Aiming for Rs 5,500 crore turnover in FY17: Bajaj Electricals

With the summer season kicking in before time, the demand for fans, coolers and ACs have picked up, and we have sold out all of our inventory, said Shekhar Bajaj, CMD, Bajaj Electricals. The company expects to score a high double digit growth in the coolers segment in FY17. At present, Bajaj has an order book of Rs 2,000 crore, and it will bid for those tenders that will meet the company's margins requirements, Bajaj added. The company, however, plans to add more distributors to its network. It expects turnover of Rs 5,500 crore in FY17, of which its engineering, procurement and construction business will contribute 30-35 percent at Rs 2,000 crore, Bajaj said. Below is the verbatim transcript of Shekhar Bajaj's interview with Reema Tendulkar & Mangalam Maloo on CNBC-TV18. Mangalam: How has the demand been in terms of fans as well as your other products as far as this summer is concerned and what can we expect in the next financial year? A: As far as coolers are concerned, last two years have been very bad and therefore most of the companies were playing safe and not building up too much of inventories because this is a short, one month type of product group. So with a result that this time the summer started 15 days before time and because of that everybody realised that there is a longer period for summer and therefore cooler demand picked up and the result of that is that in most of the markets we are stocks out. Reema: In the last one-and-a-half month which is when summer season has been in full throttle, what would be the rough sales that you have clocked in? A: I would not know the numbers but growth is high double digit in the cooler segment. Mangalam: We also want to know about your strategy in the engineering and projects (EnP) business as well. Are you still bidding for projects or are you still completing your earlier orders? A: We are bidding for projects but have been told many times that we will not be only looking at topline. We are interested in bottomline. So if it doesn\\'t meet our minimum margins requirement and we lose a few tenders, doesn\\'t bother us. The legacy projects were done over a year-year-and-a-half year back. However, now we are talking about current orders which are there for 18-24 months, so those are going as per schedule; most of them are ahead of schedule and we have an order book of over Rs 2,000 crore. It is not that we have got no order but it has been over Rs 3,000 crore at one time. We rather execute on time because orders, we always get but we must get at right price. Therefore, for next year we are looking at Rs 5,500 crore. On Rs 5,500 crore EnP business should not be more than Rs 2,000 crore. So we are saying that it should be 35-40 percent or more. The scope is of doing Rs 1,000 of crore but we will not go that way. We will restrict our business to 35-40 percent of our turnover of the business will be on the EnP business. Reema: If you are already stocked out, how are you planning to meet the increasing demand? A: The good news is that every day we are producing and whatever is getting produced is getting sold. So it is not that there is no supply; supply is going on but there is no stock, so it comes in goes out. The biggest advantage I see is that by end of the season we will be having zero stock, our distributors; dealers should have zero stock, so next year will be strong. However, last two years we have been carrying huge stocks; our dealers have been carrying huge stock and therefore their money was blocked up for the year. Now the money will be free and hopefully they will be buying other products. So coolers are sold out, so their cash is free and therefore they will buy other appliances and therefore to that extent we expect good sale in other non cooler products also whether its fan or whether it is appliances because most of the dealers are selling all products. So cooler has only one month time; the other 11 months they are carry the stock and which is why their money gets blocked. Mangalam: There are murmurs going around that there is some inorganic or organic growth plan rather inorganic growth plan in the offing. Could you give us your word on that? A: We keep looking at, whether it is acquisition or some type of collaboration or some brand which we can market - that is continuously on our radar but unfortunately last five-six-seven years we have not been able to close any deal because the type of pricing that was expected from the parties were not working out because financially all those who have bought companies have not made much of money. Mangalam: Anything we can hear in near future? A: I do not think anything is there in terms of any acquisition or any big ticket. We may get some distribution rights for some particular product, if that happens, we will inform because everybody is looking at India strongly that India is a market of the future. Therefore, every top brand in small appliances, lighting or fans wants to come to India. Hence we being a well-established player, they might contact us and ask us if we would be interested in distributing their products. So those types of discussions are going on with many companies.