New business segment
We consider ourselves as a ‘house of purity’ and have embarked on a journey to develop innovative solutions for pure and healthy living. We are already into water purifiers, and thus keeping the business synergy in mind and with a view to help people have pure air, we decided to enter a new business segment – air purifiers. The logic was simple – all of us want pure water and pure air – and hence the business proposition to enter into this segment was very much in coherence with our mission. More so there is synergy in terms of production, sales, and most importantly, need.
There is no well defined market size; the air purifier market in India is still in its infancy. Air purifier is a new concept product which people are trying to understand. As far as Kent RO Systems is concerned, we are not looking at market share. We are not looking at what numbers we’ll get. This is an evolving market and it will take four to five years for it to settle and then probably we can have a clearer picture. Till the time consumer awareness builds up and they start picking up the products, we will keep informing them about the benefits of the product and also about our presence in this segment.
We have not yet made any capital investment for this segment, as we are still using our main factory. The only investment has been in terms of inventory and that too not very substantial, around Rs 10 crore.
Kent RO Systems has not entered into any sort of strategic alliances. We are the only company that makes airpurifiers all by itself–the cabinet, assemblies, spare parts – we produce everything; this is our USP. All others are importing from China and putting their labels. I would admit that at present its easy for anyone to enter the market as there’s a lot of hype; however it needs to be understood that the market is in its infancy and one needs to invest to grow it.
As a company we are leaving no stone unturned for promotion; we are going all out. We spend close to 15% of our turnover on ATL/BTL activities. We are following all models of communication – ATL, BTL, direct marketing, etc – we want to penetrate the market. Our focus now will be on the digital space and we will assign a budget to it from our total AMP budget. Air purifier is not a product that you keep on the shelf and it will sell.
We are diligently using the media platforms – print, electronic, digital – and educating people that if there is excess pollution it can harm them. All they need to do is call us, and we can check what the pollutant level is and how we can clean it. The results are encouraging, people are calling us, we are giving them our product demonstration, installing purifiers and showing them the benefits.
We are on a strong footing as far as promotion is concerned. Our costs are divided over two product categories, so we are much better off than our competitors. In fact in ten seconds we are selling two products – water purifiers & air purifiers! It’s been around three months since we entered this segment and people are now quite aware that we are a key player.
The benefits will start accruing to us after two years; you don’t build a brand or category in a few months. And even if you do build a category in a few months, if you are unable to sustain itthen it will lose its momentum. Many brands have come, advertised and disappeared; real branding is one that sustains, then only you can leave a permanent imprint on the minds of the consumers. And even after investing much and for long, you can’t afford to be complacent. We have been advertising heavily for the last 12-13 years but even today we can’t leave that space, else someone else will occupy it. It’s difficult to re-enter.
Changing consumer behaviour
It is very difficult to change the mindset and behaviour of customers. Even after having worked hard to build the water purifier industry for close to 18 years, we find that barely 2.5% of the population has a water purifier at home. Creating awareness is one thing; getting them to buy it is another. However, the positive side is that gradually the consumer behaviour is changing; disposable income and availability of information is certainly changing the scenario.
DeMo & GST
In our case, sales dipped by 20% during last November–December. In fact we were growing by 15% y-o-y, but in the aftermath of DeMo, growth will likely be down to 12%. Now the conditions are improving – cash is now available; we have seen the bottom. Demonetisation had to happen sometime or the other, you can’t continue with the grey economy for a long time. The demonetisation exercise was well planned; I think it’s a prelude to GST, because GST would have created a lot of hurdles for the grey economy. Demonetisation is a welcome move; we have no reason not to welcome this initiative. How can the country grow with a parallel economy? Why should the honest taxpayers suffer?
GST deliberations are a push and pull – every state is trying to get something from the Centre. It has to come; there are no two opinions about it. I think it will be implemented by September this year. GST will have a lot of impact on the water purifier industry. Being largely dominated by the unorganised players, our industry will be assisted by GST to become formal; you will know from where they are buying, at what price, invoices, etc. To my mind, there will also be some sort of consolidation post GST.
We have adopted eight villages across India; have supplied them with sanitation facilities. We are planning to help in the construction of check dams, so people can conserve water and have access to clean water.