It gives me immense pleasure to inform you that your Company has performed well duringthe year 2017-18 with an impressive profitability.
Key highlights of the performance of the Company are:
Sales increased from Rs. 79049 Lacs in the previous Financial Year to Rs.81185 Lacs in the current Financial Year registering a growth of 2.70 %.
Earnings before interest depreciation brand amortization and tax decreasedto Rs. 26367 Lacs in FY18 from Rs. 27000 Lacs in previous Financial Year registering adecline of 2.34%.
This Financial year has again been very challenging due to the volatile marketconditions. Your company continued its journey towards sustainable profitable andbalanced growth. We're raising the bar across everything we do to continue to acceleratesales growth improve productivity and empower our organization and culture to deliversustained strong performance.
During the current year the major change in policy was the implementation of the Goodsand Services Tax (GST). GST implementation had an adverse even if transient effect onurban consumption through loss of output and employment in the labour-intensiveunorganized sector. Government expenditure provided sustained support to aggregate demandwith a pick-up in pace in the second half. Gross fixed capital formation turned around inQ2 and accelerated in the second half markedly so in Q3 reflecting the firstsigns of a sustained expansion in capital goods production and a modest revival ofconstruction activity. Net exports dragged down aggregate demand in 2017-18 due to a surgein imports and deceleration in exports in Q3 the latter being driven in part by GSTrelated working capital disruptions.
Further the year under review was characterized by extreme volatility with rate cutstill August 2017 and then rising interest rate scenario evolving due to number ofinternal and external factors. Indian rupee has also shown significant volatility againstDollar while staying within the narrow band of 64 to 66 levels
The Hair Oil Industry
The Hair Oil category has shown a strong growth in current Financial Year with a valuegrowth of 10.2% and a volume growth of 7.8%. This is almost equal to the personal haircare category growth which was pegged at 10.2%. (Source: Nielsen Offtake Nos.)
Our lead brand - Bajaj Almond Drops has been able to keep up with the market pace inthe Urban areas thereby maintain its value share at 10% in the Total Branded Oil segment& increasing its volume share in Urban by 0.1% to 7.7%.
In Rural however the growth was subdued due to the GST impact and recovery of salesnumbers took time. Hence at a rural level the value share has declined by 0.5% to 8.9%and volume share has declined by 0.3% to 6.6%.
Crude prices remained highly volatile during the year. Light Liquid Paraffin (LLP)which is a major raw material is a derivative of crude. As a result the prices of LLPshot up by about 35% during the year. The rise in crude prices also impacted the cost ofother packaging materials as well as freight costs.
Research & Development
Company's Research & Development and Innovation Centre have become fullyoperational. It has also been accorded accreditation from the Department of Scientific& Industrial Research. The object of establishing Research & Development andInnovation Centre is to fuel innovation culture in the Company. Towards this end theCentre contributed in helping Company launching a completely new Hair oil in thevalue-added coconut oil segment Bajaj Coco Jasmine Hair oil.
In order to further expand Company's footprint in the Hair oils category and tostrengthen product portfolio Company restaged Bajaj Brahmi Amla Hair oil with anAyurvedic formulation and a premium new packaging. With the New Bajaj Brahmi AmlaAyurvedic Hair Oil Company intend to leverage its heritage of over 90 years with theayurvedic benefits.
The Company continues to focus on improving the distribution of its brands. The brandsare being sold through more than 7900 stockists and is now available in more than 3.92million retail outlets across the country. Along with the increase in distribution yourcompany has also focused on improving the efficiency of the sales infrastructure. Towardsthis end your company has started the process of automation. Currently 85% of Company'sdirect distributors are linked to Company's central server through the DistributorManagement System (DMS) making it possible to track effective coverage range selling andfield force productivity real time. This has been achieved in 6 months making it probablythe fastest rollout in FMCG industry. In addition to this the entire sales force islinked to DMS through the Sales Force Automation application that has been christened as"Saathi".
In the year 2017-18 we had institutionalized the BCL Pathfinder defining the corepillars for the Organization; Winning with Brands Winning with Sales Winning withProcesses and Winning with People.
Company's endeavour is to integrate the organizational processes and initiatives andalign them with the core pillars for smooth transition.
Company is continuously striving to attract best talent enhance employee experienceand improve employee retention. In order to achieve this objective Company partnered withAon-Hewitt and launched the HR Process Optimization Study.
Company has been constantly implementing better systems and processes to enhancecustomer value and build leadership and functional skills at all levels in theorganisation.
Responsibility towards Society
Your Company undertakes its CSR activities through Kamalnayan Jamanalal BajajFoundation' ("Bajaj Foundation"). Bajaj Foundation with the vision of"Integrated development of the society through participatory approaches that setsbenchmarks and standards for others to emulate for sustainable development" empowersthe rural community to take charge of their own development in a participatory manner bydeveloping and managing natural resources. The developmental interventions focus onenhancing the income generated from agriculture which is the principal source oflivelihood. Bajaj Foundation also promotes alternate agro based livelihood opportunitiessuch as dairy farming organic farming horticulture and biogas which not only providesadditional steady income but allows rural community to get enhanced quality of life.
Going forward we shall continue to create value for our stakeholders throughinnovation across product segments. We will strive for operational efficiencies throughautomation and effective system and process improvement. We remain committed forprofitable and sustainable growth in years to come by upholding highest level of corporategovernance and integrity.
With warm regards
Kushagra Nayan Bajaj