Pralhad Bhutada knows a thing or two about chimneys and hobs. After all, he was instrumental in introducing the Indian market to electric chimneys way back in 1995. As the CEO and director of Indo-Italian joint venture Elica PB India Private Limited, Bhutada is intent on growing the market further even though the domestic industry is well established. In an exclusive conversation with Sourcing Hardware, he shares his insights about the product category and the market, and why he believes Elica will continue to dominate.
By Gyanendra Kumar Kashyap
Elica has been in India for the last seven years; how has the brand been positioned and how has its acceptability grown?
Our experience over the last seven years has been phenomenal, despite the fact that this industry on the whole has witnessed slow growth. We at Elica India are currently growing at nearly 45% annually, and the brand acceptance is pretty good. We sell premium products which boast of superior technology and design, yet at very aggressive prices.
By virtue of our clear positioning, Elica has built a pan-India presence and is considered to be amongst the most preferred brands in the country. Our kitchen hoods feature cutting edge technology and have by far the best aesthetics. Our brass burner hobs have been perfected for Indian cooking and are considered to be the best in terms of technology and aesthetics.
Elica has always been at the forefront of technology when it comes to kitchen hoods. We were the first company in India to launch multi flame control brass burners, in 2013. We launched split chimneys in 2014, and Elica Deep Silence (EDS3) technology in 2016. This technology allows us to offer the most silent hoods in the world, and this has enabled Elica to make major inroads in the market. The EDS3 product caters to the mid-high and premium segments. However, to bring this advantage to the mid and mid–low segments, we plan to introduce the new ETB technology, which also offers a reasonable level of silence. In fact, we have strived to always be in the lead when it comes to aesthetics and Italian styling, even for products that have been specifically developed for Indian cooking.
What are the processes that are unique to Elica PB; have you put in place best practices of Elica SpA in India, to create an ‘open culture’?
Technological edge, lean structure and superior product quality sets us apart from other players. Also, we offer superior technology and design in an affordable price scale. I always like to assert that quality is the focus at Elica. Furthermore, we cover the entire spectrum of customers from low to mid, mid to high and premium, which no brand does at present. We have something for all!
Quite like our parent Elica SpA, Elica PB India too has a very open culture; it is not the typical bureaucratic culture, rather it is more results driven. Also, Elica SpA has been recognised as one of the best places to work in Europe. So we are trying to imbibe a similar working culture. Every employee at Elica PB has the independence to work with full creativity, and can put forth an independent view point. We are proud that we are a flat organisation; that is we do not believe in the hierarchy model. We give people their own space to work and they can apply their own creative ideas.
As far as manufacturing is concerned, internationally Elica’s operations are all automated as they need to produce in high volumes. We’ll bring similar processes to India once we have the volumes to justify that kind of investment.
Every employee at Elica PB has the independence to work with full creativity
Eventually India will emerge as a chimney and hob manufacturing hub for the world
Hoods & hobs sell well through any channel that’s related to home decoration and building products
Delivering right technology at the right price is the key
How is the market for chimneys poised in India? How has this product category evolved?
Well, currently around 2.5 lakh chimneys are manufactured in India by different brands. But the demand is of over eight lakh chimneys and the balance is being imported, mainly from China. So you can imagine the potential that exists for this industry.
When chimneys first hit the market, they came with basic features like push buttons and simple lights. There was no concept of noise reduction. But with the kitchen becoming the focal point of the house, we are seeing that everything goes into the cabinet and the chimneys and hoods have taken a front seat. Therefore, there is a remarkable evolution in the shape, design, control features, lighting and overall aesthetics. The push control has been replaced by touch control; bulbs have been replaced by LEDs and strips that allow you to change colour and the ambience. The chimneys now feature sound control technology, air purification ability and ambient lighting possibility. They are a complete package designed to boost the level of comfort of users. Even when you are not cooking, these chimneys are at work purifying the kitchen air. They are armed with special sensors. So this is how far technology has gone today!
What have been your areas of investment? Where will future investments be made?
