Bajaj Electricals ltd

Company Profile:
Bajaj Electricals 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 was
changed to Bajaj Electricals Limited, pursuant to a fresh certificate of
incorporation dated October 1, 1960.

In 1964, Matchwell Electricals (India) Limited, ("Matchwell"), a

manufacturer of electric fans became a subsidiary of Bajaj Electricals and
subsequently, with effect from July 1, 1984, the business and undertaking of
Matchwell was amalgamated with Bajaj Electricals.

In the financial year 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"). During the financial year 1999-2000 Black & Decker Bajaj
became a 100% subsidiary of Bajaj Electricals upon Bajaj Electricals acquiring a
further 50% of the shareholding thereof from Black & Decker Corporation,
pursuant to which Black & Decker Bajaj was renamed as Bajaj Ventures Limited.
However, the financial year 2002-2003, Bajaj Electricals divested 50% of its
shareholding in Bajaj Ventures Limited and Bajaj Ventures Limited ceased to be a
subsidiary of Bajaj Electricals.

In January 1998, Bajaj Electricals 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 Chakan unit.

In September 1999, Bajaj Electricals established and commissioned a wind

energy generation unit with an installed capacity of 2.8 mega watts at Village
Vankusawade, Tal. Patan, District Satara, Maharashtra.

In the year 2000-2001 Bajaj Electricals set-up 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, and the said
manufacturing facilities commenced commercial production with effect from April
1, 2001.

In November 2002, Bajaj Electricals entered into a technical collaboration and

brand licensing agreement with Morphy Richards, United Kingdom, for the sales
and marketing of electrical appliances under the brand name of "Morphy Richards"
in India.

In the financial year 2002-2003 Bajaj Electricals discontinued manufacturing

die-cast components.

In the year 2005 Bajaj Electricals entered into a Distribution agreement with
Trilux Lenze of Germany for high end technical lighting.

In the year 2007, we acquired 32% of the share capital of Starlite Lighting
Limited, a company engaged in the manufacture of Compact Fluorescent Lamps
("CFLs").

Our vision:

Bajaj Electricals aim to bring greater happiness to their customers, through

its products and services, while continuously enhancing stakeholder value.

Company philosophy:

Trust builds Quality

Quality builds Satisfaction
Satisfaction builds Relationship
Relationship builds Trust
We believe in “Inspiring Trust”.

Values:

Build Trust : We will conduct all our business dealings with fair and ethical
business practices and strive to build trust in the minds of all our stakeholders.
 
Belief in Excellence : We believe in setting higher levels of Excellence in all our
actions and will recognize and reward the excellence achieved by our team
members.
 
Delighting Customers : We will delight our customers by providing them world-
class products and services and thereby enhance their quality of life.
 
Encouraging Teamwork : We will ensure dignity and respect for the individual
while encouraging Teamwork.
 
Personal Growth : Every employee will be enabled to learn at the work place
with significant opportunities for Personal Growth and Contribution to the
organization.
Business Overview:
Bajaj Electricals operates in three divisions, Consumer Durables (Brown
goods), Engineering & Projects (High Mast, Poles, Towers, Rural
Electrification) and Lighting (Lamps, CFLs, LED, Street Lighting).

All the three divisions have been growing at very healthy growth rates of 20-35%
CAGR over the last 5 years and are highly scalable with future growth rates
expected to be 20-25% as they are proxy of various growth themes of India such
as Consumer Discretionary, Power Generation, Transmission, Distribution,
Industrial Capex, Retail, Infrastructure etc.

