The company had a disappointing Q1FY14. Two factors pulled down the bottomline. Firstly, net revenue came in weak at Rs.306 crore, down 1% (YoY) and this was further aggravated by a whopping 33% surge in raw material cost. It ended the quarter with a 16% (YoY) drop in net profit at Rs.26 crore. The numbers came in when the market was in session and the stock tanked 5% yesterday.  The lackadaisical performance is a reflection of the times we live in where costs are high and people have cut down on purchases. Unless this sentiment improves, challenges will continue, especially for companies like TTK.

But such challenges seem to have made the company stronger. From being a South centric company it now has a pan-India presence and over 50% of its toplione now comes from non-south markets. It has a wider product range now, including induction cookers and kitchen appliances. The power situation in South remains a cause of concern but this expansion of network has helped cushion the fall of sales in south. Once the power scene improves, demand could see a pick up. At a capex of Rs.325 crore, the company is now nearing completion of its new manufacturing plant at Gujarat and is expected to go on stream before end of Q2.  The company has a debt of Rs.115 crore and it raised Rs.106 crore by selling 5.6% stake to PE fund, Cartica Capital. It plans to use proceeds of the same to bring down its debt. Its interest outgo at the end of current Q1 was at Rs.3 crore, higher than Rs.2.65 crore of Q4. Hopefully with these planned moves, the outgo should also come down in coming quarters.  It also plans to look at new acquisitions and has plans on the anvil to get into the water purifier business.  The company seems to be set on a much better path for the future.