The Indian kitchen comes to mind when a person thinks of a pressure cooker sizzling over a gas burner. This has been the case for decades now, but this is all about to change. The consumers are purchasing products like induction cooktops, air fryers, mixer grinders, chimneys, electric kettles, and other sophisticated kitchen gadgets. This is being done by a company called Stove Kraft Ltd., which manufactures popular brands like Pigeon and Gilma.
While many are aware of the products that this company makes, many do not know how large a business it has become and how much evolution it has gone through in recent times. The company is not only making pressure cookers anymore. It has transformed itself into one of India’s largest integrated kitchen appliance companies.
Big Changes Coming in Indian Kitchens
The Indian kitchen appliance industry is experiencing tremendous growth and is predicted to continue growing in the coming years. There are some factors behind this tremendous growth.
High Price of LPG
LPG cylinders served as a major source of fuel for cooking in India for several years. However, the high prices of fuel, along with global uncertainty, have made LPG more expensive. Consequently, people are increasingly looking at alternatives like induction cooktops and other electric cooking appliances.
Benefits of these alternative products include:
- Increased energy efficiency
- Increased convenience
- Safety
- Temperature control
The demand for these appliances will continue increasing as people become more familiar with them.
Increasing Trends of Nuclear Families
India is moving gradually from joint families to nuclear families. As soon as there is a division of one family into two different families, the demand for kitchen appliances increases drastically.
The need for:
- Pressure cookers
- Gas stoves
- Mixer grinders
- Cookware
- Appliances
Is created in the newly formed families.
Busy Urban Lifestyles
Present-day families have become busier than any other generation. The dual-income household has made convenience highly valued. Customers value products that save them time and effort.
Examples include:
- Air fryers
- Induction cooktops
- Electric kettle
- Food processors
- Mixer grinders
All these gadgets make cooking easier for consumers.
Easy Growth of Commerce
Applications like Blinkit, Zepto, and Swiggy Instamart have transformed the shopping habits of customers. Today, buyers are able to buy kitchen gadgets through their smartphones and have them delivered in a matter of hours.
Government Regulations Have Improved the Situation of Brands That Are Well-Organized
In the kitchen appliances sector for a long period of time, there were numerous unorganized local producers offering cheap goods. Many of the mentioned products did not have adequate safety certificates and quality criteria. In order to enhance the safety of consumers, the government adopted more stringent quality regulations.
Now the goods must have certificates like:
- BIS certificate
- Quality Control Order (QCO)
Large organizations like Stove Kraft will be able to adhere to these rules. The smaller players will find it hard to adhere to these regulations. Therefore, the organized brands will have a bigger market share while the unorganized ones may shrink.
Why Investors Failed to Understand Stove Kraft
Stove Kraft went public in the year 2021. At this point in time, the financial performance of the firm seemed to be extraordinary. The revenue was close to ₹859 crore, and profitability was quite good. But there is a reason behind these unusual figures.
The behavior of consumers was affected due to the COVID-19 pandemic. The consumers were spending more time at home cooking.
During this period:
- Advertising cost was low
- Travel cost was low
- Administrative cost was low
Thus, profits were appearing abnormally high. But when the economy opened, all costs came back to the usual level. Also, the price of raw materials has risen by a huge margin. It has led to a fall in profit, hence making the investors think that the growth story of the firm is over.
Company’s Biggest Turnaround
Rather than relying on profit maximization, Stove Kraft invested significantly in manufacturing facilities. During FY22 to FY26, the company made investments worth more than ₹380 crore for enhancing the manufacturing infrastructure.
This has completely transformed the company.
As of FY26:
- The company achieved revenues of a record ₹1,607 crore
- Improved gross margins
- Expanded manufacturing facilities
The Strength of Manufacturing
There’s a notion among many people that consumer brands succeed due to marketing. While branding does matter, manufacturing gives the competitive advantage. Most of the appliance companies import appliances from China and then rebrand them. But this involves lesser investment with some major risks like:
- Disruptions in the supply chain
- High cost of imports
- Exchange rate risk
- Overseas dependence
Stove Kraft took a different route.
The company created a manufacturing ecosystem of its own. The company operates large manufacturing facilities in:
- Bengaluru
- Baddi, Himachal Pradesh
In these facilities, Stove Kraft has:
- 40 production lines
- 20 specialized manufacturing units
The company manufactures a wide variety of components through its own internal manufacturing process.
