Bajaj Electricals Limited · Disclaimer This presentation has been prepared by Bajaj Electricals...

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Bajaj Electricals Limited

Corporate Presentation

November 2009

Disclaimer

This presentation has been prepared by Bajaj Electricals Limited (the “Company”) solely for providing information about the Company. This presentation is confidential and may not be copied or disseminated, in whole or part, in any manner. This presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes no representation or warranty or undertaking, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness, correctness and reasonableness of the contents of this presentation. This presentation has not been approved and will not be reviewed or approved by any statutory or regulatory authority in India or by any Stock Exchange in India and may not comply with all the disclosure requirements prescribed thereof. This presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or any omission from, this presentation is expressly excluded. No representation or warranty, express or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of such information or opinions contained herein. Neither the Company nor any of its respective affiliates, advisers or representatives, shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation. The information contained in this presentation is only current as of its date. Certain statements made in this presentation may not be based on historical information or facts and may be “forward-looking statements”, including those relating to the Company’s general business plans and strategy, its future financial condition and growth prospects, and future developments in its industry and its competitive and regulatory environment. Actual results may differ from these forward-looking statements due to a number of factors, including future changes or developments in the Company’s business, its competitive environment, information technology and political, economic, legal and social conditions in India and worldwide. The Company undertakes no obligation to update forward looking statements to reflect events or circumstances after the date thereof. This presentation and any information presented herein are not intended to be, offers to sell or solicitation of offers to buy the Company’s equity shares or any of its other securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful. The Company’s equity shares have not been and will not be registered under the U.S. Securities Act 1993, as amended (the Securities Act”) or any securities laws in the United States and, as such, may not be offered or sold in the United States or to, or for the benefit of, U.S. persons (as such term is defined in Regulation S under the Securities Act) absent registration or an exemption from the registration requirements of the Securities Act and applicable laws. Any offering of the equity shares made, if any, in the United States (or to U.S. persons) was made by means of a prospectus and private placement memorandum which contained detailed information about the Company and its management, as well as financial statements. The Company may alter, modify or otherwise change in any manner the content of this presentation, without obligation to notify any person.

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Table of Contents

Strategic Business Units

Financials

Key Highlights

Bajaj Electricals – An Overview

4

Legacy of the “Bajaj” Group

Shri. Jamanalal Bajaj

• Bajaj Auto… Group's flagship company is one of the world's leading 2 & 3 wheeler manufacturer

• A brand well-known across Latin America, Africa, Middle East, South and South East Asia

• The company is currently engaged in life insurance; general insurance and consumer finance businesses

• It has plans to expand its business by offering a wide array of financial products and services in India

• Deals in the financing of consumer durables, personal and small business loans, loan against property/shares

• Achieved a disbursal of INR 24 bn (~USD 0.52 bn) in FY09 under its various financing schemes

• General and Life Insurance Joint venture between Bajaj Finserv and Allianz SE (74:26 holding)

• Assets under management of INR 22 bn (~USD 0.47 bn) as on 2008-09

• Received the “Business Leader in General Insurance” award by NDTV Profit Business leadership in 2008

• Mukand Ltd. is one of the leading manufacturers of alloy and stainless steel long products in India

• The company also builds machines and plays an active role in turnkey projects and highway construction

Brief on select Bajaj group companies

• One of the oldest business conglomerates in India

• A group comprising of 25 companies

• Turnover over INR 280 Billion (~USD 6 Billion, at INR 46 per USD)

• Around 36,000 Employees

• Headed by Mr. Rahul Bajaj, currently Member of Parliament and active leader in CII, WEF etc.

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Bajaj Electricals Ltd.… leader in the space with 7 decades of history

Business Overview

Headed by Shekhar Bajaj, Chairman and MD

Manufactures & Markets Appliances, Fans, Lighting and

Luminaires

Also has interests in Engineering & Projects, High Masts,

Turnkey Lighting Projects, Transmission Line Towers,

Rural Electrification and Wind Energy

Extensive manufacturing facilities all over India

Strengths in Logistics, Supply Chain, Distribution,

Sourcing Arrangement, Project execution, R&D and

Marketing

Commenced operations in Lahore

Company started marketing small appliances &

lighting products reserved for manufacturing by the

Small Scale Sector

1940-70

Amalgamated Matchwel Electrical Ltd which

manufactured fans, die-casting components and

magneto assembly

Company set up fan manufacturing unit at Chakan

Set up wind farm near Vankusewade near Satara

1971-99

2000-02 Set up High Mast and TLT manufacturing unit at

Ranjangoan near Pune

Tied up with Morphy Richards

Acquired 32% share holding in Starlite Lighting

Limited a CFL manufacturing unit

Evolution

Shareholding Pattern as on Sept 09

2007-09

Project Smile – Implementation of ERP from Oracle

Crossed INR 18 billion turnover mark in 2008-09

2003-06

Mission Excell – Change Management initiative

undertaken.

