Consumer electrical equipment manufacturer Bajaj Electricals said on Wednesday it had gained market share in the consumer products segment over the past three years and despite rural stress, the company holds twice rural market share than that of its competitors.
“Our rural versus urban mix is different from the competition. Rural is weak right now due to a demand cycle, but we have gained market share in both markets. We don’t publish numbers, but it (rural markets) is very high double digits and it’s almost 2x compared to the competition. Therefore, our rural weighting is much higher,” managing director and CEO Anuj Poddar told CNBC-TV18.
Although the rural economy is weak, Poddar believes the industry is only about a quarter of a return from rural markets.
Talking about the overall trend, the CEO of Bajaj Electricals said the company has been gaining market share after which its three-year CAGR has reached 14.3% for its consumer business, which he says is good. ahead of the average industry and some of its peers.
His remark came a day after the company announced a marginal decline in its consolidated net profit to Rs 62 crore for the quarter ended September 30, mainly due to declining revenue and high-cost inventory. Its net sales fell by 6.41% to Rs 1,201.14 crore in the quarter under review from Rs 1,283.44 crore a year ago.
“We are in a difficult environment, demand is soft. Some of this is incorporated into our numbers in terms of turnover. But we tried to keep our profits. Overall as a company we delivered a better PBT,” he said.
Talking about the breakout of the segment, he said lighting, which saw a strong recovery, was the highlight of this quarter. “Our lighting profitability came out very strong this quarter,” he said.
He added that the engineering, procurement and construction (EPC) business, which had been loss-making for a long time, returned to profit this quarter.
In the consumer sector, there was some decline in revenue and earnings, but the company was quite successful in containing some of the earnings and margin contraction. “Some of this is carried over from high-cost inventory inherited due to commodity inflation. We are confident that from the third quarter you will see a reversal in the cost of inventory and as a result margins will also rebound from the third quarter in the consumer businesses,” he explained.
Poddar believes that in the coming quarters, the middle class or rural segment should be on the cusp of a turnaround from the premium segment that has been laying off the company for four years.
“Major indicators for some of the FMCG companies, including biscuit makers, etc., are starting to see some traction from rural,” he noted. Poddar also cited CMIE data to say wage jobs in the organized sector are back and that would mean an increase in demand from the middle class.
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