in the first quarter.
Okay, so it was,
We had to also organize the supply chain to meet that demand. We needed that time.
Oh, so it was almost nil to negative sales for July, that's why the whole thing.
There was no nil to negative. I can put it another way for you. If you add July plus August of last year and compare it with July plus August of this year, it was exactly on par.
It was exactly on par. Okay, okay. Okay, got it, sir. So, thank you, thank you.
I'm trying to shed more light on that.
Okay, okay. This is across all, your segments, like cooker, cookware, and appliances?
We, as we told you, the pressure cooker charge started in August, and from then on, the pressure cookers have also grown. So, if you do this July plus August, it'll be on par. If you take August, September, October, we are at 20%+ growth.
Okay, sir. Sir, I mean, what you said is pressure cooker demand was low in July, or it's the same promotion thing for July?
The same promotion thing.
Okay, okay. Okay, sir. Got it. Thank you so much. Sorry.
Thank you very much. Next question is from the line of Janakiraman R from Franklin Templeton Investments. Please go ahead.
Hello. Good evening. So this August and September, where you mentioned that the sales was quite robust for you, is there any ways for you to tell us whether the secondary sales were all as good as the sales that you had?
Yes, the secondary sales was quite robust. The pipeline has not been overloaded. We are seeing secondaries and tertiaries, because we are seeing sustained demand in October, which we have filled, and we are seeing sustained demand in what we foresee to November as well. It's not as if we've been loading the pipeline.
Remember that online goes straight to the consumer.
Correct. Of course, there will not be any inventory built up in online. And since you mentioned this order book, that you had some order book entering into the October month also, so typically, how does it work? Do your dealers actually place an order with you at the beginning of the month?
No, they place the order with us whenever they want to place an order with us. We accumulate those orders, keep supplying, and by the month end, some orders will not be supplied.
Okay, so this is a rolling kind of an order book?
Yes, yes. It's not a one-time, it's not, once a month only we take orders.
Let me try and explain that. What the Chairman told you was that there was a fill rate that was less than 100%, and those orders, some of them came back in October, some of them were new orders in October, some of them were lost orders. This is something that happens on a regular basis. The point he was trying to make was that if we had more inventory, we probably would have been doing even better than what we have shown.
... May I also say, and yes, and since you also mentioned that the demand momentum has continued the December quarter also, so now, have you beefed up your supply adequately to, to cater to this demand?
Yes. Well, adequately is difficult to define. We have beefed up our supply to meet what we think is demand, but if the demand outstrips that, we still won't. Hello?
Right. Because some of the statistics that you proved, that, as against 35 or 3 lakhs per month of cookware last year, so this year you said just in one quarter, you have done 20 lakhs. These are, like, very impressive numbers. What is leading to this kind of sharp increase in demand?
Your guess is as good as mine. Everybody says it's because people are working from home, they're cooking more at home, they're not going out to eat, so they want the better vessel, but newer products in the kitchen. That's what they're saying.
Well, let me tell you, cookware, especially non-stick cookware, demand increasing is not just an India phenomenon. What we are seeing is it's a worldwide phenomenon. Hello?
Right. Just one specific question, sir. I actually personally felt this experience. There seems to be some meaningful price difference between some of your popular products online or even the Smart Kitchen route. What is your philosophy is on pricing on this challenge? Do you, do you follow some differential pricing... How do you manage this channel pricing conflicts?
Our attempt is to keep a constant pricing across channels. Now, that is a very utopian desire. What we do tell all our channel partners is, "This is the kind of pricing we recommend you to sell to the retailer.
But they are free to-
But, by law, you know, they are free to sell at whatever prices. So, what we try and do is actually try and make, give them advice. The second thing is, as far as online is concerned, sometimes you might find a price that is cheaper because they want to burn money on that month, or we would have given them an exclusive offering, which is not there on offline. Similarly, we give exclusive offerings to offline, which is not there online, to ensure that they retain their competitive edge.
Right. So, the price at which the online merchant decides to sell your stock, that is not under your control, is it?
No, it is not.
However, it is controlled.
Yeah.
You are not allowed to control that by law. Hello?
Right. Right. Yeah, yeah. And, suppose, let's say I buy a Prestige cookware online on Amazon, the... Will the invoice specify as Prestige or Amazon?
Amazon.
Depends on who is the seller on the marketplace. You will never get an invoice from Amazon. You will get an invoice from the seller on that marketplace on Amazon. That seller could be-
Okay. Now, let's say that it is one of those.
Seller, et cetera.
If in your online sales, let's say 80 case study, let's say 100-
Sorry, sir, your voice is breaking.
Sir, now?
Mr. Janakiraman, your voice is breaking.
Okay. Let me come back a bit later then. Thank you.
Thank you. Next question is from the line of Bhavin Vitlani from SBI Mutual Fund. Please go ahead.
Thanks for the opportunity. So, just two questions. We saw drop in the gross margins. Any reason if you could attribute, is it mix change or is its certain pricing pressure that you are facing because of increased raw material prices?
No, no, it's not. It is mixing change and channel change. Different channels give us different margins, so if online, for instance, is growing faster, our margin will be marginally smaller, and these things happen. I mean, if their product mix, some products we make less, some products we make more. So, if the product mix is different, we'll also see lower margin, but our margin never changes.
You would have also seen that our EBITDA is very stable. Compare it with last year's Q2, you would see it's very, very stable.
I understand. Would it be possible to share the mix that you've been sharing normally between the channels this quarter versus last quarter?
I suggest we leave that out. We've told you already, online is between 24% and 25%. Now, we've also told you that the large format did not pick up till the second half of the quarter, really. Let me also tell you that our general trade is rock steady, stable, at the same contribution as what we've shared earlier, and so is the case with PXL. You can draw the parts after that.
Sure. And how about CSD? Any change in the mix from that?
CSD has gone down, has gone down because there's been an active effort by the canteen store department to actually limit customers due to COVID in the canteens, and that is changing in the Q3, so you are seeing a positive outlook for Q3.
Sure. Yeah. Thank you so much for taking my questions.
Thank you very much. Ladies and gentlemen, that was the last question for today. As there are no further questions, I will now hand the conference over to the management for closing remarks.
Chandu?
Yeah. We've had a very good quarter, as we, as we began by saying, and we are looking at that very positive outlook, continue all the way through to October and even till today, and we are hoping that the same continues till the end of this Q3. The festival sales, because Diwali has been delayed, has been quite good for us. Overall demand has been good. The channels have been, supply, have been quite positive, and most of the channels are now active, so, things are looking quite positive, and we hope to come back with good results in Q3 as well. Thank you very much.
Thank you very much. On behalf of Ambit Capital Private Limited, let's conclude this conference. Thank you for joining us. You may now disconnect your lines. Thank you.