Kitchen appliances maker Kutchina pumps in Rs 40 crore to aid pan-India growth Plan

Source: Economic Times, 03 January 2022

Kutchina has embarked on a pan-India expansion plan to position itself as one of the top kitchen solution brands in the country, and planned to invest Rs 40 crore to augment manufacturing capability to overcome COVID-induced challenges, a company official said on Sunday.

It enjoys around 66 per cent market share in chimneys in eastern India, and the modular kitchen segment is also growing fast in the region, he said. “We now have limited presence in western and northern parts of the country. We have planned to become a top national brand in the kitchen space over the next 2-3 years,” Kutchina managing director Namit Bajoria told PTI. 

The Kolkata-headquartered company is planning to strengthen its presence in North and West India with chimneys and modular kitchens, and after consolidating in these regions, it would focus on southern states, he said. “We are in the process of executing an expansion project to ramp up our manufacturing capability by four to five times with a capital expenditure of over Rs 40 crore. We have earmarked a total of Rs 50 crore to enhance our capabilities and become a national brand,” Bajoria said. Video Player is loading. 

PlayUnmute Fullscreen VDO.AI A new integrated production facility is coming up in North 24 Parganas district in West Bengal with the latest imported plant machinery, he said. Apart from chimneys, hobs and modular kitchens, the company also sells small kitchen appliances such mixer grinder, electric kettle, hand blender and OTG and RO water filters. The company had mostly followed an outsourcing model since its launch in 2003 but the COVID-19 pandemic has forced the management to have its own manufacturing facility to protect from supply-chain disruptions, he said. “One cannot stop operations during disruptions. We decided to have our own strong manufacturing unit to address supply chain issues and costs,” the official said. 

The kitchen appliances maker, which had introduced the first auto-clean chimneys in the country, will also bring innovation in the new year with storage ultraviolet
(UV) water filters that would not require continuous water supply. Currently, UV water filters require constant piped water supply.

The company achieved growth in 2021, amid the COVID-induced disruptions and hopes to end the current fiscal with Rs 300 crore revenue. Bajoria also stated that the company is expanding the footprint of Kutchina Galleries from 75 to 100 by April with the majority of them being set up in new locations.

How deep-tier financing can help India’s manufacturing sector

Source: Economic Times, 16 December 2021

The pandemic has disrupted India’s growing auto sector. The industry, which was flourishing in the early 2010s, recording a growth of over 10 per cent, is now struggling. In FY21, sales of all segments (two wheelers, three wheelers, commercial vehicles and passenger vehicles) were at a multi-year low. In FY11, 6,76,000 commercial vehicles were sold and in FY21 only 5,69,000. This sharp downturn is a huge setback to the millions of SMEs, who have been a crucial part of the auto value chain and are now grappling to stay afloat.

Take for instance, Ford’s recent exit from India. The company had more than $272 million in dealership investments. Its decision has put at risk over 4,000 vendors, some of whom claim that business with Ford made up 20 to 40% of their business. Simply put, this means losses worth crores, in terms of finances, raw materials and human capital.

Ford is just one example. In the last two years, the auto component industry declined over 30% and capacity utilization remained at roughly 60%. If we look at exports in FY21, India’s share in the global trade in auto components is a dismal 1.3% of the $1.3 trillion. Undoubtedly, several vendors of large Original Equipment Manufacturers (OEMs) have suffered setbacks due to COVID-19. Now, with everything slowly returning to normal, the auto industry will continue to face two challenges:

     Slow recovery for demand
     Increased supply side constraints, particularly with financing

According to Automotive Component Manufacturers Association of India (ACMA), MSMEs constitute 80% of India’s component industry, and a majority of these are tier 2 and tier 3 players. For long they have been challenged with access to timely capital, manpower and technology. Now, these issues become all the more pertinent because vehicle production is still at an all-time low, and MSMEs continue to struggle with liquidity.

Adding to their woes are challenges faced by NBFCs and banks. NBFCs who have traditionally been major lenders to the auto industry are embroiled in the ongoing liquidity crisis post the bankruptcy of Infrastructure Leasing and Financial Services impacting lending outcomes. Banks prefer to focus on financing large tier 1 vendors, due to NPA fears. This leaves out a massive chunk of MSMEs, almost 80% in the country. Not only does this lead to increased risks in supply chain distribution, but poses risks of MSMEs shutting down.

While the situation is perhaps most stark in the auto industry, most manufacturing sectors have a similar tale to tell. Between the pandemic, existing and exacerbated systemic liquidity issues, cyclical lows and the global supply chain crisis, manufacturing SMEs countrywide are struggling. While some sectors such as pharma may have come through a little better, they too are facing challenges with the global supply chain crisis.

Understanding deep-tier financing
There’s an urgent need for capital to reach tier 2 and tier 3 vendors at timely and affordable rates. A way to achieve this is through deep tier discounting, that will ensure acceleration of capital from OEMs to tier 1 and tier 2 as well, all through a seamless automated model.

Deep-tier discounting is an effective concept. It goes beyond traditional vendor financing that focuses on large OEMs and tier 1 vendors in isolation, but instead, unlocks access to working capital for the entire supply chain of a company, allowing the buyer to deploy working capital to SMEs all the way down the value chain. This transparency also encourages financial institutions to provide working capital solutions at competitive and affordable pricing, making it easier to offer financing to the entire supply chain, even the smallest vendors/SMEs.

Enabling deep-tier financing requires all stakeholders – corporates, tier 1, 2 and 3 vendors to be on a unified platform where there’s complete transparency across levels, and information and capital flow can take place in a seamless manner. Technology plays a key role here. Once established, there will be several benefits. Buyers have clear visibility of where the liquidity gaps are and in due course, be able to pre-emptively plug those gaps to avoid any unnecessary disruption.

Finally, deep tier financing doesn’t just benefit the vendors i.e. MSMEs but large corporates as well. It allows them to optimize working capital in a similar fashion to that of vendor finance. Hence, the impact is deeper, considering all suppliers across the chain are enrolled in the program. This, in turn, allows corporates to build more resilient and sustainable supply chains, which becomes important in today’s scenario.

In a nutshell, considering all suppliers have access to finance, corporates are in a better position to mitigate risks, enabling greater profits and growth that benefit all.

Manufacturing growth to see revival in Q4: Survey

Source: The Hindu Business line, Apr 8, 2012

New Delhi: The manufacturing sector is likely to see modest revival in the fourth quarter of 2011-12 after growth bottoming out in the third quarter, says a FICCI survey.

The revival is owing to higher orders on the books and a somewhat better export outlook.

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