Chairman & managing director Shekhar Bajaj’s bold RREP (Range, Reach Expansion Programme) distribution game-plan has enabled the homegrown electrical major Bajaj Electricals Ltd to maintain operating margins in its consumer products segment. This is despite a sharp decline in demand for the company’s conventional lighting products such as CFLs and FTLs, as consumers are increasingly shifting to LED. Bajaj’s consumer products segment comprises lighting, fans, geysers, room heaters and coolers, among other appliances.
The RREP strategy, which Bajaj had revealed in an exclusive interview to SEL in October 2016, envisaged integrating multi-electrical products dealers, eliminating wholesalers, and setting up centralised warehouses in the company’s supply channel. (Read more: ‘The Radical Path to Being Future Ready’ https://sourcingelectricals.net/2017/02/07/radical-path-future-ready/)
“Consumer products segment registered a good performance in spite of steep fall in demand for compact flourescent lamps (CFL) and flourescent tubelights (FTL) on account of consumer shift to LED-based products. However, growth in certain other product categories and improvement in first level margins due to RREP distribution helped the segment maintain its operating margins,” commented Bajaj, on the company’s results for the fourth quarter and year-ended March 2017.
He asserted, “There was good progress on the RREP rollout, which has now become a way of life and this would facilitate full rollout and implementation at a faster rate. Consumer products segment looks forward to posting a much better performance in FY 17-18 and thereafter.”
During the fourth quarter, the company has achieved sales from operations of Rs 1,278.06 crore as against Rs 1,363.98 crore, a decrease of 6.3% over the fourth quarter of previous year. Profit before Tax (PBT) and Profit after Tax (PAT) for the quarter has been Rs 60.32 crore and Rs 38.42 crore respectively, as against Rs 54.16 crore and Rs 35.25 crore in the corresponding quarter of previous year.
For the year ended March 31, 2017, the company has achieved sales from operations of Rs 4,298.26 crore as against Rs 4,626.70 crore, a decrease of 7.1% over the corresponding previous year. PBT and PAT has been Rs 168.04 crore and Rs 107.66 crore respectively, as against Rs. 176.87 crore and Rs 110.35 crore in the corresponding previous year.
The company’s consumer products segment, during the quarter, has achieved total revenue of Rs 610.76 crore, de-growth of 14.6% over the corresponding previous quarter. During the year ended March 2017, the segment has achieved total revenue of Rs 2,314.21 crore, with a de-growth of 10.9%.
The Board of Directors has proposed dividend of Rs 2.80 per equity share (140%) for the financial year, subject to approval by shareholders in the ensuing Annual General Meeting.