Rs mn FY06 FY07 FY08 FY09 FY10 CAGR

Appliances 1410.0 1940.0 2600.0 3630.0 4640.0 35%
Fans 1090.0 1410.0 1850.0 2410.0 2950.0 28%
Lighting 1000.0 1090.0 1340.0 1760.0 2090.0 20%
Luminaires 1210.0 1550.0 1930.0 2300.0 2820.0 24%
Engineering
& Projects 1780.0 2450.0 3050.0 3630.0 5230.0 31%
Total Revenues 6490.0 8440.0 10770.0 13730.0 17730.0 29%
EBIDTA 418.6 677.5 869.4 1432.1 1797.4 44%
PAT 138.5 284.8 385.6 731.2 893.5 59%
Marketing – project topics:
1. Customer Satisfaction Survey
2. Strategic Analysis of market
3. Consumer Perception Survey
4. Service Quality Study
5. Service Blueprinting
6. Service Process Mapping – Back stage, on-stage
7. Improving service quality using service blueprinting
8. Competition Analysis
9. Service standards
10.Study on effectiveness of employee’s role in service delivery
11. Effectiveness of channels (distributors/ DSAs) in service delivery
12. Effectiveness of channels (on-line/ Internet) in service delivery
13. Customer Data Analysis
14. Study of Institutional markets
15. Effectiveness of promotion schemes
16. Measurement of Brand awareness and brand perception
17. Customer Loyalty study
18. Study of purchase influencing factors
19. Customer Profiling
20. Advertising effectiveness study
21. bcg matrix
22. marketing process
23. marketing mix and marketing research
24. marketing objectives
25. the 4 P's - product, price, promotions, place.
1) Measurement of Brand awareness and brand perception:

This research investigated direct and indirect relationship between brand

equity constructs which includes brand awareness, brand association, perceived
quality, and brand loyalty. We implement Structural Equation Modelling with
LISREL to examine the hypothesis. The finding showed that there is a significant
and positive direct effect between brand awareness toward brand associations, and
brand association toward perceived quality and brand loyalty. We argue that brand
association plays as a suppressor in our model that leads to inverse relation
between brand awareness and perceived quality. With respects to the mediating
effect of perceived quality to the relationship between brand awareness towards
brand loyalty and brand association towards brand loyalty, our finding showed that
perceived quality does not play as a mediator role in this study. On the other hand,
we find that brand association is a very important variable which mediate the
relationship between brand awareness toward brand loyalty.

Keywords: Brand Equity, Brand awareness, Brand Association, Perceived

Quality, Brand Loyalty.

The issue of brand equity emerge as one of the most crucial topics for marketing
management in 1990s and its concept and measurement has interested
academicians and practitioners for more than one decade. There have been three
different perspectives for considering brand equity; The customer- based
perspectives, the financial perspectives and combined perspectives. While this
study focus on customer based brand equity.
 2) Customer satisfaction survey of Bajaj Electricals:

We all know customer satisfaction is essential to the survival of our businesses.

How do we find out whether our customers are satisfied? The best way to find out
whether your customers are satisfied is to ask them.

When you conduct a customer satisfaction survey, what you ask the customers is
important. How, when , and how often you ask these questions are also important.
However, the most important thing about conducting a customer satisfaction
survey is what you do with their answers.

How You Ask Whether Customers Are Satisfied

There are many ways to ask your customers whether or not they are satisfied with
your company, your products, and the service they received.

You can ask them:

 Face-to-face
As they are about to walk out of your store or office, ask them.
 Call them on the phone
If you have their phone number, and their permission, you can call them
after their visit and ask how satisfied they are.
 Mail them a questionnaire
This technique has been used for a long time. The results are predictable.
 Email them a customer satisfaction survey
Be careful to not violate Spam laws
 Email them an invitation to take a customer satisfaction survey

When To Conduct A Customer Satisfaction Survey

The best time to conduct a customer satisfaction survey is when the experience is
fresh in their minds. If you wait to conduct a survey, the customer's response may
be less accurate. He may have forgotten some of the details. She may answer about
a later event. Her may color his answers because of confusion with other visits.
She may confuse you with some other company.

What To Ask In A Customer Satisfaction Survey

There is a school of thought that you only need to ask a single question in a
customer satisfaction survey. That question is, "will you buy from me again?"
While it is tempting to reduce your customer satisfaction survey to this supposed
"essence", you miss a lot of valuable information and you can be easily misled.

It is too easy for a customer to answer yes to the "will you buy from me again?",
whether they mean it or not. You want to ask other questions in a customer
satisfaction survey to get closer to the expected behavior and to collect information
about what to change and what to keep doing.

By all means ask the basic customer satisfaction questions:

 How satisfied are you with the purchase you made (of a product or service)
 How satisfied are you with the service you received?
 How satisfied are you with our company overall?

And ask the customer loyalty questions"

 How likely are you to buy from us again?

 How likely are you to recommend our product/service to others
 How likely are you to recommend our company to others.

Also ask what the customer liked and didn't like about the product, your service,
and your company.

What's Next in Customer Satisfaction Surveys?

