Shekhar Bajaj, chairman and managing director of Bajaj Electricals Ltd, in an interview with Swati Khandelwal of Zee Business, talks about the growth in consumer durables business, the impact of rising commodity prices and strategy for digital sales.
Of course, we will grow by 15-20% in the quarter and this growth will be supported by the distribution network that is available with us. We are also reaping the benefits of the subsidiary that was opened under our expansion plan.
Yes. Actually, we always try to avoid price rises and can bear it to a certain level. But we will have to increase the prices as the commodities are getting expensive and we will not be able to absorb it. In fact, prices of certain items have been increased and rest will see a hike in the coming two to three months. Engineering, procurement and construction (EPC) will have maximum impact, if there is any hike in commodity prices in the segment, as we cannot pass it on to them due to the availability of several orders of fixed prices. This may have an effect on our margins. However, the pressure on consumer durables will be passed on to the consumers as this hike will have an effect on everyone including me and everyone will look forward at hiking the prices. I can just say that we will pass it on in the market and the consumer will have to bear that.
EPC business has performed well in the second quarter and we are expecting that second-quarter results will help us to fill the gap that was created due to the backlog in the first quarter.
The consumer durables segment is doing well and I hope that it will continue to perform. Besides, the peak season, October, has started and we will perform in this quarter too.
Crompton's distribution model is different from ours. They have a wholesale model and may go for special discounts to achieve their numbers. But we have closed the system and don't go for discounts or special deals and like to sell our products at a proper margin. We don't have any problem with Crompton and will be satisfied with whatsoever we are able to sell at our prices and margins.
Nirlep was bought two-three months ago and we have decided to sell its products through our distribution channels at more than 1.70 outlets linked to Bajaj Electric. Similarly, the products of Morphy Richards will also be sold through our distribution channel.
We have a market share of 3-4% in digital space at present but it will grow with time. We will have a digital presence but will continue to grow in other segments like malls and modern format retail (MFR). In fact, all sectors are growing well and we want to balance all sectors to make sure that disturbances are not felt in the market, at least when 85% products of Bajaj Electric are sold through its retail outlets.