Bajaj Electricals, which is in consumer durables, lighting and EPC, is planning to be debt free by June next year. The company’s net debt as per an August notification stands at around ₹434 crore.
According to Anuj Poddar, Executive Director, Bajaj Electricals, the debt repayment will see Bajaj Electricals clear off its own debt by March 2022 and “in another three to four months” it will clear off debts accrued post acquisition of majority stake in Starlite Lighting.
“So by early next fiscal year, we intend to be debt free,” he told
In May, Bajaj announced acquisition of its “remaining stakes” in Starlite Lighting for a cash consideration of ₹60 crore. Starlite was a JV that Bajaj had entered into in 2007.
Bajaj’s net debt stood at ₹656 crore for the quarter ending June 30 and it was subsequently brought down to ₹434 crore.
Profitable growth in EPC business
According to Poddar, Bajaj Electicals is also looking at turning its EPC business profitable by FY23. Accounting for around a third of the company’s topline, Bajaj Electricals has been trying to scale down the vertical by “being selective on new orders” based on “protecting margins''.
The company’s EPC order book stands at around ₹870 crore – which includes ₹300 crore from illumination segment, ₹500 crore from power and transmission and another ₹70 crore from distribution.
“We are being selective on new orders at the moment; not under-cutting margins by bidding low. So FY23 onwards, the vertical should not have any losses,” he said.
Consumer Durables Business
The prime consumer durable vertical – accounting for nearly two-thirds of turnover – is witnessing a “steady bounce-back” post re-opening of markets and large format markets after a second wave of Covid-led restrictions and localized lockdowns.
Kitchen appliances and premium offerings continue to be dominant drivers, but “bounce-back is not as sharp as it was witnessed in the pre-festive season last fiscal”. Despite the YoY rise in GDP, numbers are down 9 per cent from pre-Covid years; indicating the stress.
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A combination of price hikes, which have been to the tune of 12 per cent between January and July, and a Covid-hangover are playing out on consumer sentiments.
“Consumer sentiments are hit to an extent that people have grappled with high medical bills in the second Covid wave. It has impacted savings,” Poddar explained.
Bajaj Electricals, he said, is planning another round of price hikes – to the tune of three per cent – to offset commodity price increase in base metals like aluminium and copper, in steel, and across other inputs like polypropylene. While hikes in metals have been between 15 and 20 per cent, in case of other inputs, price movements are 50-100 per cent.
“There was some steadying in metal prices in July. But, then they started heading upwards again. So by mid-September another three per cent of hike is expected in select offerings. Overall, 15 per cent price hikes are expected spreading across categories in CY2021,” Poddar added.