Non-south market contributes to 40% of V-Guard’s revenues: Mithun Chittilappilly
Chittilappilly, MD, V-Guard Industries Ltd says they spent 6-6.5% of their revenue last year on marketing which was roughly around Rs 130 crores; this year too it would be upwards of Rs 100 crores
If Kochouseph Chittilappilly made V-Guard a formidable brand in the state of Kerala in the 80s, his son Mithun Chittilappilly, MD, V-Guard Industries Ltd has managed to put it on the national map, without compromising on profitability or quality of its products. With a turnover of Rs 2321 crore in the last fiscal year, Chittilappilly says over the next 2-3 years non-south market will contribute to 50 per cent of V-Guard’s revenues, making it a truly national brand.
When did V-Guard decide to spread its wings nationally?
V-Guard started as a stabilizer brand in Kerala and even before I joined the business in 2006 we had diversified into 4-5 other categories but even then our presence was largely in Kerala and the south. Back then, Kerala alone was close to 45 per cent of our revenues and south comprised 95 per cent of revenues. And as a category stabilizer contributed to 50 per cent of revenues. But we felt it was not good to have a single category contribute so much to the business. So, we did both, expanded not just with regards to geography but also product categories. From 2006, the journey has been to expand across the country. While I would still like to call ourselves work in progress, I have to mention that we are present in most states across the country today.
Why did the brand relaunch take so much time, you have been debating it since 2012?
People had divergent views on it within the organisation and yes, we have been debating it since 2012. But we did a consumer study in 2014 which told us that we need to go through with this. We realised that while we had very good some values associated with V-Guard like durability, trust, sturdiness, but we lacked other values like technology leadership, better designs etc. It is not that we didn’t have products that were good looking, we had a fairly good design team, but our logo was looking dated. Hence we decided to do not only a brand re-launch but also a complete revamp of the packaging. We tried close to 80 different packaging options and it was painful because we had close to 3000 SKUs. Everything had to be redesigned, reworked. Plus there were around 10,000-12,000 retailer boards we had to replace. It took us almost a year and a half to completely refresh the brand.
You are one of the rare brands with a Kangaroo in your logo, what is the story behind it?
It goes back to our first ad campaign when we were only in the stabilizers business. Just like a Kangaroo protects its Joey, we showed that the V-Guard stabilizer would protect your fridge. From there came the logo of Kangaroo with the fridge. It became hugely popular in the 80s. But, today stabilizer as a category contributes to only 15-18 per cent of our revenues. So, we asked ourselves if it made sense to retain the Kangaroo. But our consumer study told us that people associate V-Guard with the Kangaroo. So, it was very clear from the start that the Kangaroo has to be there. And it was a huge challenge because we had to now reinvent, kind of modernise the Kangaroo. The current logo of black and gold immediately differentiates us from our competitors because 70 per cent of our competitors have the combinations of white on red and 30 per cent have white on blue. So, between these three colors, almost 100 per cent of our competitors are covered. So we specifically wanted to move away from those colors, to ensure we stand out.
What kind of change in revenue and sales did you see after the brand refresh last year?
Revenue wise we have had an YTD growth of 9 per cent in Kerala considering that it has been a fairly tough year for the industry. So we are very happy with our numbers. There are also a lot of products that we sell during the summer season which have not done well this year as we had less than adequately warm summer due to intermittent rains and all that. Overall the growth figure stands at 12.6 per cent pan India which is good. The re-launch has helped mainly in the new markets where we were not as well-known before. We also had several cases of local brands trying to copy our trade dress. Moreover the retailer feedback is also extremely positive. So we have managed to create a huge buzz in the market.
What percentage of your business comes from outside of Kerala today?
Kerala alone contributes to 20 per cent of our business and that outside of South contributes to close to 40 per cent. We have launched the major categories namely wires, stabilizers, water heaters, water pumps and inverters across India. The smaller categories are in the process of getting launched, like we just rolled out switch gear. Kitchen appliances is being launched in the east and then in north after a couple of years. In the next 2-3 years, non south market will be able to contribute to 50 per cent of our revenues.
Does being a late entrant in these categories nationally put you at a disadvantage?
We are trying to enter markets where some brands have been for decades, so it’s very difficult to break relationships and forge new ones. But being late today is probably not a very bad thing. We have some advantages in terms of scale, we are able to defend and grow our market share. My dad never really thought about getting into those markets because a lot of brands tried to go national and ended up bankrupt. But we managed those risks well and grew our revenues without compromising profitability which was a huge challenge. We managed it because we are not trying to grow very fast by doing too many things at the same time. Even the brand re-launch was only initiated when we felt that we had completed the roll out and are on a much more stable footing. We initiated it only after the initial phase of investments were done and when we started making money from those markets.
What are the biggest categories for you nationally and what market share do you have in them?
Broadly, I would say that stabiliser category for us contributes to 17 per cent of our revenues today and it has a market share (organised market) of close to 50 per cent. In water heaters we have a market share of about 15-16 per cent and in wires and cables we have a market share of 7-8 per cent and it contributes to 25-26 per cent of our revenue.
How much do you spend on marketing currently?
We spent 6-6.5 per cent of our revenues last year on marketing which was roughly around Rs 130 crores. This year also it would be upwards of Rs 100 crores.
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