The Chennai-based Butterfly, manufacturers of stainless steel appliances and consumer durables, has a long history. Started 40 years ago with a few thousand rupees as initial investment, it has come a long way today and has large sized factories in India, China and branch offices across India. The Butterfly brand was established in the 1980s, after the product had already been recognized for their quality and safety.

Explains Lakshminarayanan VM, Chairman, Butterfly, on why they opted for this name..

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Source: BSE, month-end figures. *As on 11 August.

When a small-cap company’s share rise by nearly five times in the span of less than a year, two thoughts come to the minds of the investors. The obvious one is that the prices are manipulated by some operators who has managed to acquire the shares early. The other is, it is probably a turn around and the markets missed the opportunity. In the case of Gandhimathi Appliances,  (market cap INR 373 crore) better known for its brand Butterfly, the second seems more likely…

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VML Karthikeyan, Director, Marketing, Butterfly Gandhimathi Appliances

The Butterfly brand of kitchen appliances is making efforts to reclaim lost glory.

What would a brand manager do if the brand more or less looks like a “me-too” on cluttered shelves, and needs to be separated from the pack? Give it an overhaul. This is precisely what the kitchen appliances brand ‘Butterfly’ is all set to get.

“It’s going to be more than just an overhaul,” says V.M.L. Karthikeyan, Director (Marketing), Gandhimathi Appliances. The 40-year-old brand is going to get a complete makeover.

Gandhimathi Appliances makes and sells a range of kitchen appliances including pressure cookers and tabletop grinders under the brand Butterfly. It is one of the top three brands in most categories its present in. Karthikeyan is part of the promoter family and belongs to the third generation. “Our generation wants to take the brand to new highs by breathing fresh life into the brand DNA. We want the brand attributes to undergo a metamorphosis — be it the logo, brand positioning, product design or even packaging,” he says.

Butterfly group, pioneers in branded stainless steel appliances, started operations four decades ago. “In fact, in the early 70s, our Butterfly tumblers were even smuggled into neighbouring countries. It used to give a sense of  ‘quality gifting’ those days,” says V.M. Seshadri, Karthikeyan’s uncle and Managing Director of Gandhimathi Appliances. The brand has many firsts to its credit. Butterfly was the first to come out with a stainless steel gas hob and stainless steel vacuum flasks in India, he says.

However, fine-tuning to contemporise the brand image is critical in a highly cluttered and competitive market. Currently, Butterfly is present in 12 product categories and has over 300 SKUs. It faces stiff competition in almost all the categories. For example, in pressure cookers, the rivals are TTK Prestige, Hawkins and Premier at the national level, and a host of regional brands; in mixer grinders, there are Philips, Preethi (also owned by Philips), Panasonic and Maharaja; in tabletop grinders there are atleast half-a-dozen big brands in the market.

Though Butterfly enjoys good brand recall in the market, particularly in the South, redefining brand attributes is the need of the hour. All Butterfly products and packaging should use the same logo, colour schemes and tagline. Pointing to different boxes, Karthikeyan says, “See … logos in different colours, sizes and formats … I want uniformity. After all, branding is all about sending an effective, consistent message, and uniform across product categories, right?”

Though the brand has a national footprint, even the advertising was fragmented with different layouts for different regions. Butterfly recently roped in Grey as its agency on record after a multi-agency pitch for its creative assignments. “Earlier, there was not enough professionalism in our advertising or media buying.”

Moreover, Karthikeyan believes product design is a key element as visual impression is often the deciding factor. “It’s more so for products in the kitchen appliances and consumer durables segments. It even overrules other senses and persuades the consumer against all logic,” he observes.

For this purpose, the company has tied up with “a design school” to redesign the whole range of products to impart an aspirational quality, and more importantly, a common design language across product categories.

Is it possible to have a common design element for your mixer grinder and gas hobs? Why not, he shoots back. He refers to automobile brands such as Audi, where, he says, one can easily identify Audi SUVs through their similar-looking front grill design. Similarly, certain subtle design elements will be common across BMW’s cars. “We want such a thread in our products.”

At the back end, the company is planning to expand its capacity and also intends to undertake some upstream projects. The Rs 280-crore company plans to raise Rs 100 crore through private equity and has given the mandate to Motilal Oswal Financial Services. Currently, the promoters own 62 per cent stake in the company.

Besides, it also plans to merge another firm, Gangadharam Appliances (promoted by the same family) with itself, following which the promoters stake in Gandhimathi Appliances will go up to 78 per cent and will be brought down to around 67 after the PE infusion.

However, the merger proposal is still pending with the BIFR (Board for Industrial and Financial Reconstruction).

Gangadharam Appliances, which currently manufactures pressure cookers, vacuum flasks and cookware for Butterfly, went to BIFR in 1998. Following that, the promoters came out with a share buyback offer. The promoter family currently owns 99.1 per cent stake in the company. Gandhimathi Appliances too went to BIFR in 2003 and came out in 2008 following the settlement of loans to the tune of Rs 40 crore raised from promoters’ personal funds.

Observers say the brand has to make a significant difference to make a dent. Ramanujam Sridhar, CEO, brand-comm, says, “In my opinion, changing the logo or even the product identity will only have a limited impact, unless the brand demonstrates its distinctiveness to the consumer,” adding, “I would like to wait and watch how significant are the changes going to be.” Raghu Vishwanath, Managing Director, Vertebrand Management Consulting, says, “Even as a consumer, I remember Butterfly differentiated itself those days by being the first to come out with stainless steel pressure cookers.” Now as most home-grown brands are forced to battle with global brands, “if Butterfly’s design differential is significant and consistent, it will certainly enable the brand to position itself at a premium, in addition to increasing its market valuation,” he says.

Karthikeyan says Butterfly is also planning to expand its product portfolio with a few more products in the home appliances category. “However, all these things will happen only after the brand makeover. It may take a while, but the change will be pronounced,” he declares.

Sheshadri VM, Managing Director, Butterfly

Kitchen appliances major Gandhimathi Appliances Ltd. is planning to raise Rs. 100 crore through private equity investment into the company for capacity expansion and “a few upstream projects”, said Mr. V.M. Seshadri, Managing Director, Gandhimathi Appliances. The company has given the mandate to Motilal Oswal Financial Services for the purpose.

Gandhimathi Appliances manufactures and markets a range of appliances from pressure cookers to mixer grinders under the brand name Butterfly. Currently, the promoters own 62 per cent stake in the company…

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