Successful Financial turnaround of the company

Rights Issue of Rs 108 mn in October 2003

Shifted vendor base to Himachal & Uttaranchal

73%

11%

16%Promoter andPromoter GroupPublic Institutions

Public Non-Institutions

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Organization structure

Mr. Shekhar BajajChairman & Managing Director

Mr. R. RamakrishnanExecutive Director

Appliances SBU

LightingSBU

LuminairesSBU

Customer Care

Fans SBU

Branch SalesSupport

IT

E & PSBU Corporate

Finance

Secretarial &Legal

InternalAudit

HR &Admin

Mr. Anant BajajExecutive Director

Morphy Richards

Advtg. & Brand Development

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Table of Contents


Annexure: Financials Statements

Key Highlights


8

Strategic business units

Bajaj FansBajaj Engg & Projects

Bajaj Lightng

Bajaj Appliances

Bajaj Luminaires

FY09 Sales: INR 2,950 mnAs a % of total sales: 16%





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SBU wise sales growth

6,4908,440

10,770

13,730

17,700

FY05 FY06 FY07 FY08 FY09

(INR mn) FY05 FY06 FY07 FY08 FY09 GOLY CAGR

Total 6,490 8,440 10,770 13,730 17,700 29% 29%

Lighting 1,000 1,090 1,340 1,760 2,090 19% 20%

Luminaires 1,210 1,550 1,930 2,300 2,820 23% 24%

Appliances 1,410 1,940 2,600 3,630 4,640 28% 35%

Fans 1,090 1,410 1,850 2,410 2,920 21% 28%

Engg. & Proj. 1,780 2,450 3,050 3,630 5,230 44% 31%

Sales (INR mn)

6,7638,801

11,146

14,046

18,007


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Key Profit & Loss metrics

PAT (INR mn)

Gross Sales/Income from Operations (INR mn)

EBITDA (INR mn)

CAGR (FY05-09): 28%

429

692869

1,432

1,798


CAGR (FY05-09): 48%

138

298390

731

894


CAGR (FY05-09): 60%

Diversified revenue mix across high growth verticals

15% 13% 12% 13% 12%

19% 18% 18% 17% 16%

22% 23% 24% 26% 26%

17% 17% 17% 18% 17%

27% 29% 28% 26% 29%


Lighting Luminaires Fans Engg. & Proj.

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Key Balance sheet metrics

Networth (INR mn)

Reducing debt-equity ratio Return on Capital Employed

807 9011,168

1,748

2,450


CAGR (FY05-09): 27%

2.1 2.1 2.0

1.4

0.9


9%

16% 17%

24%26%


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Other important metrics

Market Capitalization (INR mn) and Share Price (INR) as on March, 31st

1:1 Bonus during FY 08

15.8032.63

44.58 42.3151.69

42.31

51.69


Earning Per Share (INR)

CAGR: 60%

Return on Equity

18%

36% 38%

50%

43%


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5 year financial summary (INR mn)

Particulars FY 05 FY 06 FY 07 FY 08 FY 09

Gross Sales & Income from operations

6,763 8,801 11,146 14,046 18,007

Net Sales 6,496 8,459 10,789 13,745 17,705

PBIDT 429 692 869 1432 1798

% Sales 6.60% 8.17% 8.06% 10.42% 10.16%

Interest 164 180 231 293 370

Depreciation 60 64 73 75 86

Operating profit 205 448 566 1064 1343

Other Income (Net) 13 22 43 50 57

PBT 218 470 609 1114 1400

% Sales 3.35% 5.55% 5.64% 8.11% 7.91%

PAT 138 298 390 731 894

% Sales 2.13% 3.53% 3.61% 5.32% 5.05%

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Half-Yearly performance (INR mn)

