MANAGERIAL ECONOMIC

PGDM FINANCE Sec-D(2010-12) PROJECT

MARKET STRUCTURE OF HAWKINS

Term 1

Group Members:

SHAMEEN HAMED K.V. THARUN RAJASEKHARAN PUNIT FRANCIS TIRKEY ROHAN MITRA ASHIM KUMAR NATH RAKESH

ABOUT THE COMPANY: Hawkins Cookers Limited has been in business since 1959. Today, it has two offices, three factories and about 1000 persons working. The design of each model is inherently safer than conventional pressure cookers. Hawkins pressure cookers are pressure-locked for safety like a jetliner door!. The Hawkins Company is well known for not compromising on quality and for continual product innovation. The most thorough research and development, the most careful selection of materials, the best manufacturing practices and the strictest quality control - all go into making pressure cookers which are trusted by the millions of families using them. All Hawkins pressure cookers are guaranteed for five years.

VOLUME OF PRODUCTION: Hawkins has sold over 42 million pressure cookers worldwide. Today, it makes 57 different models of pressure cookers in 10 different types. Hawkins sells its products under the brand name of Hawkins, Futura and Miss Mary. Company has produced 28 lakh units of pressure cooker for the year 2009-10 which shows an increase of 22.27% from the previous year.

GEOGRAPHICAL MARKET: It is the leader in the pressure cooker market in India and has exported its products since 1974 to various countries in each of the six continents of the world. Out of the total sales 114.8 million is obtained from exports. Although they are selling their products in 6 continents across the world, their primary focus is on India along with Nepal and Bhutan.

INDUSTRY ANALYSIS Size of Pressure Cooker industry in India is projected at Rs.575 crore and cookware is projected as Rs.125 crore. The pressure cooker industry is growing at a rate of 10% for last 5 years and is expected to grow at about 12% to 15% in the coming years. The pressure cooker

industry suffers from low entry barriers. As a result the market has regional and unorganized players along with national companies like Hawkins and TTK Prestige. There are about 250 brands of pressure cookers in the market.

MARKET ANALYSIS Hawkins is the number one brand in the pressure cooker market of India. It primarily caters to the domestic market with domestic sales contributing to about 96% of the total sales. The strengths of Hawkins lie in its brand and its marketing and distribution activities

MARKET STRUCTURE Hawkins is the number one brand in the pressure cooker market of India. Hawkins and TTK Prestige (brand Prestige), are the two large players in the segment, and together cornering over 50% share in the domestic pressure cooker market. This shows that the company is having a monopolistic nature in the industry. The pressure cooker industry suffers from low entry barriers. Hence, Hawkins faces tough competition from regional and unorganized players along with TTK Prestige.

PRICING STRATEGIES Even though the company faces a monopolistic market having major market share and growth, it is not in a state of increasing prices. It is because of the fact that it is facing tough competition from Prestige and other unorganized brands in rural areas. It charges price on the basis of competitors price mainly considering Prestiges price. However, there can be changes in price due to taxation policies of government. The average price charged by Hawkins is 960 Rupees having a profit margin of 13.5% on each cooker. However, Hawkins charges the biggest price in the industry because of its goodwill and brand value.

DEMAND ANALYSIS The growth in demand for domestic home appliance products especially, the kitchen ware production continues to rise in tandem with the increase in income and living standards of the people both in the urban and rural areas of the country. Even now, the demand for the

pressure cookers are increasing at a very high rate, especially in the rural areas, and the company is finding it difficult to meet those demands due to limitations in capacity.

SALES ANALYSIS Sales of the company has grown by 22.27% for financial year 2009-10 and pressure cookers are the primary sales contributor with over 80% of gross sales contributed by the segment. For the current year the company has shown a sales of worth 285.56 crores which is half of the total industry share. The trend in sales show that the company has diversified its busin from ess pressure cooker segment to cookware segment. The company expects a growth in sales at a rate of 24% in the coming year.

COST ANALYSIS In the past it has been observed that, the operating expense is 92% of the sales. However, Hawkins has managed to reduce its operating expense from as high as 94% of sales to 91.7% of sales.The total cost incurred by the company summing up the Raw materials (stock and purchase), employee cost and other expenditure comes up to 23168.3 lakhs for the year 2009-10. The total quantity produced by the company for the year is 28 lakh units. Therefore, the average cost comes upto 23168.3/ 28= 827.43 lakhs. Since, the company is in competitive phase and due to the rules and policies of the company, they have not disclosed on the marginal cost.

PRODUCTION ANALYSIS Hawkins has manufacturing units in Janpur, Thane and Hoshiarpur. It has has not imported any technology in last 5 years. Primary raw materials used in the process of manufacturing are brass, stainless steel and aluminum. The raw material is procured from the domestic market and the performance of the sector is largely dependent on the price of the raw material.