TTK Prestige Ltd (TTKPRESTIG) Q3 FY23 Earnings Concall Transcript

TTK Prestige Ltd (NSE:TTKPRESTIG) Q3 FY23 Earnings Concall dated Jan. 31, 2023.

Corporate Participants:

Chandru Kalro — Managing Director

Analysts:

Dhruv Jain — Ambit Capital Ltd. — Analyst

Prakash Kapadia — Anived Portfolio Managers Pvt Ltd — Analyst

Achalkumar Lohade — JM Financial Ltd. — Analyst

Aniruddha Joshi — ICICI Securities Ltd. — Analyst

Manish Poddar — Motilal Oswal Financial Services Ltd. — Analyst

Naveen Trivedi — HDFC Securities Limited — Analyst

Sameer Gupta — IIFL Securities Ltd. — Analyst

Lokesh Maru — Nippon India Mutual Fund — Analyst

Senthilkumar Natarajan — Joindre Capital Services Limited — Analyst

Pavan Kumar — Shree RatnaTraya Capital Partners — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to TTK Prestige Limited Q3 FY ’23 Earnings Conference Call Hosted by Ambit Capital. [Operator Instructions]

I now hand the conference over to Mr. Dhruv Jain from Ambit Capital. Thank you, and over to you.

Dhruv Jain — Ambit Capital Ltd. — Analyst

Thank you. Hello, everyone. Welcome to TTK Prestige 3Q FY ’23 earnings call. From the management today we have with us Mr. Chandru Kalro, Managing Director; Mr. K. Shankaran, Whole Time Director; and Mr. R. Saranyan, Chief Financial Officer.

Thank you, and over to you, sir, for your opening comments.

Chandru Kalro — Managing Director

Thank you, Dhruv, for that, and welcome everybody to the TTK Prestige concall. I just wanted to summarize the quarter. As we had expected, the quarter was going to be a little different from the previous year because: A, the festival itself had shifted, advanced itself, and therefore there was some sell-in that happened in the second quarter instead of the third quarter as last year; and the second thing was that we had expected some movement of the share of wallet away from the kitchen appliance segment and you know that our travel and hospitality have taken a bigger share of wallet this time. And we are really seeing a normalization in that sense between our category and the rest. And that’s what we saw.

We all know and have heard from various quarters about the slackening of discretionary consumption, which also we saw, thanks to the inflation and other things. And that also affected us. So the share of wallet, the discretionary consumption, etc., has meant that the quarter three, per se, has been a little — less than what we would have liked it to be. But as we’ve said in the beginning, please don’t evaluate us from quarter to quarter. The nine months are still looking quite good, quite robust. We have still performed very well for the first nine months, and we’re looking forward to things changing as quickly as possible as we go along.

I’ll now hand over to you all for any questions that you might have. Hello, Dhruv?

Dhruv Jain — Ambit Capital Ltd. — Analyst

Yeah, I guess, one operator [Indecipherable] Let me just check.

Chandru Kalro — Managing Director

Can you hear us?

Operator

<<Operator>> Yes, sir.

Dhruv Jain — Ambit Capital Ltd. — Analyst

<<Analyst>> Yes, clearly.

Operator

<<Operator>> Clearly, we can hear you, sir.

Chandru Kalro — Managing Director

<<Chandru Kalro>> Okay, fine.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from the line of Prakash Kapadia from Anived Portfolio Managers Pvt Ltd. Please go ahead.

Prakash Kapadia — Anived Portfolio Managers Pvt Ltd — Analyst

Yeah. Thanks for the opportunity. Couple of questions from my end. If I look at the current quarter sales of around INR694 crores and compare it to December ’19 we were INR587 crores, which is pre-lockdown. So in the context of four year period doesn’t that growth seems to be low, because December 2021 had some patterns of lockdown. I was trying to assess growth over a longer-term period. So if you can give us some sense from the longer-term perspective that will help.

Secondly, if I look at real estate sales, they are pretty buoyant. So what impact does it have on demand for our products in the coming quarters over the medium term?

