THE COMPANY AT A GLANCE
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An introduction: Bajaj electrical Ltd., incorporated in the year 1938, is a mid cap company (having a market cap of Rs 2531.98 cr.) operating in consumer durable sector.
The company expertise in lighting, consumer durables, engineering and projects, is promoted by Kamalnayan Bajaj & have its headquarter in Mumbai, Maharashtra.
History: The Company was incorporated as Radio Lamp Works Limited under the Indian
Companies Act, 1913 as a public company limited by shares, pursuant to a certificate of incorporation dated July 14, 1938. Subsequently the name of the Company was changed to Bajaj Electricals Limited, pursuant to a fresh certificate of incorporation dated October 1, 1960.
Company’s manufacturing unit have been accredited with ISO 9001 / 9002 and ISO
14001 certifications for its quality management.
Some notable projects of the company include lighting works at the Commonwealth
Games stadium and the Bandra Worli Sea Link.
The Company caters mainly to the needs of the Indian markets and the export turnover being 0.67% (Previous Year 0.81%) of the total turnover of the Company. There are no reportable geographical segments. All assets are located in India.
Management: The company management includes:
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Shekhar Bajaj
Harsh Vardhan Goenka
Ashok Jalan
V. B. Haribhakti
Madhur Bajaj

Chairman And Managing Director
Director
Director
Director
Director

Plant: the company has manufacturing plants at Chan & Ranjangaon in Pune district and a wind energy unit at Satara. The company has installed capacity of 800,000 fans per annum, 300,000 units of magneto assemblies, 25,000 units of parts and accessories for magneto, 25,000 electric motors and power generation capacity of 2.8 MW per annum.
Raw material: The key raw materials for the products manufactured by BEL are ferrous and non-ferrous metal & components, electrical stampings. Metals which contains appreciable amount of Iron or its alloys such as steel, is called ferrous metal and vice versa. Aluminum, copper and zinc are non‐ferrous metals used in the products by BEL.

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The company procures both ferrous and non‐ferrous metals from dedicated domestic vendors. Milestones:
1964

Matchwell Electricals (India) Limited, ("Matchwell"), a manufacturer of electric fans became a subsidiary of the Company and subsequently, with effect from July 1, 1984, the business and undertaking of Matchwell was amalgamated with the Company.

1993-1994

Bajaj Electricals entered into a joint venture with Black & Decker
Corporation, United States, for the manufacture and marketing of power tools, household appliances, and related accessories, through a separate company named Black & Decker Bajaj Private Limited, ("Black & Decker
Bajaj")

1998

The company established a new manufacturing unit at Chakan near Pune and commenced operations of manufacturing of fans and die-cast components. The production of fans at our manufacturing activities of the
Matchwell unit also was gradually shifted to our Chakan unit.

2000-2001

The company set-up their manufacturing facilities including a fabrication unit and a galvanizing plant at Ranjangaon, near Pune for the manufacture of high masts, lattice towers, and related products, which commenced commercial production with effect from April 1, 2001.

2003-2004

The company discontinued manufacturing die-cast components.

2005
2007

BEL acquired 32% of the share capital of Starlite Lighting Limited, a company engaged in the manufacture of Compact Fluorescent Lamps ("CFLs").

2012-2013

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The company entered into a Distribution agreement with Trilux Lenze of
Germany for high end technical lighting.

The company completely divested their stake and association with Black &
Decker Corporation, USA.