So how do you know what's important? How do you know what really matters to
them? More importantly, how do you know which things to focus your limited
resources on first in order to have the biggest impact on improving customer
satisfaction?
 3) Strategic Analysis of Bajaj Electricals:

Strategic analysis is about looking at what is happening outside your organisation

now and in the future. It asks two questions:

 How might what's happening affect you?

 What would be your response to likely changes?

It’s called strategic because it’s high level, about the longer term, and about your
whole organisation.

It’s called analysis because it’s about breaking something that’s big and complex
down into more manageable chunks.

The focus is external because factors outside your organisation have a powerful
influence on it. Increasingly organisations appreciate that they can learn to manage
their response to those influences, rather than assume there is nothing they can do.

It's part of the overarching process of strategic planning.

Strategic analysis boosts organizational effectiveness

Strategic analysis helps to:

 Anticipate what might happen

 Evaluate how likely it is to happen
 Prepare for it happening

Strategic analysis will lead to clearer more relevant goals, better quality decisions,
and a more secure future as you are better prepared for what will happen.

Otherwise known as “external environmental analysis” it is a key step in strategic

planning. It is the link between getting your overall direction right and making the
right decisions. You will make better decisions if you understand the influences
from the outside world to which you might have to respond in the future.

Many funders are reassured by strategic analysis because they know that
organisations that are well prepared for their future are more likely to use grants,
donations and loans to greatest advantage and to maximise the difference their
organisation makes.
The cost of not doing at least a small amount of strategic analysis means missed
opportunities (some call this ‘opportunity cost’ – the cost of not doing something).
If you don’t do strategic analysis you risk being left behind, missing opportunities
for beneficiaries.

Company Profile:

Bajaj Electricals Ltd. is a high growth company (last 5 yr sales CAGR is 30%,
PAT CAGR is 51%) trading at ~10x its FY11E earnings, its recent earnings have
grown at 62% and 152% in Q1FY10 and Q2FY10 respectively. The company has
grown at these high rates without saturating any of its markets, with market share
ranging between 15-30% implying significant future growth opportunities.

The company generates significant cash to sustain its operations thereby

curtailing the need to raise capital which helps in generating high returns on
capital (Average ROE of 40% over the last 4 years). However, the company has
recently done a QIP at Rs.785 per share to raise Rs.1600 mn, which would be
used as growth capital (hinting acquisitions).

Bajaj Electricals operates in three divisions, Consumer Durables (Brown goods),

Engineering & Projects (High Mast, Poles, Towers, Rural Electrification) and
Lighting (Lamps, CFLs, LED, Street Lighting).

All three businesses are a play on India growth story: All the three divisions have
been

growing at very healthy growth rates of 20-35% CAGR over the last 5 years and
are highly scalable with future growth rates expected to be ~20-25% as they are
proxy on various growth themes of India such as Consumer Discretionary, Power
Generation, Transmission, Distribution, Industrial Capex, Retail, Infrastructure
etc.

Valuations:
There aren't any direct comparable companies to Bajaj Electricals, however
If we look at the various businesses of the company and compare them with
the sectoral valuations, Bajaj Electricals is trading at the lowest end of the
valuations.
Year Net Sales %growth EBIDTA OPM% PAT %growth EPS PE(x) RoE% RoCE%

FY08 13,815.9 27.2 1,432.1 10.4 731.2 86.8 42.3 20.7 50.1 35.0

FY09 17,779.7 28.7 1,797.4 10.1 893.5 22.2 51.7 17.0 42.6 39.0

FY10E 21,271.8 19.6 2,240.9 10.5 1,295.6 45.0 67.0 13.1 34.2 36.1

FY11E 25,907.7 21.8 2,749.3 10.6 1,638.6 26.5 84.7 10.3 28.1 33.2

Market Values:
Buy
Current Price Rs 876
Target Price Rs 1282
% upside 46%
52 Week Range Rs .1485 / Rs .331

Key Share Data

Market Cap Rs .16.9 BN/$352.9 MN
EV / Sales 0.8
EV / EBI DTA 7.4
1mth avg. dai y vol . Rs .14.5 mn/$0.3 mn
No.of Shrs o/s i n MN 19.3
Book Value 265.1
BSE / NSE 500031 / BAJAJELEC
Reuters BJEL.BO
Bloomberg BJE IN Equity

Share holding (%)

Period Dec''10 Sep”10
Promoters 65.7 73.5
MF/Banks/FIs 18.1 10.1
FIIs 2.2 1.3
Public & Others 14.1 15.2
Total 100.0 100.0