And lastly, what trends are we seeing on input cost? And do we think this gross margin improvement which we’ve seen on quarter-on-quarter basis could trend upwards in the coming quarters?

Chandru Kalro — Managing Director

So three parts to your question, one is the three-year — you started from FY ’20, is it?

Prakash Kapadia — Anived Portfolio Managers Pvt Ltd — Analyst

’19, INR587 crores to INR694 crores.

Chandru Kalro — Managing Director

Okay. What I would request you to do is to look at the same period of nine months from FY ’19 to now and you will see that you are looking at something like INR600 crores moving to INR2,200 crores or INR2,100 crores. So that’s a very decent growth from there. So I wouldn’t want us to see this as quarter and quarter because for the last eight or 12 quarters, ever since COVID has hit, there is always some kind of a negative or positive base effect that we would like to even out over a longer period of time rather than just look at it from this one quarter perspective.

I think what we all must be concerned about is what is the standing of the brand and the company in the market, is the market share robust, are we growing or not in that sense, or are we gaining market share or not in that sense. And there I think we are very confident. We are saying that we are extremely strong in the market. And our products and brand are very powerful, and that is why we are seeing growth. Even if you look at a very mature category like pressure cookers, we have grown 14% over the previous nine months. So that gives you an idea of where we are. All the appliances put together almost did double digit in spite of everything. So I would look at this very positively.

The second part of your question I think was on the raw material cost, right?

Prakash Kapadia — Anived Portfolio Managers Pvt Ltd — Analyst

Yeah, raw material and that real estate buoyancy, so the demand of that real estate buoyancy on our medium-term sales.

Chandru Kalro — Managing Director

So the real estate buoyancy definitely has a positive effect on us. But if there’s a lag — it’s a lag for us because what happens is when the real estate is delivered and the occupying happens, then first the fixtures get done, the furniture, the hard furniture gets done, and then people move or upgrade into the smaller appliances. So we have a little bit of a lag effect in that sense. But yes, as real estate grows, it is definitely a positive for our company and our industry.

And the third thing that raw material cost that you are seeing is it was largely on the down — going downwards until November. And then this China reopening, obviously, has had a different effect on the commodity prices, and suddenly we saw a reversal and things going up again. But given that the demand, per se, is not that robust, we are not expecting any major surprises negatively on the raw materials, and we are expecting that gross margins actually improve as we go along in the coming quarters.

Prakash Kapadia — Anived Portfolio Managers Pvt Ltd — Analyst

In the coming quarters. Understood. And sir, also if you could give us some sense, as we are aspiring to double our sales in the next five years, organic growth would be the biggest driver to this. So what volume/mix can we look at over the medium-term to achieve that aspiration? So is 7%, 8% volume growth reasonable enough for us to have that direction of doubling our sales with a price and product mix, is that a fair assessment?

Chandru Kalro — Managing Director

So, first, you must understand that our business today has multiple categories in it. While we are operating in a single segment, we have multiple categories. Some are very mature like pressure cookers, some are very much underpenetrated, some where we have relatively lower market shares in some geographies, some where we have higher market share. So there are different strategies required for different categories. At the overall level, we are looking at a 15% thereabouts value growth, which could be anywhere between 8% and 10% volume growth on a year-on-year basis for us to reach our objective.

Prakash Kapadia — Anived Portfolio Managers Pvt Ltd — Analyst

Okay, around 8%, 10% volume growth.

Chandru Kalro — Managing Director

So the thing is here we need a model mix, the channel mix, the geography mix, there are several variables in it, and we have to optimize those to achieve our objective.

Prakash Kapadia — Anived Portfolio Managers Pvt Ltd — Analyst

Right, right. And we seem pretty confident over the medium to long run to achieve that aspiration, right?

Chandru Kalro — Managing Director

Oh yes, certainly, because the brand as you know is extremely powerful and very good, very well respected in the market.

Prakash Kapadia — Anived Portfolio Managers Pvt Ltd — Analyst

Great. Thank you. All the best.