Particulars Financial Year ended Mar 09

Half Year ended Sept 08

Half Year ended Sept 09

Growth over Previous period

Net sales 17,705 6,969 8,775 25.92%

PBIDT 1,798 565 912 61.36%

% to sales 10.16% 8.11% 10.39%

Interest 370 178 171

Depreciation 86 39 46

Profit before tax 1,400 348 696 99.83%

% to sales 7.91% 5.00% 7.93%

Profit after tax 894 224 456 103.53%

% to sales 5.05% 3.21% 5.20%

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Table of Contents



Key Highlights


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Products:Mixers Grinders, Juicers, Food Processors, Water Heaters, Air Coolers, Iron, Ovens Toasters Grillers (OTG), Room Heaters , Toasters & S/W makers, Hand Blenders, Water Purifiers & Filters, Microwave Ovens, Gas stoves, Electric Kettles, Coffee / Tea Makers

Competitors: Philips, Kenstar, Usha, Maharaja, Merloni, Spherehot, Sumeet, CG, National, Black & Decker, Tefal, Braun

Tie-ups:

Overview Products

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APPLIANCES Total W. Heaters Mixers R. Coolers Irons Others

GOLY 28% 35% 28% 37% 18% 17%

CAGR (over 4 yrs.) 35% 45% 37% 31% 24% 30%

Sales Performance (INR mn)

1,4101,940

2,600

3,630

4,64040%

28%34%

38%

22%


Total revenue % Growth

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One of the leading players in small appliances market, especially in Mixers, Irons, OTG, Water Heaters and Room Cooler

Wide Product Portfolio and highly trusted brand in the small appliances market

Business strategy

• Introduction of new models in Mixers, Water Heaters, Iron & Coolers

• Continue Network expansion and rural penetration

• Improve presence in organized retail

• Ensure success of PLATINI, Gas Appliances and New products such as Home Inverters, DVD players

Key industry growth drivers

• Increase in purchasing power of Indian middle class and rapid urbanization

• Sales in unorganized segment will shift to organized segment as prices reduce

• Organised retail will improve shopping experience and brand presence

Key highlights

Strong distribution network with more than 25,000 retail outlets

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Bajaj Platini Product Range

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Morphy Richards Product Range

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Products

• Domestic-use: Ceiling, Table, Pedestal & Wall mounted Fans, Personal Fans, Bajaj-Disney Children’s Fans

• Industrial-use: Industrial Exhaust fans, Commercial Air Circulators, Cooler kits and Pumps

Tie-ups

Overview Products

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FANS Total Ceiling TPW

GOLY 22% 25% 9%

CAGR (over 4 yrs.) 28% 29% 23%


1,0901,410

1,8502,410

2,950

30%

22%

31%29%

10%



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Tie up with Midea – One of the leading fan manufacturing companies in the world

One of the leading players in fan industry with over 15% market share (source: IFMA)

One of the leading players in Premium segment

Key highlights

Business strategy

• Introduction of new models in Premium/ Decorative and Under-Light fans, Fans decorated with more Disney Characters, Remote controlled Fans

• Focus on Pumps, Motors and Industrial fans

• Expand dealer network, rural penetration and presence in institutional segment


• Construction and housing industry revival

• Replacement market will improve due to Consumer boom

• With tax reforms, sales from unorganized segment will shift to organized segment as prices will be lower

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27

Products

• Lamps: GLS Lamps, Fluorescent tube lights, Compact Fluorescent Lamps

• Others: Domestic Luminaires, Ballasts & Starters, LED Torches

Manufacturing facility:

Hind Lamps, Shikohabad and Starlite Lighting, Nashik

Overview

Products

28

LIGHTING Total CFL GLS&FTL Fittings

GOLY 19% 23% 10% 28%

CAGR (over 4 yrs.) 20% 61% 2% 21%


1,000 1,0901,340

1,7602,090

31%

19%

4%

9%

23%



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Key highlights

Business strategy

• Network expansion and consolidation in Kirana segment, Modern Retail formats. Already covering more than 300,000 outlets

• Focus on CFL since demand for GLS and FTL is not growing fast. Significant capacity expansion in Starlite Lighting

• Motivate consumers to shift to energy saving lamps


• High growth in CFL due to reduced prices and energy conservation drive at residential, commercial and government level

• Greater focus on Environment and Climate change amongst Consumers

• Rural electrification and higher Power availability will spur future demand

One of India’s oldest lighting company with respected brand image

Good progress in CFL market

Acquired significant stake in Starlite Lighting - a strategic move

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Products:

• Luminaires: Industrial, Commercial, Decorative, Street light, Flood light, LED, Lighting Electronic, Lighting Control

• HID lamps: Mercury & Sodium vapor lamps, Halogen lamps, Metal halide and Fluorescent Lamps

Tie-ups

Overview Products

Technical lighting Fire Alarms & Security systemsIBMS & HVAC

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LUMINAIRE Total Fittings HID

