Philips Gambit of Acquiring Preethi Kitchen Appliances in 2011

In one of the largest acquisitions in India’s home appliances business, the India subsidiary of Netherland-based Philips, acquired the Chennai-headquartered Preethi Kitchen Appliances, seven years ago. After some unexpected hiccups, the gambit, now seems to be paying off

Philips has been a respected brand in India for almost 90 years, selling the first light bulb in 1938 and the first radio ten years later. In this century the India entity of the Netherlands-based multinational player has concentrated on healthcare and hospital products, but the brand equity remains strong in a range of consumer appliances. Philips kitchen appliances competed with brands like Bajaj, Butterfly, Maharaja Whiteline, Kenstar, Bosch among others.

Then out of the blue in 2011 came the announcement that Philips was all set to acquire the business of Tamil Nadu-based Preethi Kitchen Appliances, whose flagship mixer-grinder was one of the big names in that niche. The acquisition, for Rs 350 crores was one of the biggest in the Indian home appliance market.

Preethi was the top selling brand but…

Preethi had been around since 1978 and was the top selling brand in South India. While Philips had its own products in the kitchen appliance sector, the Preethi acquisition brought a commanding presence, and the unique local knowledge that only a desi player could bring. Plus a national footprint: Preethi already had four plants in Himachal Pradesh in addition to three in Tamil Nadu.

It was win-win all the way: Philips brought a heightened culture of product quality, that could build upon Preethi’s savvy on what Indian food habits demanded in an all-in-one kitchen appliance. Things were great, till the combine was blindsided by a development no one anticipated: Tamil Nadu Chief Minister Jayalalitha’s decision to give away “mixies” free, to lakhs of households in the state soon after she returned to power in 2011, ironically the year when the Preethi acquisition was mooted.

Then came capital infusion by Philips

The years between 2012-15 were difficult for Preethi, with their key home market taking a hit. That is where the Philips connection helped with significant infusion of capital. The company also tapped the military canteen stores department (CSD) as a steady market.

By 2018, the Philips-Preethi story was bright once more, the new parent, wisely let its acquisition work independently and build on its 40-year old brand. Just six months ago, in November 2018, the next growth phase was signaled when Preethi launched yet another manufacturing plant, a 7000 square metre facility near its Chennai HQ, which would help consolidate its number one position in mixer-grinders in India, while expanding sales in 14 other countries.

Roy Jakobs, chief business leader, personal health and EVP, Royal Philips, said, “We are proud that our Preethi manufacturing unit is lean certified and all our products will be RoHS compliant. The facility is equipped with top notch technologies like robots to increase efficiency and to deliver high quality products to our consumers. We are looking at this, as a world class manufacturing site for Mixer-Grinders and it fits perfectly with our growth plans.”

Now a 10,000+ strong dealer network

Srinivasan Subramanian, Managing Director, Preethi Kitchen Appliances explained on the occasion that the company had diversified into gas stoves as a second key category. Preethi now had a 10,000+ strong dealer network with over 100 distributors and 96 service centres across the country to support its range of coffee makers, electric cookers and table top grinders, beside mixies.

For Philips executives like Jakobs, the Preethi connection is a reason to wear two hats: In India he oversees operations like Preethi’s new Chennai plant and ensures it meets global standards of efficiency and quality control. Then he is in Europe, at events like the IFA in Berlin, helping launch a different set of Philips-branded kitchen tools in the West.

It can seem like schizophrenic for a company to sell similar products under two brands, sometimes in the same market ( Philips-branded kitchen appliances are also available in India and on e-commerce sites they compete in the same price brand as Preethi). But it all seems part of Dutch major’s game plan to think globally, act locally. This used to be the mantra of environmentalists. Now it seems a sensible solution for selling mixies too.

A Guinness record for cup cakes — and a mixie

On January 19 , 2019 Preethi Kitchen Appliances broke the Guinness World Record for the Tallest Tower of Cupcakes with a 41.8 feet tower with 18,818 cupcakes in a Chennai mall . 1,411 kg of cake batter was prepared in a Preethi Zodiac Mixer-Grinder with a Master Chef Plus Jar.

This story is written by Anand Parthasarathy. His rich experience, reporting ACE (Appliances and Consumer Electronics) stories encompasses working 15 years with The Hindu as its IT Consulting Editor. He is a qualified instrumentation systems engineer who has worked for 20 years as a scientist on numerous defence R&D projects, and as a project manager for surface-to-air missiles at DRDO.