Chandru Kalro — Managing Director

Thank you.

Operator

Thank you. Our next question comes from the line of Achal Lohade from JM Financial. Please go ahead.

Achalkumar Lohade — JM Financial Ltd. — Analyst

Good afternoon, sir. Thank you for the opportunity. My first question was in terms of the price increase in past 12 months, would it be fair that there is hardly any price increase in last four quarters, just to see in the YoY number how much is the volume drop, or if the volumes are flat?

Chandru Kalro — Managing Director

So, first, let me give you a direct answer to your question. When you look at the nine months, all our key categories, we have a volume growth, some in low-double digit and some in high-single digit. So except for cookware and gas stove where we had a very much more higher growth in the past and base effect is trying to catch up, the volume growth have been quite robust in most of our key categories.

And coming back to the price increase, in this financial year, we have not had any price increase because we have not required to take any price increase. And you know since commodity prices have been falling, actually we are having what most other companies have as a problem, which is high cost raw material inventory, lower actual spot inventory prices, and therefore, ability to take any price increase not being there. In fact, where people are holding lower inventories, they are in a better competitive situation.

Now we enjoyed this situation the previous year when the things were going up. Now on the way down we are a little bit lagging in terms of those gross margins going back up. So that’s where we stand.

Achalkumar Lohade — JM Financial Ltd. — Analyst

So just to clarify, you’re saying basically as compared to the peers, we had higher RM inventory, so that benefit accrued when the prices were rising, and it is working in a reverse fashion when the prices have declined in 3Q. Have I got it right, sir?

Chandru Kalro — Managing Director

Absolutely right. Bang on.

Achalkumar Lohade — JM Financial Ltd. — Analyst

Got it. Sir, if I look at nine months like what you mentioned and one of the other company, your peer, has reported number, if I look at their nine months — three-year CAGR in terms of nine months FY ’20 comparing with nine months FY ’23, it is 15%, while for us it’s about 10%. So just wanted to understand, when you say the market share, can you help us understand some statistic with respect to categories where our market shares are currently, how it was say three years back?

Chandru Kalro — Managing Director

See, the other company which you are talking about has a very different category mix to our category mix. So, for example, the kitchen appliance category segment in their mix will be smaller than ours. And within — therefore, we cannot really compare these two like for like. We have to look at these individual categories. Now some of their key categories in their mix, we have actually, as per the retail audit data now, actually gone up by two notches in the market share as we look at the last Q3 share. So it’s difficult to say.

But there is one thing that you must — we are seeing is that a little bit of the — given the inflation being where it is and there is a little bit element of downtrading, we are seeing that the smaller brands are little bit nibbling away in some regions at some price points at some customer segments. So, therefore, you will see that depending on where which brand is positioned and for which category, there might be differential growth. You can be rest assured that our market share situation is quite robust.

Achalkumar Lohade — JM Financial Ltd. — Analyst

Understood. Sir, if I look at the past several years, kitchen appliances used to be the biggest driver compared to cooker, cookware. Now if we see last three, four quarters, we have seen that the appliances, if I look at last four, five quarters, the appliances is growing at a smaller rate than cooker, cookware combined. Is there anything to highlight there or what is driving this slight weakness in the appliances growth particularly? And how do you plan to tackle the same?

Chandru Kalro — Managing Director

So as I said, it’s about various segments. Now we — in our gas stove segment, which is one of our very key segments, if you might say, the gas stove category per se has not been growing very much — as much as it used to grow. Now this is a very mature category, and normally in an inflationary situation, people tend to postpone purchases. Cycle times reduce or replacement times reduce when things are very affluent, and they normally elongate because people postpone purchases. So gas stove is a very important category in that sense.

But over there if you look at our focus, we have launched the Svachh range of gas stove, which is at the upper end of the price mix. So now the contribution of this in the entire category would be a little limited given the kind of customers we can attract, but the product is met with an extremely good response. We’re looking at how do we expand that gas stove category across.

