Bajaj Electricals ↗

BEL is a part of Bajaj Group which has presence in diverse industries such as automobiles (two wheelers and three wheelers manufacturer), home appliances, lighting, iron and steel, insurance, travel and finance. BEL is headed by Mr. Shekhar Bajaj as Chairman & Managing Director of the company, bringing over more than 35 years of experience. Furthermore, BEL has an established marketing position and brand recall with pan India distribution network and currently

BEL has a strong presence in the CP business and has diverse portfolio in the consumer product space which includes lighting (bulbs, LEDs, torches, lamps etc.), appliances (mixer, grinder, microwave ovens, steam irons, water heaters etc.), fans (ceiling fans, exhaust fans, pedestal fans, wall fans, table fans) and presence in premium segment via Morphy Richards. It also has considerable presence in the E&P segment wherein it executes projects under the spectrum of transmission towers,

The revenue from the CP reported growth of 23.3% on YoY basis in FY19 as compared to YoY decline 3.7% in FY18. The growth in revenue from consumer products was attributable to benefit on account of progress in RREP implementation leading to growth seen in every sub-categories of Appliances. The PBILDT margin of the consumer product has remained on 1 Complete definition of the ratings assigned are available at www.careratings.com and other CARE publications.

Under the RREP, the company has changed its strategy from Push model to Pull model, where it is intended to eliminate the wholesale segment entirely once fully implemented. Although, there were delay in implementation owing to synchronizing and teething issues in FY18, however, as at the end of FY19, BEL has achieved about 93% rollout of RREP. The progress in RREP in FY19 had positively impacted the margins of CP business in FY19, further; the same is estimated to have positive

E&P business of BEL primarily includes illumination, distribution and transmission, which accounted for about 7%, 64% and 20% of total revenue of E&P division in FY19.The revenue from its E&P business grew by 58.1% on a YoY basis in FY19. The growth was mainly on account of execution of its UP project (Madhyanchal and Purvanchal projects in Uttar Pradesh). The revenue from UP project was about Rs, 1609 crore, accounting for about 41% of the total revenue of Rs.3,932 crore from

Owing to nature of business of consumer products demands higher inventory levels, further adding to this large receivables arising out of E&P makes BEL’s operations high working capital intensive in nature. Consequent to increase in revenue from E&P segment over last few years, total receivables in absolute terms have remained on the increasing trend. The same is evident from high share of gross working capital as percent of total capital employed and total operating income of 194% as

In-line with increasing share of E&P segment as well as short execution timelines of its UP orders had resulted in higher working capital requirement and higher cost of execution, which as is evident from increase in short term borrowings and decline in PBILDT margins of E&P segment. Consequently, the overall gearing including acceptances rose to 1.59x on a consolidated basis as on March 31, 2019 as against 0.79x as on March 31, 2018. The coverage indicators such as total debt to

The E&P business of the company is exposed to counter party risk as it deals with national as well as state institutions; however, most of the projects done by the company are centrally funded. The receivables in absolute terms continued to remain on the increasing trend with rise in revenue share of the high working capital intensive E&P business. BEL’s total receivables as on March 31, 2019 increased significantly to Rs..3,144 crore (current+non-current) as against Rs.2,012 crore as

On the back drop of promising outlook in consumer appliances industry (due to rising income levels, rapid urbanization, and growth in nuclear families), the competition in the segment is intensifying, thereby increasing the pricing pressure on the company. The E&P industry is also strife with competitors both existing and the new ones entering the market due to low entry barriers. 2 CARE Ratings Limited Press Release