These components include:
Bakelite Components
Handles that are heat-resistant and are used in pressure cookers and cookware.
Sheet Metal Components
Components used in chimneys, cooktops, and kitchen appliances.
Die-Cast Components
Components that are precision-engineered and are used in all types of products.
Cast Iron Cookware
There is a major new factory setup in 2024 that is capable of producing around 2.2 million cast iron cookware annually.
Currently, 97% to 98% of all Stove Kraft products are made by itself.
The Air Fryer Success Story
Among the finest illustrations of Stove Kraft’s strong manufacturing capabilities is its air fryer line of products. Some time back, most of the air fryers sold in India were imported. These gadgets were quite costly and aimed at premium customers. It was an opportunity that Stove Kraft couldn’t miss out on. The firm invested in research, design, and manufacturing. In less than ten months, Stove Kraft had managed to develop a full-fledged air fryer manufacturing process. The company began manufacturing air fryers within the country rather than importing the end product.
This helped the firm:
- Cut costs
- Increase profits
- Pricing competitively
As a result, Pigeon air fryers soon became among the top-selling products in the category. With a reputed market share of about 50% in the top e-commerce websites.
Multi-Brand Strategy
Stove Kraft caters to different consumer segments through its multi-brand approach.
Pigeon
Pigeon is the leading brand of the company. Pigeon targets value-seeking consumers.
The product range comprises:
- Pressure Cookers
- Gas Stoves
- Mixer Grinders
- Induction Cooking Range
- Air Fryer Range
- LED Lighting
Pigeon continues to be the growth engine for the company.
Gilma
Gilma addresses the needs of consumers who prefer high-end kitchen products.
The offerings include:
- Modular Kitchen Systems
- Built-in Appliance Systems
- Kitchen Appearance
With increasing income levels of households, there is a rapid growth in demand for high-end kitchen appliances.
Black & Decker
With the help of its licensing agreement, Stove Kraft offers Black & Decker products to Indian consumers. This enables the company to compete in high-end appliance categories without impacting the position of Pigeon.
Pigeon LED & Skava
The company has further ventured into:
- LED Lighting
- Electrical Switch Gear
This strategy helps the company earn additional revenue from its existing retail channels.
An Effective Retail Expansion Strategy
There is always considerable investment involved in retail expansion. In order to save on costs, Stove Kraft developed a different strategy. Initially, the retail outlets were directly owned by the company. Soon after, Stove Kraft moved toward the franchise strategy.
The strategy includes:
- The company controls the store infrastructure
- Franchising handles the store operations
Such a strategy offers various advantages, including:
- Fast expansion process
- Reduced the cost of operations
- Improved efficiency
By FY26, the company had:
- 329 exclusive stores
- In 151 cities
- From 22 states
The management plans to grow to up to 500 stores in 2027.
Financial Performance Is Getting Better
One of the best things that has happened is the improvement in the firm’s financial performance.
Better Margins
In FY22, the increased prices of raw materials had adversely affected the margins.
But the management did something about it:
- Higher margin segments
- Increased manufacturing integration
- Improved product mix
Consequently, the gross margins improved considerably to reach almost 39% by FY26. Management forecasts improvements in margins in the coming years.
Improved Working Capital
Inventory management plays a significant role in manufacturing organizations. The firm has succeeded in reducing its inventories and improving its cash flows.
It means:
- Money gets freed up from stocks
- More cash is available for growth
- Operational efficiency improves
- Lower Debt
One of the best accomplishments of the firm has been the decrease in debt levels. There has been a sharp decline in net debt over the past few years. The debt-to-equity ratio has also gotten much better.
Lower debt level implies:
- Fewer interest payments
- Improved balance sheet
- Increased financial flexibility
- Growth Drivers for the Future
Growth of Small Appliance Segment
Small appliances currently make a huge percentage of the firm’s revenues.
Examples include:
- Air fryers
- Induction cooktops
- Mixer grinders
Final Thoughts
The Indian kitchen is experiencing a revolution of sorts. The Indian consumer has never before had the appetite for convenience and technology along with premium products. Stove Kraft seems to be the perfect fit in this environment.
With the increasing number of Indians updating their kitchens and using modern appliances, it seems that Stove Kraft is poised to make the most of one of the best consumption trends in the country.
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