Now induction cooktops have also come in the way of expansion of gas stoves because over the last three years induction has definitely caught the fancy of most people because electricity is available, LPG prices have gone up, and therefore induction has been going up. So it’s a mix of various factors and I believe these are all temporary.

Unfortunately, as I keep saying, the last two or three years the base effects of each quarter and each period given COVID lockdowns and no lockdowns have caused all this confusion to happen. Once we get out of these and there our normalcy returns, then we will have a period of clear runway. Also with Ujjwala scheme slowing down because they have almost given all the lower end of the society, that robustness also is coming down. So you would have seen most of our peer groups have also reported gas stove being down, whereas mixer grinder we’ve done extremely well. So these are some of the things that are happening.

Achalkumar Lohade — JM Financial Ltd. — Analyst

Got it. Sir, if I may ask one more question with respect to the category like chimneys and hobs we are seeing a lot of excitement among the players. I just wanted to understand your thoughts on the same in terms of: A, the market size; B, what is our presence in terms of the range and in terms of the market share if we can give any color on the same.

Chandru Kalro — Managing Director

So the color is that we are actually very marginal players in the chimneys, to be honest, and I believe it’s an extremely exciting growth-generating category for us, and it is definitely in our radar, and we have some extremely exciting products that we are coming out with in the near future.

Achalkumar Lohade — JM Financial Ltd. — Analyst

Any market size and the growth, sir, for the industry?

Chandru Kalro — Managing Director

Market size is huge. I don’t have offhand numbers, but it’s huge. And like your previous previous friend [Phonetic] had said, with the real estate growing the way it is, especially at the upper end, this kind of market has good growth prospects and that is why we are going to focus on this in a very big way in the coming future.

Achalkumar Lohade — JM Financial Ltd. — Analyst

Got it. Sir, I have more questions, but I’ll come back in the queue. Thank you.

Chandru Kalro — Managing Director

Okay, thank you.

Operator

Thank you. Our next question comes from the line of Aniruddha Joshi from ICICI Securities. Please go ahead.

Aniruddha Joshi — ICICI Securities Ltd. — Analyst

Yeah. Thanks for the opportunity. Sir, in this presentation, the company has said that the peers were offering relatively higher discount. So how is the situation now? Has the discounts in the market normalized, or do you see that competition at the low end of the market still continues to be very steep? And obviously, will it continue to hurt the Q4 numbers as well? And second question is, there is also comment that as a matter of prudence, provision was made for inventory considered unserviceable. So if you can please quantify this provision which has been made in Q3? And do you see any provision that needs to be made in Q4 as well? Yeah, thanks.

Chandru Kalro — Managing Director

Yeah, I’ll answer the last one first. As a matter of good governance, as soon as the issue comes to light to the management, we like to provide it then and there, irrespective of how the bottom line is looking. And in this case, the amount was about INR2.5 crores or INR3 crores thereabouts, and that is what we are talking about here. So that’s what has gone off the bottom line. And this has happened over the years of which is obsolete inventory which had to be written off, which is prudent accounting. Whenever we use some of it, it will come back, so that is how it is.

Coming back to your question on the lower-end competitive intensity, it continues. Whenever volumes don’t grow, the industry typically is — not only our industry, any industry typically starts fighting hard for every volume that is there. And that discounting we are seeing. And we are not going to do a very tactical — some of it we will do. It’s not that we don’t do anything at all, but we won’t do anything that will hurt the long-term interest of the brand. And therefore, even at short-term losses we are willing to take for the long-term interest of the brand, which is what we have said here. How are we going to react to this in the future is to create products that will not affect us at the upper end and the innovative end, while we continue to participate at the lower end and those strategies are being formulated continuously, product development is happening continuously, so that we can do that. We will not be — part of this quarter will continue to be like that. But having said that, I’m sure we will be stronger at the end of this quarter to face these challenges.

Aniruddha Joshi — ICICI Securities Ltd. — Analyst

Okay. Thank you, sir.

Chandru Kalro — Managing Director

Thank you.

Operator

Thank you. [Operator Instructions] Our next question comes from the line of Manish Poddar from Motilal Oswal. Please go ahead.

