BPL was the brand of choice in TVs and other large appliances for many urban Indians in the 1990s and early 2000s. The company lost its way and shut its appliances business in the late 2000s. Last year, after the brand showed high recall in some consumer surveys, BPL executive chairman and managing director Ajit Nambiar decided to explore a relaunch. A few months later, BPL relaunched on Flipkart. Customer response has exceeded Nambiar’s expectations. In an interview, he spoke about sales targets, financing options and selling online. Edited excerpts:
Why did you choose Flipkart for the relaunch?
Other than the fact that Flipkart is by far the leader in this category, what brought us to Flipkart was that if you have a good product it needs to be sold well, installed well and serviced post-sale as well. We also spoke to Amazon and Snapdeal but the only guys who have that end-to-end infrastructure were Flipkart with Jeeves (after-sales services provider) and Ekart (courier service). Online, it’s all about customer reviews and we didn’t want to have bad reviews because of service issues. Flipkart also has a lot of data on buying behaviour, who the customer is. That was very valuable. We started making our marketing strategy based on this kind of data. We started making our marketing strategy based on this kind of data. It also helps that the Jeeves guys are former BPL executives so it helped us (getting a sense of comfort with Flipkart).
What are your sales targets?
We should be able to do Rs70-80 crore for this year (ending March 2017). In three years’ time, we’ve set a target of Rs600 crore as we add more appliances.
What are the other categories in which you are launching products?
We have TVs and washing machines. We are adding large-screen TVs (50- inch TVs and larger) and smart TVs. We will get into refrigerators and microwaves within the next six months. We are also working on ACs and small appliances but it will take us slightly longer to launch those.
You currently outsource assembly. Will you get into assembly of parts or manufacturing?
The critical components are decided by us. Where we assemble is based on what incentives state governments give. Most of the components in this industry are not made in India. We have a long way to go before that. In case of BPL, earlier we used to manufacture components. Now, it’s much easier to find parts. This frees you up to focus on design and marketing, and allows us to keep costs low.
But we will soon do assembly — sourcing of products and putting them together. It makes sense to assemble if we are doing 40,000-50,000 units a month. For manufacturing, maybe one million a month! Currently, we are doing around 5,000-7,000 units a month.
Has it been tough to raise capital? How much have you raised?
We’ve been able to raise working capital as per our operating plan. It has not been an issue. Banks are aware that we are serious about this business, so we’ve been able to raise working capital. Apart from that we will invest Rs40-50 crore to enhance our technology.
Any plans to raise equity financing?
No, not night now. It’s too early.
Will you be exclusive to Flipkart for long?
Right now, they are the best channel in this category. Right now, we are happy with the progress. Our business is growing and it makes sense for us to stick with them.