Bajaj Electricals to glow ahead with rural thrust

Bajaj Electricals to glow ahead with rural thrust

Mumbai: Bajaj Electricals would increasingly focus on penetrating rural markets in the coming years as it plans to grow volumes for its electrical appliances and utility products, a senior official said on Thursday.

“Rural is going to be the major thrust of the company...We have in fact already got some people specially looking into rural markets," executive director Anant Bajaj said in an interview.

“We are also in a process of finalising a specialised team in each business unit to take care of rural penetration," he added.

The firm, which makes appliances, lighting products, fans, luminaires and is also into contracting of electrical projects, hopes to earn 2760-2800 crore in revenue in FY11, while turnover target for FY12 is pegged at 3500 crore, Bajaj said.

“Our engineering projects, appliances, and Morphy Richards will be the mainstay in terms of creating the big volumes."

Bajaj Electricials has a licensing pact with Morphy Richards of UK for sales and marketing of the latter’s electrical appliances in India.

It also aims to keep up its 35% annual order book growth as in the past several years, he added.

Bajaj had an order book of 1050 crore at December end, and is awaiting the outcome for bids worth 2000 crore. It recently won a 4.5 crore lighting project in Kolkata, he said.

Earlier in day, the Mumbai-based firm posted a 19% rise in October-December net profit at 40.59 crore, on net sales of 690 crore.

Pricing Pressure

Soaring raw material prices have also impacted the firm, but the company would continue to increase prices of some of products like water heaters, air coolers and steam irons in phases, he said.

“Demand has been absolutely outstanding for lot of our products. So wherever we had a dip in the margin we have more than made it up with the volumes," he said.

In the products segment, it had witnessed a three-fold spurt in demand for room heaters due to an unusually cold winter this year, he said.

The firm plans to increase volumes in its LED (light emitting diode) lighting segment and aims to derive 4-5% revenue from this segment, which now contributes just 1%.

“Right now the cost (of LED) is higher, but I think just like CFL (compact fluorescent lamps) that will also come down."

While the company will continue to introduce new products in the market, its projects business will receive greater emphasis, he added.

“Engineering and Projects (E&P business unit) is too much of a critical mass. One third of the company’s turnover, but close to 40% of the companies profits," are from E&P, Bajaj said.

The firm will also hike prices for select product categories in 2011 to offset soaring commodity prices, Bajaj said.

Shares in the firm ended down 1.89% in the Bombay Stock Exchange that ended down 1.5%.