Manish Poddar — Motilal Oswal Financial Services Ltd. — Analyst

Yeah. [Technical Issues]. Just one question based on the pricing…

Chandru Kalro — Managing Director

Can’t hear you clearly. Can you speak into the speaker, please?

Manish Poddar — Motilal Oswal Financial Services Ltd. — Analyst

Okay. Do we need to take incremental pricing given the recent set of RM pricing which you have started seeing? And what is the outlook for pricing in FY ’24 given what competition is behaving?

Chandru Kalro — Managing Director

As of now, we are taking it as it comes. We don’t believe we need to take any price increase or do any major price reduction. So we are looking at a period of stability for the next couple quarters at least, unless things change dramatically. And these things can change very quickly given the way things are. Luckily, this morning for the first time after seven, eight trading sessions, we’ve seen raw material prices again cool off. So we don’t know. As of now, even at current prices, I don’t think we need to do anything with our pricing.

Manish Poddar — Motilal Oswal Financial Services Ltd. — Analyst

And would you need to cut prices in FY ’24, given how competition is stacking up?

Chandru Kalro — Managing Director

As of now, no. As I said, our response is that we might come up with some other strategic moves to help counter us and compete well in those areas.

Manish Poddar — Motilal Oswal Financial Services Ltd. — Analyst

Got it. Thanks.

Operator

Thank you. Our next question comes from the line of Naveen Trivedi from HDFC Securities. Please go ahead.

Naveen Trivedi — HDFC Securities Limited — Analyst

Yeah. Good afternoon, everyone. Sir, in your opening remarks, you mentioned about festive season also was one of the reasons that Q3 was on [Indecipherable] sort of a number. If you look at Q2, Q3 combined this year versus last year, then also there is a 4% decline in the revenue side. So just wanted to check apart from festive demand, how has been the underlying trend where you are also talking about, at the end of the time, you are seeing normalization of the demand side. So two things I want to understand from your side.

Chandru Kalro — Managing Director

It’s a good point you raise. Actually if you see, again, just given the COVID situation, last year, if we are tracking our primaries and secondaries put together, last year, the propensity of the channel to stock up was much better than this year, given the situation and the economic climate that we are in. So if I look at the secondaries of last year and the secondaries of this year, my volume growths are quite evident. But the primaries that happened last year was with the view of increasing the stock given that we were coming out of a lockdown, etc., etc., that opportunity was not there this year, and this year it has followed the secondary sales and that is healthy, because if I unnecessarily increase channel stock that will vitiate many other variables.

So if I look at the secondary level, the sale which has happened, there seems to be a growth. It’s not a flat thing in most of the categories, whether I take Q2 plus Q3 or whether I take only Q3. So that way — that is why when we are looking at the retail audit of the market share, we are seeing that we are absolutely stable. If not, we have grown few basis points here and there.

Naveen Trivedi — HDFC Securities Limited — Analyst

Sure. And thereby you’re expecting that there’s normalization of the demand?

Chandru Kalro — Managing Director

Yeah. So we are saying that the demand, per se, has not collapsed or anything, but the growth rate definitely of the previous year, given the higher share of wallet that was coming to this, and now that the share of wallet is normalizing, it’s kind of stabilizing. So given these two — one or two quarters, then we are getting back to normalcy. Even this year if you’d see, the first quarter was 68% over the previous year because the base effect of the previous year was there. Now if you look at the first half and half, we have outperformed most of our peers in the industry. So it’s all these primary, secondary, this COVID, non-COVID, all of these things which are creating these confusions.

Naveen Trivedi — HDFC Securities Limited — Analyst

Sure. And when you talked about specific channels, is it the e-comm side where the propensity has gone down?

Chandru Kalro — Managing Director

So, obviously, when the lockdowns were there, e-comm had a higher share and relevance. I am not saying that e-comm has stopped growing, but I’m saying that e-comm has definitely not grown much this year like it used to in the previous years. And, in fact, if you had looked at the e-comm channel, that is where the discounting started very badly during the season, and we said that it will hurt the long-term interest of the brand which is why we stayed away. Now e-comm, for us, will be, as I already said even in the previous quarter, between 14% and 18% is the band in which we are seeing e-comm stay and that’s where we want it also.

