In 2020 kitchen manufacturer Ultrafresh Modular Solutions was operating with 75 franchisee-owned outlets. Today, three years on, the franchise count stands at 125 across India. In the intervening period, the company drew investor interest from kitchen and home appliances major TTK Prestige, which in November 2021 acquired a 40 per cent stake in Ultrafresh. Now, Ultrafresh, Prestige are powering the kitchen business together, and the market could well be looking at its first national specialist kitchen brand.
No kitchen brand has undertaken so rapid a retail expansion as Ultrafresh. According to CEO Dhruv Trigunayat, the company has been able to achieve this blistering pace because of its focus on customer experience and channel partner success. In 2019, Ultrafresh was recognised with the Emerging Kitchen Brand Award at India Kitchen Congress.
“We are a start-up in this industry, as we started our kitchen operations in 2018. But right from the start, we were clear that we would operate in the affordable market segment, which was not being serviced by any other organised player. Also, we had decided that our success would depend on how well our channel partners grew while selling Ultrafresh kitchens.”
Trigunayat, who had researched the Indian kitchen market while working with a consulting company before joining the family business, says that penetration for factory-made kitchens is barely one per cent and there’s a stark absence of industry leadership. “Affordability and availability are the main impediments to growth in this industry. But the opportunity is huge, considering that 90 per cent of the customers are buying a modular kitchen for the first time in their life.”
The demand for kitchens is indeed huge and will continue to increase in the foreseeable future. Two key statistics are worth considering in this context. First, India’s urban crawl is moving by 2.30 per cent each year. In 2021, the urban population was 493 million and it is likely to exceed 550 million by 2030. Second, more than 75 per cent of the urban infrastructure that will be required by 2050 is yet to be built.
The kitchen market is marked by three broad segments, says Trigunayat. The uber-luxury segment, which is very niche, is serviced primarily by German and Italian brands and their prices range from Rs 15 to Rs 20 lakh and beyond. The premium luxury segment is driven by architecture and design professionals, is largely centred around tier 1 cities, and the prices range from Rs 5 lakh to Rs 15 lakh. The affordable segment, where prices range from Rs 1 to Rs 5 lakh, is driven by demand from customers in tier 2 and tier 3 cities who want to graduate from carpenter-made furniture and to a more aspirational lifestyle.
According to Trigunayat, the affordable segment is the most crowded, with regional and local manufacturers operating within their geographical limits. “Their lack of scale does not permit them to operate far away from their bases, as this business is dependent on distributed supply chains and skilled manpower.”
Ultrafresh is aiming to fill this gap in the affordable market with its process-driven and customer-oriented approach. “We own the entire supply chain, right from sourcing of materials to manufacturing, to distributed warehousing. We only sell what we manufacture. We have a 25-member design team that understands the nuances of every geography’s architecture and construction. And we have over 100 installers on our rolls, to ensure that the order fulfilment is as per the customer’s expectations. I believe that no other manufacturer in India is as focussed on the kitchen as we are.”
The Ultrafresh-Prestige partnership is an acknowledgement of the prospects of the market as well as Trigunayat’s understanding of the business. TTK Prestige is a 66-year-old and very respected brand in the kitchen and home appliances space and has a dominant position in the market. The company clocked a consolidated turnover of Rs 2,722 crore in FY2021-22, up from Rs 2,194 in the previous year. Profit before tax stood at Rs 411 crore in FY22 as against Rs 323 in the previous year.
Prestige has paid Rs 30 crore for acquiring a 40.81 per cent stake in Ultrafresh, which will eventually increase to 51 per cent. This is a strategic investment, through which it aims to become a total kitchen solutions provider. However, following the acquisition Ultrafresh will continue to operate as an autonomous entity, with Trigunayat remaining in the saddle as CEO and board member.
“Ours is a benign partnership, with the Prestige management mentoring us and sharing their insights into the consumer durables market. It is not easy for start-ups to scale their business. But with Prestige as a strategic partner, we are strengthening our manufacturing infrastructure, building up the technology backend, improving worker safety, and expanding our operations rapidly. Following this partnership, we are making up for the time we lost due to Covid.”
The partnership, says Trigunayat, has found immediate synergies between the two brands brands as their TGs and price points are quite similar. The 125 Ultrafresh outlets are already displaying Prestige products on their shelves, while many of the 750-plus Prestige outlets will selectively expand into the modular kitchen business. For Ultrafresh channel partners this means more reasons for their customers to visit the store besides buying a kitchen.
Ultrafresh aims to have a network of 200 outlets by end of 2023 and achieve turnovers of Rs 300-400 crore by 2025. In June it opened a company-owned experience centre in Bengaluru, its fourth after Delhi, Mumbai and Kolkata. New franchises will be established in the south and west, in the formats of Ultrafresh Kitchen Studio (500-600 sft) and Ultrafresh Experience Centre (900-1,100 sft), which call for an investment of Rs 15 lakh and Rs 25 lakh respectively.
“The Ultrafresh franchise is a high RoI opportunity. Our partners need to invest only in their store displays and interiors. There is zero inventory requirement as this is a cash-first operation. Each franchise is assigned an Ultrafresh executive, for support in sales and execution. We support them with centralised lead generation and branding, while local ATL and BTL activation is done on a shared basis with planning for each quarter.” Trigunayat says they aim to add 100 franchises each year.
Ultrafresh has undergone a few pivots in the past five years. In 2018 it exited its legacy business of water purifiers while retaining chimney and hob manufacturing, and entered steel kitchen cabinet manufacturing. In 2019 it added wooden cabinetry to its line. During Covid, it introduced wardrobes, TV units and bar cabinets, the latter two with an eye on the growing e-commerce market. In 2021, following the partnership, it stopped marketing appliances under the Ultrafresh brand and manufactures them solely for Prestige.
‘Ultrafresh powered by Prestige’ is how the kitchen start-up is planning to achieve market leadership in the next couple of years, says Trigunayat.