Business segment, Product & tie-ups:

SEGMENT

PRODUCT

ASSOCIATION/JV/TECH
NICAL TIE UPS

Lighting

Lamps: GLS lamps, fluorescent tube lights, compact fluorescent lamps

Starlite Lighting (India)

Others: Domestic luminaries, ballasts & starters, LED torches

Hindustan Lamps (India)

COMPETITORS
Philips
Crompton
Surya
Havells
Wipro
Osram

Luminaries

Luminaries:
Industrial,
commercial, decorative, street light, floodlight, LED, lighting electronics, lighting control
HID Lamps: Mercury & sodium vapour lamps, halogen lamps, metal halide & fluorescent lamps

Appliances

Fans

E&P

Mixers grinders, juicers, food processors, water heaters, air coolers, iron, ovens toasters grillers (OTG), room heaters, toasters & S/W makers, hand blenders, water filters microwave ovens gas stove purifiers & filters, ovens, stoves, electric kettles, coffee/tea makers
Domestic: Ceiling, table, pedestal & wall mounted fans, personal fans, Bajaj –Disney children’s fans
Industrial: Industrial exhaust fans, commercial air industrial fans, circulators, cooler kits and pumps

Delta Control (Canada)

Morphy Richards (UK)
Nardi Elettro domestici
(Italy)
Securiton (Switzerland)

Midea (China), Disney

Special Projects: Turnkey lighting projects, factory lighting, airport lighting, sports lighting, rural electrification, etc

High Mast & Poles: High mast lighting, signage, transmission lines, energyefficient illumination

Towers: Design, supply, erection and commissioning of transmission lines and telecommunication towers, monopolies, etc. 

Trilux International
(Germany)

Phillips
Crompton
Wipro
Thorn

Abacus (sport lightings)
(UK)

Philips
Kenstar
Usha
Maharaja
Preeti
Prestige
Kenwood
Crompton
Usha
Orient
Khaitan
Polar
Havells
Symphony
Kenstar
Philips
GE
Crompton
IVRCL
NCCL
ICOMN
KBL
Kalpataru
Phillips
Crompton
BP Projects
GE
Utkal Galvaniser
KEC,
Kalpataru,
Jyoti
L&T

Distribution network: BEL has 19 branch offices spread in different parts of the country with a chain of about 1000 distributors, 5000 authorized & direct dealers, over 400,000 retail outlets and over 376 Customer Care centers.

INVESTMENT RATIONAL
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DIVERSIFIED BUSINESS PORTFOLIO: The revenues of the company are evenly divided among its different business portfolios. The company’s E&P Business Unit comprises of three different businesses- (i) special projects, (ii) high mast & poles, (iii) towers. Thus, when one product fails to bring enough orders, the other is more than enough to fill the gap. »

EXPANSION: the company has set up a conglomerate business for providing quality products to the customers & be stated among the top conglomerates of the world. It has achieved its goal by attaining No. 1 position in Sri lanka & No.2 position in Ghana for
Ceiling Fans. The Dubai municipality has placed a prestigious order for supply of high masts for 3 FIFA for 19 Football Stadiums. It is planning to fully operationalize its Dubai branch office.

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COMPETITIVE: Due to sluggish market conditions, growing competitiveness, dominance of new channels like E-commerce, the market remained price sensitive leading to pressure on margins. But it had managed to maintain profitability and market share by its new product launch. Some of the recently introduced new products by the company are: * Lighting BU launched its premium segment of lighting range including LED lights in Hyderabad, South India in July 2013. It has plans to capture the southern market by the next financial year & in a phased manner across the country. The premium lighting products are being brought to India through a tie up with
Megaman, a Hong Kong‐based company. These new products, including the LED range and fluorescent lights, are expected to reach out to new markets.
* During April 2013, the Lighting BU also introduced its new range of “futuristic”
LED products, under the brand name of iLED, in Kerala. These products have been launched keeping in view the potential market of LEDs’ in India.
* The use of renewable lighting sources has become inevitable in the current environmental conditions. To maintain sustained development the resources such as solar power in lighting application has emerged to achieve environmental balance. Considering this the Luminaries BU has launched solar street light range of luminaries in FY13.
* In comparison with CFL based Street Light Luminaries, solar based luminaries have potentially saved 5.56% of energy consumption. During the year the BU has sold 2200 solar street light Luminaries, which on an annual basis saved energy of about 2,40,900 KWh.