Naveen Trivedi — HDFC Securities Limited — Analyst

Sure, sir. Thank you and all the best.

Chandru Kalro — Managing Director

Thank you.

Operator

Thank you. Our next question comes from the line of Sameer Gupta from India Infoline. Please go ahead.

Sameer Gupta — IIFL Securities Ltd. — Analyst

Hello, sir. Good afternoon and thanks for taking my question. On your 15% value growth aspiration, now when I look at years even before COVID, we were trending right about at below 10%. Even on nine months, your CAGR is around 10%. So just wanted to understand what is the bridge here? From this 10% to 15%, what exactly differently are we doing? What has changed for this acceleration to happen? Especially considering the slowdown in discretionary environment, how confident are you of this achieving this 15% kind of a growth?

Chandru Kalro — Managing Director

Look, I can answer you this in a little more detailed fashion probably next quarter once we’ve had our budgets for this year prepared because that’s where all strategic issues are raised. But coming back, yes, you are absolutely right, even pre-COVID our CAGR has not been near that 15%. And, again, if you go back in time, we’ve had several ups and downs given the channel, the way things were turning, we had one or two customers who changed strategy and therefore they were quite big in our scheme [Phonetic].

So what we want to do largely, let me give you two or three themes what we want to do largely is actually look at specific geography, specific categories which can be large and where we are not large, and then build those categories for ourselves by investing in those categories. That’s what we want to do and expand our footprint in those categories. That is going to be largely the strategy. I can’t give you more information than that, but we are confident that we will come up with a way to get those numbers kicking in as we go forward into the next few years.

Sameer Gupta — IIFL Securities Ltd. — Analyst

That’s very helpful, sir. Thanks. That’s all for me. All the best.

Chandru Kalro — Managing Director

Thank you.

Operator

Thank you. Our next question comes from the line of Lokesh Maru from Nippon India Mutual funds. Please go ahead.

Lokesh Maru — Nippon India Mutual Fund — Analyst

Thank you. Sir, my first question is on the current demand environment. Given that a lot of our sales are also related to wedding season, which has been quite upbeat in last — this last November and December, so getting into January and given that like you have said that secondary sales have been quite good, what is the momentum that we are seeing on primary side in this month of January and what kind of target are we setting for our channel as such?

Chandru Kalro — Managing Director

See, our approach to this is very simple. Our primary must follow the secondary, and the secondary, as I said, while it is not growing dramatically, it is also not dropping dramatically. I believe that some level of stability will come through in this quarter, and we will continue our policy of following primaries with the secondaries the wedding season is a is something that happens every year this year was a little more robust but then this year there were a lot of weddings which were destination wedding which were travel-related [Phonetic] weddings and all of the other things. And there are a lot of new variables that have come in.

I do believe that these things all normalize over a period of time. And the demand of discretionary spend, not just in our category but even in all categories is going to come back. When you have an economy that is growing at 6.5%, 7%, it is going to come back somewhere to us finally.

Lokesh Maru — Nippon India Mutual Fund — Analyst

Agreed. Right. Sir, my next question is on the margin side. So one is that we are going to benefit from the raw material — the high-cost inventory being flushed. Another is just because of intense competition, some part of these margin gains could also be passed on — passed through. So what kind of gross and EBITDA margins are we targeting in near-term?

Chandru Kalro — Managing Director

Look, on the EBITDA front, we’ve always said that we want to be between 14.5% and 16%, and I think that is something we should be able to achieve in that band. Coming back to the gross margins, just give me a minute, we are trying to say that we will be almost at the same level as the previous year I think. One minute, just let me…

Lokesh Maru — Nippon India Mutual Fund — Analyst

42%.

Chandru Kalro — Managing Director

Yes, almost there, give or take 50, 60 basis points here or there. I think that’s where we want to be and that’s where I think we are likely to be.

