Our consumer durable business has grown 22-23%: Shekhar Bajaj

Shekhar Bajaj-Bajaj Electricals-1200As a company, we are not finding much of a slowdown. Our growth has been anything 22-23% in consumer durable. The consumer durables space — that is appliances and fans – has grown even faster. It is the lighting segment which is slightly slower and in the military canteen it is slow. But otherwise, as far as the trade is concerned, it is more than 25%.

Every quarter, we have grown by over 25% and I expect 20-25% growth to continue in the future because the penetration levels in India are very low and the demand in the rural markets will be very high. Because of our strong distribution in the rural markets, we will benefit out of that.

Interactions with the distributors have indicated that you have been fairly ahead of competition in terms of capturing market share in the some of the tier-2 and rural markets. Post the Polycab listing, what is the scope in the market?

Every year, new players will keep coming. The only entry barrier I can see which we have been working on for the last two, three years is our distribution strategy. Most people who enter give the product to their whole-sellers who send it all over the country. We have made the effort to go to all 200,000 outlets on a weekly basis and offer our range of products to them. For somebody new, to have a distribution reach like ours, plus having a supply chain to take care of that 200,000 outlets is something of a challenge.

You have already said that consumer business is looking good but what is the kind of outlook in terms of the portion of earnings that you expect to come in from that segment in FY20-21?

You mean FY19-20?

FY 20 and 21. I was just looking at a longer term outlook but whatever that you have already factored in, if you could share with us?

Basically, what I see is that one need not increase the range. We had about 1,200 SKUs about three years back. We have brought it down to about 600 because we feel that people get confused if you have too many SKUs. What is required is that you must keep upgrading, keep offering the consumer new and newer products and withdraw the older products, so that he has a choice but a limited choice.

It is important to have a full range. For example, if I am going to buy a fan for my bedroom, for drawing room, I need to have 56 inch, 48 inch, 36 inch, 24 inch models. If I just have a 48-inch model, that would not suit my kitchen. Having a full range is very critical but having 20 different types of fans does not really help because the consumer wants to have a choice. He wants to see what is the new thing like? For example, we were the first in India to introduce antibacterial fan and we call it Bye-Bye Dust fan. If any bacteria comes in touch with the fan, the bacteria dies and that is a new thing which we have introduced. This particular antibacterial benefit will continue for many years. We have introduced a lot of new mixers for south market. We were very weak in the south market and so starting from last year, we have launched in a big way four new mixer grinders for the southern market. That is how our strategy is going to be.

What about the commodity price movement? Along with currency depreciation, that will be the key for your margins going forward. How are you seeing margins shape up in EPC segment. based on these factors?

Last year, the commodity prices were going up continuously in the third quarter. This was hurting our margins but from the fourth quarter onwards, we are seeing that the commodity prices are under control, especially in EPC business.

A lot of aluminium is used and aluminium prices have really fallen. Most of these projects pricing are fixed price contracts. EPC business is more about being able to complete the project, see that we get our money on time. The whole game in EPC business is how soon can you get your money back on the basis of your supplies? Cash flow becomes a very important aspect. In the case of our trade business, luckily whatever you sell, you get the payment immediately and so trade is not an issue as far as cash flows are concerned.

[“source=economictimes.indiatimes”]

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