* The saving in energy consumption has resulted in reduction of electricity cost by
1.57 mn, reduction in emission of Carbon Di‐oxide by 166 metric ton (equivalent to removal of 50,300 small cars from street) and saving of 1,67,27,04,000 gallons of water from being contaminated due to Mercury.
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In FY 13, the Appliances BU under the brand Morphy Richards (MR) introduced a new range of sophisticated and versatile food processors and a range of feature rich induction Cookers with copper coils, a unique selling proposition in the
Indian market.

* Morphy Richards (MR) brand of UK in its 12th year of association with the
Company has achieved sales turnover of Rs. 231 crore in FY 2014-15, with a growth of 12% and CAGR of 13%; and is poised to clock sales turnover of over Rs.
260 crore in FY 2015-16 with its plan to launch a new range of personal care products in men’s grooming. MR is expanding the network to reach to 15000 retail outlets and distribution coverage in the top 360 urban markets across the country. »

INTERNAL POLICIES: The Company has taken several measures to ensure better management of working capital, to avoid cost and time run over by monitoring of project performance on continuous basis and completion of projects as per schedule.
The gross turnover and other income achieved for the year ended 31 March 2015 was
Rs. 4,309.42 Cr, a growth of 5.63% over the previous year, 2014. PBDIT increased by
16.69% from Rs. 97.09 Cr to Rs. 113.29 cr. Interest cost at Rs. 105.08 Cr was higher by
34.20%, mainly on account of increase in borrowings levels. Net Loss was at Rs. 13.95 Cr as against Rs. 5.31 Cr for the previous year. Earning per Share (EPS) for the year was negative Rs. 1.39.

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MARKETING: In order to bring in more focus on marketing, the division operates in two strategic business units: (i) Kitchen Appliances (KAP) (ii) Domestic Appliances (DAP).
During the year, appliances have reported a total turnover of Rs. 1,165 crore with a growth of 3% and CAGR of 5% to remain a dominant player in the small appliances industry. KAP accounted for sales of Rs. 579 crore and DAP accounted for sales of Rs.
586 crore.

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ADVERTISEMENT: Advertisement expenses of the company are less as compared to competitors like Havells India and V-Guard Industries. The lower advertisement expenditure can largely be attributed to the company’s focus on maintaining its EBITDA margin. BEL has recorded an advertisement expenditure of ~16% CAGR during FY 07-13.

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GOVERNMENT POLICIES: Until mid-2014 the economic situation did not favour consumer appliances. However, after the national elections in May 2014 there was a subsequent boost of sentiments among companies and consumers. Lower inflation and reduction in fuel prices has started showing signs of revival of this industry creating

opportunity for consumers to make their deferred purchases. Further, the new
Government in the budget proposal has emphasized domestic manufacturing. The
“Make-in-India” campaign initiated by the present government has invited leading foreign companies to set up their manufacturing units on our mother land. The government is focused on improving the country’s infrastructure to facilitate the logistic between the manufacturing hubs. The tax relief in specified areas & alteration in the import duty has encouraged domestic players to revive their business.
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OUTLETS: Appliances division has so far set up 104 exclusive showrooms “BAJAJ
WORLD” across the country through franchise and has plans to increase the same to 150 in FY 2015-16. This would give better visibility to Company’s appliances, fans & lighting products. KEY CONCERNS
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Currency risk: The Company’s imports content contributes ~13% to the top line, which includes 40% of Morphy Richards, 20% of appliances, 10% each of lighting and fans.
Rupee depreciation over an extended duration could put pressure on margins in the near term.
Slowdown in E&P business: A slowdown in the power transmission and distribution industry and slower rate of project execution has hit the company’s segment revenue.
This led to stretched working capital requirement and finally hit margin. There is also stiff competition in the segment due to the presence of major players like Kalpataru
Power and Jyoti Structures. Any cut in government expenditure under RGGVY and transmission line towers can affect the company’s performance.
Highly Competitive Industry: Although Bajaj Electrical has remained a strong brand in the consumer durable segment for the last 75 years, the industry has faced regular competition from the unorganized sector due to a low entry barrier. Further, BEL’s entry into newer segments, which are highly competitive in nature, poses a risk of overcapacity. This may have an effect on the margins in future. All the segments of BEL are highly competitive putting pressure on the top line and margins of the company. The
Company is mitigating the risk by continuous introduction of new products and optimizing the utilization of its extensive distribution system of urban and rural areas.
Price volatility of metals: Metals (both ferrous and non ferrous) are the key raw material for the company, which is highly price volatile. Any adverse movement in the prices may put negative impact on the margins of the company.