Lokesh Maru — Nippon India Mutual Fund — Analyst

Sure, sir. Sir, last question on Ultrafresh, given the top line and the number of stores, basic math basically comes out somewhere around INR3 lakh to INR3.5 lakh fees [Phonetic] per month per store of Ultrafresh. So what is the kind of magnitude we want to ramp it up per store basis sales per month or per year targets that we may have. Anything that you may want to put a light on?

Chandru Kalro — Managing Director

It’s a little early on that. I think after the acquisition or the association of the Prestige brand on that board of every studio, definitely one thing that we are seeing as a trend is that the average price realization for kitchen has definitely gone up. Now each studio ideally should give me at least two to three kitchens in a month. I believe that since these are new studios and the business development team is doing everything to make sure that the studio gets enough traction in the nearby trading area in the next six to eight months we are likely to see this being realized.

So what we are doing is we are acquiring new stores, making sure they stabilize, and then go for the next round of acquisition. This year almost 35 net store acquisitions have happened on a base of 80, 85, which I think is extremely robust. So this is going to be a high-growth category, but it is also going to be something that we would still need [Phonetic] because we need customer satisfaction because it’s a highly referral-oriented business.

Lokesh Maru — Nippon India Mutual Fund — Analyst

Understood, sir. Thank you so much.

Chandru Kalro — Managing Director

Thank you.

Operator

Thank you. [Operator Instructions] Our next question comes from the line of Senthilkumar from Joindre Capital Services Limited. Please go ahead.

Senthilkumar Natarajan — Joindre Capital Services Limited — Analyst

Hi, sir. Good evening. Thanks for the opportunity. I have a couple of questions. First one is from the investor presentation, I can understand that sales were impacted on account of inflation and thus the demand for low-priced competitive products. But we have a Judge brand exactly to compete with the low-priced product category, I mean mass category. My query is whether the Judge brand has got — has not got market acceptance and is thus unable to compete with low-priced product — low-priced competitors? Your thoughts on this, please?

Chandru Kalro — Managing Director

Mr. Senthilkumar, you have asked a very, very pertinent question indeed. The Judge brand was precisely for that to operate at the lower end, but you must remember that in the previous year when we were having so much demand, we actually underplayed Judge because we would rather produce for Prestige brand rather than produce for the Judge brand. So these things — to be fair, we have been a little tentative on the Judge brand because we are forever trying to protect Prestige from any kind of cannibalization. But I do believe that in the next few months and quarters, you are going to see a proper strong strategy for Judge. We are in a position to certainly compete well in those price segments, but we will never be the cheapest in that, because remember that any customer who’s buying a Judge product is supported by the same aftersales service system that Prestige has. So that reassurance of TTK Prestige we would like to maintain. That has a certain cost, so we will never be the cheapest. But we will definitely be a good value alternative to Prestige for a customer who doesn’t want to pay a Prestige price [Phonetic].

Senthilkumar Natarajan — Joindre Capital Services Limited — Analyst

And my second question is on what basis the sales was classified into primary and secondary, because I could see primaries this year appear subdued in the presentation. I just want to know how the management is classifying the primary and secondary sales.

Chandru Kalro — Managing Director

If supposing I am having distributors, I sell to the distributor, that is called primary sale. That is the sale that you are seeing as my sale. What the distributor sells to the market is called secondary sales. That we track through our secondary sales distributor management software. It is that sales that I’m talking about as a comparison with the previous year where I am telling you that the sale is stable, it’s not grown.

Senthilkumar Natarajan — Joindre Capital Services Limited — Analyst

Okay, got it. Thank you. That’s it from my side.

Operator

Thank you. [Operator Instructions] Our next question comes from the line of Pavan Kumar from RatnaTraya Capital. Please go ahead.

Pavan Kumar — Shree RatnaTraya Capital Partners — Analyst

Sir, what should be the normalized EBITDA margin band that we should assume going forward [Speech Overlap]?

