Bajaj Electricals says the margin will not cross 10% this year — here's why
During a conversation with CNBC-TV18, Anuj Poddar, the Managing Director and CEO of Bajaj Electricals, conceded that achieving a double-digit margin in the current fiscal year might not be feasible. Nevertheless, Poddar maintains his positive outlook, affirming that Bajaj Electricals' trajectory is on a clear upward path.
Consumer electrical equipment maker Bajaj Electricals expects its margin to be around 10 percent or even lower this financial year due to pricing pressure across product categories, competition and muted consumer demand.
In a conversation with CNBC-TV18, Anuj Poddar, MD & CEO of Bajaj Electricals, acknowledged that a double-digit margin might not materialise in the current fiscal year. However, Poddar maintains his positive outlook, affirming that Bajaj Electricals' trajectory is on a clear upward path.
“If you see the operating leverage kick-in or the demand come back you will see the margins actually come back very sharply. However, double-digit margins is not going to happen this year, we don't give a projection, but it's definitely not this year. But that is fine the trajectory is important for us,” he said.
Poddar emphasised the persistent challenge of pricing pressure across product categories. He mentioned that the competitive landscape and weak summer have led to this phenomenon.
“Weak summer and an overall week muted discretionary consumption demand in the economy, you are seeing that across sectors. I think both of these factors combined are leading to pricing actions or discounts and that are not necessarily healthy. So in this kind of an environment, players are discounting.”
The appliance segment has demonstrated a more positive trend, achieving a growth rate of 10 percent, supported by a volume increase of 6-8 percent.
Looking forward, Poddar expressed confidence in the performance of the consumer lighting segment, anticipating an upswing in demand by the second quarter. Additionally, the market share of the fans segment has noticeably risen from 8 percent to 10 percent over the past 18 months.
Poddar also highlighted the impact of the new star rating regulations, revealing that there's an approximately 10 to 12 percent increase in costs that has not yet been transferred to consumers. He stated, "As industry participants, we are absorbing around a 4 to 5 percent cost impact in this context."
Also Read | India to move Bills amending GST laws to include 28% GST on online gaming, casinos, horse race clubs
(Edited by : C H Unnikrishnan)
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