FINANCIALS

(Rs. In Lacs)

INCOME STATEMENT

FY 13

FY 14

FY 15

Net operating income

337733.96

402982.96

425810.94

Operating expenditure

326646.26

394789.36

416911.07

11087.70

8193.60

8899.87

Equity capital
Share application money pending allotment

Depreciation

1445.22

2474.64

2902.55

EBIT

9642.48

5718.96

Other income

1681.04

1514.38

EBIDTA

Interest
Exceptional items
EBT after exceptional items Tax
Minority interest
PAT
EPS (rs)

FY 13

FY 14

FY 15

1995.11

1999.38

2015.25

0.00

50.07

0.00

Reserves

70868.78

68909.36

66683.16

5997.32

Net Worth

72863.89

70908.74

68698.41

2429.28

Loan Funds

6898.47

7829.62

10508.32

-2472.32

0.00

0.00

6897.37

-596.28

-2081.72

1776.54

65.42

686.69

0.00

0.00

0.00

5120.83

-530.86

-1395.03

5.14

-0.53

-1.39

BALANCE SHEET

5936.11

15848.10

22598.44

Current liabilities

136939.87

182455.64

191674.03

Total Liabilities

215739.87

269262.55

282970.88

49924.94

65747.16

71579.08

Net Block
Capital WIP

586.77

255.98

317.78

Investment

10126.83

15006.60

13833.12

Net Current Assets

155101.33

188252.81

197240.90

Total Assets

215739.87

269262.55

282970.88

6897.37

-596.28

-2081.72

48.71

0.00

0.00

3.46

3.57

3.71

3.28%

2.04%

2.10%

OPM

3.77%

2.39%

2.64%

NPM

1.51%

-0.13%

-0.33%

7.03%

-0.75%

-2.03%

ROCE

12.44%

7.28%

7.59%

Current ratio (x)

1.13

1.03

1.03

0.08

0.22

0.32

Debtor (days)

109.07

110.72

100.71

Creditor (days)

84.60

82.65

73.00

Inventory (days)

FY 15

FY 15

long term D/E (x)

FY 14

FY 14

EBIDTAM

FY 13

FY 13

ROE

CASH FLOW STATEMENT

RATIOS

262.80

281.10

279.00

FA/ Turnover (X)

11.72

11.93

10.88

Valuation ratios (x)
PBT
Add: Depreciation,
Interest & Other
Expenditure
Net change in WC, Tax,
Interest
Cash flow from Operating
Activities
Capital Expenditure
Investment, Sale of FA,
Dividend received & others Cash flow from Investing
Activities
Cash flow from Financing
Activities
Net Increase/Decrease in cash & cash equivalent

P/E
P/BV

9897.93

15902.01

18181.87

-2733.85

-15982.67

-7282.81

14061.45

-676.94

8817.34

-6967.71

-8521.76

-6736.75

Earnings ratios (%)

B/S Ratios
6951.68

885.57

1830.17

-16.03

-7636.22

-4906.58

-14406.17

8692.13

-5624.65

-360.75

378.97

-1713.89

Opening Cash balance
Cash balance of acquired subsidiaries 5185.97

4825.22

5204.19

0.00

0.00

0.00

Closing Cash balance

4825.22

5204.19

3490.30

[SOURCE: ANNUAL REPORT OF BAJAJ ELECTRICALS LTD.]