Chandru Kalro — Managing Director

14.5% to 16%.

Pavan Kumar — Shree RatnaTraya Capital Partners — Analyst

Okay. And going forward, should we — so one thing please let me know if my understanding is right that this quarter you are saying is a normalized base quarter and from here on we should be looking at maybe we are targeting 8% to 9% volume growth and 10% revenue growth, right?

Chandru Kalro — Managing Director

I talked about the 8% to 9% volume growth from next financial year onwards. I told you that this second half of this year is likely to be a little difficult given the overall economic situation. And hopefully, we will see normalization happen through this quarter, and we go into next year with a lot more optimism than what we see today.

Pavan Kumar — Shree RatnaTraya Capital Partners — Analyst

Okay. And any further inventory losses expected in the Q4, sir?

Chandru Kalro — Managing Director

I don’t know about it yet. I don’t think so. But if it is there, we will take the prudent method of recognizing it as we have always been doing.

Pavan Kumar — Shree RatnaTraya Capital Partners — Analyst

Okay. And…

Chandru Kalro — Managing Director

See, every year we have these audits at the end, and whatever those figures throw up, we tend to do whatever is necessary and prudent accounting.

Pavan Kumar — Shree RatnaTraya Capital Partners — Analyst

Okay. And these inventory losses which we have taken on our P&L, are they pertaining to something related to the raw material prices falling or is it due to the finished goods getting obsolete?

Chandru Kalro — Managing Director

It could be various things, finished goods being obsolete or some damages or some work-in-progress which would not be converted into finished goods, or some raw material which has become obsolete because those models are no longer being sold. Those are some of the reasons that is there.

Pavan Kumar — Shree RatnaTraya Capital Partners — Analyst

So basically you are saying it is a mix.

Chandru Kalro — Managing Director

It is a mix and it is not that significant. While INR3 crores in a quarter can look significant, it is still better to do the right thing by writing it off. And if there is any realization from it later, we write it back.

Pavan Kumar — Shree RatnaTraya Capital Partners — Analyst

Okay. So it was INR3 crores for the quarter, sir?

Chandru Kalro — Managing Director

That is correct.

Pavan Kumar — Shree RatnaTraya Capital Partners — Analyst

Okay. Thanks, sir. That was from my end.

Chandru Kalro — Managing Director

Thank you.

Operator

Thank you. Our next question comes from the line of Lokesh Maru from Nippon India Mutual Fund. Please go ahead.

Lokesh Maru — Nippon India Mutual Fund — Analyst

Thank you. Just one more question from my side was on inorganic growth, acquisitions which we have stated of roundabout INR1,000 crores. So maybe if you can shed any light on the same of which categories we are looking to expand into or open to acquisitions within the same kitchenware category. Anything on that would be helpful.

Chandru Kalro — Managing Director

So there are — we have always stated that we are looking at adjacencies, we are looking at anything that is of a strategic value to our existing business, and we are largely looking within the country and not outside the country. I think these are some of the things that we are looking at. Not that we are not looking at anything outside the country, but we would prefer to stay within the country because management bandwidth is easier to manage.

The kind of product categories is, we will not definitely take something that we already have in this company because that offers us no strategic value. So anything that helps us expand our footprint with the trade, expand our customer base, get newer customers, those are the kind of product lines and companies that we are looking at. There is always something or the other under consideration. But valuations and strategic fits are always something that are difficult to come by. As and when we get that, we will take that decision. We don’t want to buy something because we have the cash. We want to make sure that we buy something that we can use.

Lokesh Maru — Nippon India Mutual Fund — Analyst

Sure, sir. Understood. Thank you.

Operator

Thank you. [Operator Instructions] Since there are no questions, so I would now hand the conference over to the management for closing remarks.

Chandru Kalro — Managing Director

Well, thank you, ladies and gentlemen, for that. I think the questions very, very, very pertinent. I would only like to end by saying that TTK Prestige is on a firm footing, and we are looking with optimism in the coming financial year. Thank you for always coming by.

Operator

[Operator Closing Remarks]