India has a lot of potential when it comes to kitchen hoods, as it’s been just two decades since this product came to the country. Not even 1% of the population uses chimneys, so you can very well imagine the scope the country has to offer. Also, the European market is quite saturated. So I believe that for the next ten years India is certainly going to be one of the fastest growing markets when it comes to chimneys. I also estimate that eventually India will emerge as a chimney and hob manufacturing hub for the rest of the world.
With this understanding we have invested significantly, and more investments are in the pipeline. Our major investment has been in infrastructure for manufacturing chimneys and hobs. We spend a lot on brand building too. And when we get the required volumes we may further invest in hi-tech robotics, as has been done in Italy.
What innovation is Elica known for globally?
Elica has aligned itself with the ‘intelligent home concept’ in Italy. They have come up with SNAP, which is a sensor-based exhaust system connected to the hood via Wi-Fi. It basically talks to the chimney. It senses when the air is not pure, and it removes the impure air and freshens it. Therefore, it maintains balanced air quality in the kitchen.
Besides, now chimneys and hobs are becoming intelligent, they are connected through a sensor. As the hob turns on, the heat automatically activates the chimney. Globally, our hoods and hobs have become intelligent and are way beyond basic functionality. They offer features, design and intelligence. We have set benchmarks in their efficiency and production and I can say that we produce the best kitchen chimneys in the world.
This year we will be launching another version of EDS3, which will be a more affordable variant. Elica will also be exhibiting a new range in Italy in April and we plan on get it to India very soon.
How extensive is Elica’s network, and where are you planning to expand in the next 1-2 years? What is the ideal channel for selling kitchen appliances?
The Elica network is a mix of retail outlets and franchisee-owned showrooms. As a national brand we have quite a strong presence across India, in the metros and category A cities. We sell through more than 2,000 retail outlets and approximately 60 distributors, and we aim to increase this number by 20-30%. We find that demand for kitchen appliances is coming from the category B cities. Therefore our focus will be on Madurai, Coimbatore, Nagpur, Kolhapur and Mangalore in particular.
We have found that hoods and hobs sell well through any channel that’s related to home decoration and building products. No wonder dealers of appliances, bathroom fittings and hardware are our channel partners. For us all these channels are of equal significance in our growth plans. However the after-sales service aspect has to be managed carefully, just as in the consumer durables sector. We are already doing this to ensure our customers get a rapid and satisfying response whenever they log in a complaint. And for this we have a unique software that allows our people to track the customer history quickly, and attend to the requirements on priority.
Elica’s Claim to Fame
Elica 70,000-sft Pune plant can produce 1,000 chimneys, hobs & cooktops daily; current production is 500 pieces daily
The company invests 12% of sales revenue in network expansion and brand promotion
Elica holds 14-15% market share in the organised sector, and 60% in total market share
The company claims credit for introducing split chimney, touch chimney and silent chimney for the first time in India
Why do you feel Elica is racing ahead in market share? Is price the only factor impacting sales, or are there other influencers?
Delivering right technology at the right price is the key. What most brands are doing, or rather where they fail, is that they are offering a good product but their pricing structure is a major drawback. They price it very high, because of which they lose out on the mass market. At Elica we make the right product at the right price, this is the thumb rule that we adhere to. We are able to strike a perfect balance at the development stage itself and offer the usable and required features to arrive at the perfect product-price combination. No wonder we’ve been seeing annual growth of 40% and today we stand at a turnover of Rs 200 crore.
How is the chimney market structured in India? How is Elica poised in terms of market share?
The chimney market in India is worth Rs 700-800 crore and it is split into three categories. First is the low-to-mid, the mass market wherein the hoods are priced below Rs 10,000. They will have basic control features, but their functionality will be good. Second is the mid-to-high segment which is the affordable high-end category; here the price bracket is between Rs 10,000 to Rs 20,000. These hoods have superior control features, LED lights and better aesthetics, although the performance is the same. The third segment is the high-end one, the premium segment, where the hoods are priced well beyond Rs 20,000. They have advanced control features, better LED and strip lighting, superior technology and aesthetics and more technical features.
I can confidently say that Elica is the only brand that covers the entire spectrum. Not just that, we are leading in all the segments as well. For the next three years we will continue to grow at 30-40%, and by 2020 we are expecting to clock Rs 400 crore in turnover.