GOLY 23% 24% 15%

CAGR (over 4 yrs.) 24% 25% 17%


1,2101,550

1,9302,300

2,820

19%23%

25%28%

25%



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One of the leading players in street Lights, flood Lights and industrial applications

Key highlights

Business strategy

• Focus on new segments IT/BPO/Retail/Healthcare/Pharma

• Promote products to builders / Electrical Consultants / Architect segment

• Introduction of new products with LED light source

• Focus on energy efficiency products and Green Building applications


• Rapid urbanization, emerging segments like retail formats, malls, showrooms, IT parks, Tourism, Services

• Govt. and Private sector spending on infrastructure

Major Customers

• Industrial: TATA Group, Reliance Group, Reliance ADAG, L&T, Aditya Birla Group, Siemens, ABB

• Government Clients: Airport Authority of India, Container Corporation of India, State Electricity Boards, NTPC, Municipal Corporations & Councils, MSRDC, BEST, DAE

Offers the latest and cutting edge Security and BMS (Building Management Systems) to its institutional customers in partnership with Delta Controls of Canada

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Fields of operation: • Special Projects: Turnkey Lighting Projects, Factory

lighting, Air-port Lighting, Sports Lighting, Rural Electrification etc.

• High Mast & Poles: High Mast Lighting, Signage, Transmission Lines, Energy-efficient Illumination

• Towers: Design, Supply, Erection and commissioning of Transmission lines and Telecommunication Towers, Monopoles etc.

Tie-up:

Overview

Products

Telecom Towers

Street Furniture

Power Distribution

Signages

Power Transmission

Illumination Projects

Sports Lighting

High Mast

CNC Profile Cutting Machine CNC Press Brake from LVD

Pole Welding Machine Welding of High Mast Section

GODREJ Make Shearing Machine

30,000 TPA Tunnel Enclosed Bath

Ranjangaon factory

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E&P TotalSpecial

Projects High Mast Towers

GOLY 44% 57% 39% 39%

CAGR (over 4 yrs.) 31% 56% 36% 15%


1,7802,450

3,0503,630

5,230

19%

44%

87%

38%

24%



38

Particulars TotalSpecial

Projects H. Mast Towers

Sales FY09 (INR mn) 5,230 1,600 1,980 1,650

GOLY 44% 57% 39% 39%

CAGR (over 4 yrs.) 31% 56% 36% 15%

Division wise Sales Performance

15% 13% 16%28% 30%

32% 29%35%

39% 38%

53% 58% 49%33% 32%


Special Projects High Mast Towers

Orders In Hand – As on Oct 2009 (INR mn)

Segment Order Book

Towers 3,974

High Mast & Pole 1,046

Special Projects 3,480

Total 8,500

39

One of the leading player in sports lighting, power plant lighting and High Masts space

Diversification into related businesses such as Rural Electrification etc

Key highlights

Industry growth drivers

Special Projects

• Huge Investments expected in Power and Infrastructure sector

• Electricity connections to 800 mn households in 125,000 villages will be given in 5 yrs under RGGVY - investment of INR 1,200 bn

• Major opportunities in Rural electrification and Transmission Line Towers

• Airport Authority of India to develop 25 non metro Airports

• Construction of IT parks / BPO / Shopping Mall / Special Economic Zones

High Mast & Poles

• Jawaharlal Nehru National Urban Renewal Mission within 7 yrs… 23 cities to be transformed involving an investment of INR 400 bn

Towers

• 60000 CKM transmission network to be added by 2012

• Present capacity of power transfer to be increased from 9000 MW to 30000 MW – Investment of INR 2,000 bn

• 350,000 TCT by 2010 –investment of INR 1,050 bn

BAJAJ Engineering & Projects BU

GMC Balayogi Football cum Athletic StadiumHyderabad

Sawai Mansingh Cricket Stadium, JaipurSawai Mansingh Cricket Stadium, Jaipur

BAJAJ Engineering & Projects BU

Main Tennis Stadium At Fateh Maidan Hyderabad

Kothagudam – APSEB - 2 x 210 MWTPP

Queen’s Necklace At Marine Drive - Mumbai

Telecommunication Application

Antenna Mast for Reliance Infocom-VPT Project

Highmast for Telecommunication & Antenna Mast

Signages & Gantry

Largest National Flag (22 x 14 mtrs) installed at Kaithal & Ladwa in HaryanaThe India’s tallest mast 63 mtrs (48x72ft)Hoisted & lowered through high speed motorised winching arrangement. ThisMast is manufactured at Ranjangaon andErected by Bajaj E&P BU team

