 "Bajaj Electricals, Bajaj")
Bajaj in India has been synonymous with two things — scooters and lighting. While the brand has phased itself out of the scooter segment in the last decade, the lighting business, on the other hand, has seen it go from strength to strength.
Part of the Shekhar Bajaj-led Bajaj Electricals (Bajaj Auto is led by his nephew Rajiv Bajaj), the consumer products and illumination vertical, which contributes half of the company’s turnover (FY18 topline was Rs 47 billion), saw double-digit volume growth of 25 per cent (on a like-to-like basis) for the July-September period. This was the second straight quarter of double-digit volume growth for the vertical, as the company strengthened distribution, launched new products and pushed the Bajaj brand name aggressively in the market. In April-June, the consumer and illumination segment had reported a 35 per cent volume growth.
The growth, said experts, also reflects a new strategy the company is putting in place, which will see it consolidate its presence in consumer products and illumination. At a time when disposable incomes are growing and Indians are eyeing improved lifestyle, experts say, brands such as Bajaj are in a position to capitalise on this uptick. For the next six months, Bajaj Electricals hopes to see its consumer and lighting portfolio grow at an average of 20 per cent per quarter in terms of sales volume. Analysts say this could be higher in the next financial year as it taps more outlets and drives sales throughput aggressively. The company is also studying new trends, identifying need gaps and stitching up alliances as well as acquiring companies to ensure the sales register keeps ringing.
While the year 2017 saw Bajaj Electricals extend its brand licensing agreement with UK-based Morphy Richards for five years (within kitchen and electrical appliances), in June this year it acquired local cookware brand Nirlep (for Rs 425 million) in a bid to strengthen its portfolio.
Helping the firm stitch all the threads together and execute its overall strategy effectively is 44-year-old Anuj Poddar, who took over as executive director this month. He looks after day-to-day operations at the firm, with all business heads reporting in to him. While Shekhar Bajaj, who is chairman and managing director, retains key portfolios such as finance, audit, legal and CSR, Poddar’s consumer experience — he was with Viacom18 group for 13 years and has been a consultant with Arthur Andersen and KPMG earlier — is expected to come in handy in his new role.
Bajaj himself minced no words when he spoke about Poddar’s appointment last week. He said: “Anuj has been associated with Bajaj Electricals as an independent director since May 2016 and brings with him a good understanding of the business. His experience and business acumen will help strengthen our position.”
Poddar says about his priorities for the company: “My agenda would be to drive growth, both in terms of topline and bottomline. The company has two key verticals — engineering procurement & construction (EPC) and consumer products and illumination. While we have a number of EPC orders currently and it is an important business, giving the company half its turnover, it is the consumer products and illumination segment, the other half, that is a high-growth area. My task would be to nurture all of them. With aspiration and income levels growing, I think we can achieve it,” he says.
Analysts say the strategy of focusing on the consumer side of the business is also driven by the unpredictable nature of the EPC segment, which depends largely on the number of orders bagged. While Bajaj Electricals bagged a string of orders earlier this year from the Uttar Pradesh government for rural electrification, it may not be this lucky all the time, analysts said.
In the last one year, Bajaj Electricals has embarked on an ambitious programme to expand its distribution reach, taking its presence from 80,000 to nearly 182,000 outlets by the end of September (mostly in the west and north of India). By March 2019, the company hopes to touch 200,000 outlets — 50-60 per cent of which will be in rural areas. “This will help the company penetrate deeper into smaller towns and build an unparalleled distribution reach,” Anubhav Gupta and Varshit Shah, analysts at Emkay Global, said in their research report dated November 1. “The business will grow as a result as the company taps into latent demand within these markets,” the analysts said.
Sanjay Manyal and Hitesh Taunk, analysts at ICICI Direct, agree with this view. “The revival in Bajaj Electricals’ consumer (segment) performance has been led by distribution expansion, consistent pricing policy and implementation of the Goods and Services tax, which has favoured organised over unorganised players. Bajaj will also be a direct beneficiary of the government’s push to double farm income over the next few years, helping the firm improve sales,” the analysts say in their report dated November 2.
Clearly, Bajaj Electricals is gearing up for the future, one step at a time.
