Business Today Net Special

Under T.T. Jaganathan, the Chennai-based TTK Group has tried hard to change. It has and still continues to have some of the best known brand names in the industry, including prestige, Tantex, Durex, Kohinoor, Kiwi, and Woodward's. In spite of all this, the group, which had a turnover of Rs 500 crore in 1995, still hovers around the same mark in 2001. What is it that Jaganathan is unable to mend.

Condoms, hair cream, undergarments, pressure cookers, heart valves, clocks, pens, chemicals, paper cones, toys and shoe polish. C.K. Prahlad the eminent management guru who advocated the "core competency" theory would have a fit. The above mentioned were only some of the areas in which the TTK Group with its 27 companies operated in. That is till recently.

Under T.T. Jaganathan the self-effacing chairman of the group, it has tried hard to change. It has and still continues to have some of the best known brand names in the industry right from Prestige range of pressure cookers, pots and pans to Tantex undergarments to Durex and Kohinoor brand of condoms, Kiwi shoe polish to Woodward's gripe water. In spite of all this the TTK group which had a turnover of Rs 500 crore in 1995 still hovers around the same mark in 2001. What went wrong?

(All figures in Rs crore for year ending March 31, 2001)
Name	Turnover	Net Profit
TTK Prestige	140	3.8
TTK Healthcare	150	(5)
TTK-LIG	140	35
TTK Textiles	45	(2)

Says the group patriarch, T.T. Jaganathan, "It is simple. We lost focus. My father built up the empire when MRTP was in vogue, and industrial houses entered a business because they could procure a license to operate in that space," he candidly admits. He says the group pursued the mantra that "if ain't broke don't fix it."

TTK says the chairman could be complacent way back in early 1990's since the group's businesses were coasting along. "We did not have the foresight to take steps to ensure that this kind of growth is sustained," he says. Forthright one would say. "Mea Culpa," says he. Score one at least for honesty.

After years of dismal performance the group finally woke up to harsh realities. Over the year's it sold off businesses like TTK Chromate, Timeaids - the clock manufacturers, Rightaids (which used to manufacture ball pens and ink), the toy company Tortoys, TTK Chemicals, and TT Cardboard (paper manufacturers). Majority of the group companies neither had the economies of scale nor the requisite expertise to focus on the areas they were operating in.

Since then the group has been on a consolidation spree with the 27 companies pruned to a respectable four. TTK Prestige, TTK Healthcare, TTK - LIG and TTK Textiles. Says Jaganathan, "Even in the case of TTK Textiles and the Tantex brand, we are ready to exit the business, if we get a good offer for it. The textile mill we had at Nagari in AP has incurred a loss of more than Rs 25 crore in the past three years. It is a millstone around the group's neck and we had to shut it down."

The TTK group now wants to focus on three core areas: Consumer small appliances (mainly kitchen equipment) under TTK Prestige, Pharma and personal care products under the TTK Healthcare umbrella, and condoms under TTK - LIG."

When queried on the fact whether merging the Healthcare Company with TTK - LIG would make more sense as it manufactures condoms, Jaganathan says that because of the fact that TTK Healthcare is a listed company (whereas TTK - LIG is a 50:50 partnership between TTK and the LIG group,) it cannot be done. "I would love to merge them but our partners are insistent that TTK - LIG which is the world's largest condom manufacturer at 1.1 billion pieces per annum and that is profitable too, be a separate company.

Jaganathan also points out that TTK Healthcare is into a variety of activities like manufacturing 'Chitra' an indigenous heart valve, disposable gloves and syringes. All this he says may not make it an exact fit with TTK - LIG.

But what sets Jaganathan's pulse racing is the recent launch of a range of 'smart' kitchen appliances like mixers, gas stoves, and fruit juice extraction devices by TTK Prestige. The company has been a major player in the mechanical cooker segment. The cooker market is however stagnant at 6 million pieces with both Hawkins and Prestige sharing around 25 per cent marketshare and the rest by others. Also it is growing at a tepid 3 per cent per annum. Even including the non-stick cookware pots and pans business of TTK Prestige it was addressing a market whose total potential was worth only Rs 600. With the introduction of the new range of smart kitchen appliances, Jaganathan says the company will be addressing a market worth Rs 3,000 crore.

Admitting that there are already strong established players in the mixers, juicers, gas stoves and other similar kitchen appliances, Jaganathan is relying on the "Prestige" brand name to carry him through. He is also planning to introduce a range of microwave ovens and other kitchen appliances in the near future. "People associate Prestige with kitchen and we are confident that all appliance under this brand, will do well."

Jaganathan claims that the current year "is a year of transition" for the group. "We will emerge as a more stronger group after the entire transformation exercise is carried out. As a part of this activity the group has shed some 1,200 employees (around 20 per cent), " he adds.

It remains to be seen whether the TTK Group will be able to recapture its old glory as a premier industrial group of the South if not the whole of the country.