Flag MastInstalled at Kaithal & Ladwa, Haryana

Transmission Line Towers

•

Monopole Tower Manufactured At Ranjangaon Plant

Monopoles For Power Transmission- PGCIL’s Dadri Ballabhgarh 400 KV D/C Monopole

132 kv d/c Transmission Line at Pachpatta, Nasik - for ABB / Enercon / MSETCL

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Table of Contents



Key Highlights


54

Key Highlights

Nationwide distribution network with wide urban and retail penetration

Strong financial track record

Robust, sustainable business strategy

Experienced management team backed by distinguished board

Strong brand positioning to drive growth

Diversified Product & Business portfolio – Both Consumer facing and Industry / Infrastructure facing

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Nationwide distribution network

Distribution network

• 19 branches

• 600 distributors

• 5,000 dealers

• 240 service centers

• 300,000+ retail outlets Lucknow

Depot

Mumbai

Pune

Nagpur

Ahmedabad

RaipurIndore

Noida

Jaipur

Delhi

Chandigarh

Bangalore

Cochin

Chennai

Hyderabad

Bhubaneshwar

Calcutta

GuwahatiPatna

Branch

Faridabad

Parwanoo

Goa

Ranchi

Daman

Zirakpur Dehradun

Has a strong pan India footprint and has displayed great

strengths in distribution, logistics & project execution…

plans to further amplify its retail network

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Strong brand positioning to drive growth

Bajaj Appliances

Tie up with Morphy Richards (UK) for manufacturing & marketing premium products in IndiaBajaj Platini introduced at the Premium endNew Ad-campaign on “Rock star mommy”launched

Bajaj Fans

Tie up with one of the world’s leading fan manufacturers - Bajaj Midea Targeting kids segment by supplying specially designed fans through a tie up with Disney

Bajaj Lighting

Significant network expansion undertakenSignificant capacity expansion in Starlite Lighting for CFLsFocus on Rural markets

Bajaj Luminaires

Tie up with Trilux Lenze (Germany) for premium technical lighting and RUUD Lighting (US) for LED New Foray into IBMS , HVAC , Fire Alarms and Security systems

Strong brand name created in consumer durables & lighting businesses over the last seven decades

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Experienced management team backed by eminent board

Shekhar Bajaj, Chairman & MD - Bajaj Electricals Ltd.

— Worked previously at Bajaj Sevashram and Bajaj

International

— Present on Board of Directors for Bajaj Auto

— Former President of ASSOCHAM, IMC, Elcoma, IFMA etc.

Eminent Board

Top Management

Anant Bajaj Executive Director

— 11 years of experience in the industry

— Holds a BCom and PGDFMB

— Director on Board of Bajaj

International

R. RamakrishnanExecutive Director

Shekhar BajajChairman & Managing Director

— B.Sc. (Hons.) and PGDBM from XLRI Jamshedpur

— Associated with the Company since last 10 years

after 17 yrs in Asian Paints

— Earlier President & COO of Company

— Actively associated with ISA, ASCI – CCC, BMA,

CII and IMC

P. P. JatharExecutive VP & CFO

— 26+ years of experience in the industry

— Holds a bachelors degree in commerce and

a qualified chartered accountant

— Responsible for all financial and accounting

matters

Madhur BajajDirector

V.B.HaribhaktiDirector

Dr.(Mrs) ShahaniDirector

Dr. R P SinghDirector

H. V. GoenkaDirector

A.K.JalanDirector

Ajit GulabchandDirector

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Robust business strategy

Leveraging strong brand equity

Created a strong brand name in consumer durables and lighting businesses over the last seven decadesContinuously focusing on brand building and expanding retail network

Focusing on high growth businesses

Engineering & Projects revenue has expanded more than 5 fold from INR 950 mn (FY04) to INR 5,230 mn (FY09). TLT, Rural Electrification have large growth potentialFocusing on premium brands like Morphy Richards and Trilux and making them successful

Substantial market share

One of India’s leading players in the small appliances , fans and Lighting marketsOne of the market leaders in mixers, irons OTGs & water heatersStrong Distribution and presence in urban and rural markets

Diversified player

Diversified player with good presence in:

Consumer facing business (Appliances, Fans and Lighting)

Industry facing business (Luminaires)

Infrastructure facing business (Engineering & projects- High mast, turnkey lighting project, Transmission Line tower and Rural Electrification)

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BAJAJ ELECTRICALS LTD.

Thank you!

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