Bajaj Electricals: Sailing the winds of change

Shekhar Bajaj, chairman, Bajaj Electricals Image: Mexy Xavier
 
Mumbai, July 22, 2024.Shekhar Bajaj was prompt, sharp and brutally honest. “I want to assure you that our company is driven by a robust and well-defined strategy and not by any single individual,” underlined the chairman of Bajaj Electricals during his terse business update call, which was triggered due to an abrupt resignation of managing director and CEO Anuj Poddar on July 17. The next day, the stock of the listed entity tanked up to 6 percent on the news. A few days later, the seasoned entrepreneur was addressing a business call with investors to soothe their nerves. “Change is an inevitable part of any dynamic organisation,” reckoned Bajaj, who joined the family business in 1980. “As long as our strategy is in place, these changes are managed seamlessly.”  

Change indeed has been a defining theme of Bajaj Electricals, which started as Radio Lamp Works in 1938 to distribute Italian-made radio lamps. Unfortunately, at times, change barged in without knocking. For instance, in August 2018, two months after he was elevated as MD of Bajaj Electricals, Anant Bajaj, 41, died due to a cardiac arrest. It was a devastating blow for the company, and the family, which had the scion firmly saddled in operations. The father recalled the nature of the challenge during his analyst meeting. “Five years ago, following the untimely demise of my son Anant, we faced the challenging task of onboarding Anuj Poddar without the opportunity for a proper handover,” he pointed out.

If losing his son was a cruel blow, then finding the company in a precarious position was equally traumatic. Back in 2018-19, Bajaj Electricals was saddled with a staggering debt of over ₹2,000 crore. “We also had numerous pending EPC (engineering, procurement and construction) orders,” recalls Bajaj, who was dealing with an irreparable personal loss and a crushing business scenario. “It was a period of uncertainty and significant pressure,” he recounted, adding that the company turned the tide through strategic planning, relentless effort, and support from the board and the senior leadership team. By FY22, the company became debt-free and it continues to remain so. “Alongside my 44 years of leadership, we have Rajiv Bajaj representing the next generation of our family, our board, and our team of distinguished independent directors, who are pivotal in steering our future direction,” he maintained. Last September, Bajaj Electricals demerged the EPC business. “Bajaj Electricals is now a purely consumer company,” he asserted, adding that during the period of transition, he will take over the responsibilities along with his leadership team. “They (leadership team, board, and employees) reflect our ability to adapt, adopt, innovate, and overcome obstacles,” he concluded.

Over a month after the investor update call, Shekhar gets into a free-wheeling conversation with Forbes India to talk about the resilience of the company, which has survived countless odds since its inception in 1938, and how it intends to rebound after sluggish growth during the last fiscal. “Bajaj Electricals is not just a consumer product company. It is much more than that,” contends the veteran industrialist whose business universe was shaped and influenced by the distinct ideologies of his grandfather Jamnalal Bajaj, and father Ramkrishna Bajaj.



Being brutally candid is one of the traits that the third-generation entrepreneur cherishes the most. “Over the last year, Bajaj Electricals has not done well,” he confesses. In FY24, the company posted an operating revenue of ₹4,641.27 crore as against ₹5,417.41 crore in FY23. A dip in performance triggered speculative and knee-jerk reactions. “People started wondering what is wrong with Bajaj Electricals,” he says, adding that one of the guiding principles of the company is embracing a long-term perspective. “Frankly speaking, we have never taken a short-term view. It’s always a long-term view, and that’s what the Bajaj group is all about,” he asserts. “Focus is our DNA,” he says.

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Focus, ironically, went missing at a crucial stage of Bajaj Electricals. The company went into the business of EPC, and power distribution and transmission. “If I look back, I don’t know why we did it under Bajaj Electricals,” he says, trying to dish out plausible reasons for losing focus from the consumer business. “I think it (EPC) gives you a turnover and a bottom line. When you want to have growth at any cost, you do something which is ‘different’,” he says, adding that the consumer business and lighting don’t gel with EPC. Finally, there was a course correction. “After discussing for 18 years, we decided that we need to separate these two businesses,” he says, adding that sticking to a focussed approach or getting back to a focussed life needs a lot of courage.



Interestingly, Bajaj Group—which includes Bajaj Electricals—never ran short of courage. Shekhar tries to explain the business philosophy of the group by quoting Rajiv Bajaj who, during a product launch in early July, spoke about his father Rahul Bajaj: “He used to sleep under the pillow of courage and a blanket of integrity.” The legacy of values, underlines Shekhar, has to be continued. “That’s why we don’t take a short-term view,” he underlines, sharing how he walked the talk during the pandemic. During the crisis, there were two things that most of the companies were doing. The first was to cut costs, slash marketing spend and advertising budgets. The second was to spend less on R&D. “We took a contrarian view by increasing R&D spend, and ramping up the advertising budget,” he says. “Long term is the key.” 


Industry observers reckon that a long-term approach has worked for the company. Apart from being the top player (in terms of sales volume) in the mixer grinder, water heater and dry iron segments, Bajaj Electricals is also among the top two to three players in the other appliances, and the top five in fans and lighting categories, points out Crisil in its ratings report in June. The company, the report underlines, derives its strength from its keen focus on research and development.

The outlook looks promising. With continued focus on strengthening the product offerings, especially in the appliances and fan categories, Bajaj Electricals is expected to register stable growth in the consumer appliances and lighting segments over the medium term, Crisil maintains in its note. The consumer products—fans, air coolers, mixers, heaters, irons, and other kitchen and grooming appliances—constitute 78 percent of the revenue. The rest comes from the lighting segment. “The company is focusing on better brand positioning and recall.”  

Enduring brands, point out marketing and branding experts, don’t happen overnight. “You need to continuously evolve and upgrade,” says Ashita Aggarwal, professor of marketing at SP Jain Institute of Management and Research. Bajaj Electricals has been upgrading via its house of brands approach. While ‘Bajaj’ remains the flagship mass-consumer brand that is spread across all rooms, Nirlep (a kitchenware and cookware brand acquired in 2018) takes the brand into the kitchen. Then there is a premium brand in Morphy Richards and a new brand for high-performance products under Nex. “The performance during the last fiscal doesn’t present the correct picture of the company,” she contends. While the premium play of Bajaj Electricals witnessed healthy growth, the company was hit due to its dependence on mass segment products and rural markets, while general trade channels faced headwinds. “If you are not fundamentally sound, you won’t survive this long,” she says. 

What has also helped the brand in its longevity is some of its iconic advertising. “Remember this jingle: Jab main chhota bachcha tha,” asks Aggarwal, alluding to the first television campaign of the brand in the early 80s. The brand, she underlines, has always been in the consideration set of Indians because of its trust, durability and quality. With the focus back on the consumer segment, Bajaj Electricals is poised to post bigger numbers. “A city like Mumbai is upgrading its infrastructure. And Bajaj Electricals, too, is a work in progress,” she adds.  

Shekhar, for his part, asserts that the company will stay focussed. “We won’t get into any other business. Now we have to become a global company,” he says, adding that the company has been talking about its global game plan for a while, but has failed to walk the talk. “Our global market share is 2 to 3 percent. We now have to step up our play,” he says. “We will keep growing but not at the cost of our values.”