Driven by MD Rajiv Bajaj's thirst for in-house research
& development Bajaj Auto has had phenomenal success since the first Pulsar
motorcycle rolled out in 2002-03.
Anant Bajaj, who was recently promoted as Jt. MD at Bajaj
Electricals , wants to do the same at the home appliances to lighting and
engineering & projects (E&P) major.
Bajaj Auto chairman Rahul Bajaj and Bajaj Electricals
chairman Shekhar Bajaj are cousins and the two businesses are run seperately.
Bajaj Electricals is setting up its own centre, which will
integrate all the R&D across its various verticals under one roof. The aim
is to save costs and develop innovative products in future.
Anant Bajaj told moneycontrol.com that the exact location
and investment required for the R&D centre will be finalised in the next
two months and the centre should be ready by end of the third quarter this
financial year.
"Today it is all sporadic. There is development in
appliances, there is development in lighting, small bits in E&P, but not
like full hog into R&D," he said.
"We should come up with a final plan post monsoon and
most certainly not later than third quarter we will be in position with it
(centre). So hopefully by the fourth quarter we will have at least 1-2 products
out of our own R&D," Bajaj said.
Last year, Bajaj Electricals spent only 3% of its total
sales on R&D. But there will be a significant focus on R&D once the new
centre (planned in a leased building) is in place, Bajaj said.
Q4 Earnings Drop
Meanwhile, Bajaj Electricals' fourth quarter net profit
dropped 15% year-on-year to Rs 49 crore, hurt by continued sluggishness in
E&P business.
Its consumer appliances business also took a hit due to
volatile commodity costs and exchange rate fluctuations.
The company's net sales in Jan-March rose 8% to Rs 1060
crore.
Its revenue in consumer durables segment was up 10% to Rs
444.3 crore. But segment profit fell to Rs 42 crore from Rs 46 crore.
E&P segment revenue also declined to Rs 368 crore from
Rs 376 crore.
"The infrastructure industry has been going through a
bad phase and this has impacted the performance of the E&P division. For
the full year, sales have been flat at Rs 832 crore, resulting in poor
absorption of fixed costs and lowering of margins" Bajaj said.
It currently has an order book of Rs 610 crore, which
includes Rs 182 crore of transmission line towers, Rs 130 crore of high mast
& poles and Rs 298 crore of special projects.
"Even now we have Rs 5000 crore of tenders done, but
only Rs 1200 crore of tenders have been opened. Its nothing to do with the
company but the end customer. So lot of these orders have simply not moved,
they are not opened," Bajaj said.
However he remains optimistic about the overall growth this
year and has maintained a revenue target of Rs 3800 crore in FY13. It
reported revenue of Rs 3099 crore in FY12.
Apart from E&P, consumer durables segment is seen
growing 20% and lighting segment is expected to grow 15% this year.
Price Hikes around the corner
Like many other durable makers Bajaj Electricals has been
hit as the sharp rupee depreciation in the past few days has made input costs
expensive, leaving the company with no choice but to mull price hikes of
appliances and lights.
"Price hikes will happen, specially in CFLs it will
probably happen fastest. In CFLs three most critical components have to be
imported for the whole industry," he said.
Bajaj said the company has not yet raised prices but are
"heavily contemplating" when to do it as there is no choice.
Bajaj Electricals shares on Monday closed at Rs 214.65, down
2.3% on NSE.
Source: www.moneycontrol.com
Thanks,
Gaurav Agarwal
Head Dealer
DENIP Consultants Pvt Ltd
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