Bajaj Electricals Ltd Management Discussions

Global Economic Overview¹

The global economy has encountered several challenges, such as slow growth, high debt and prolonged geopolitical conflicts during FY 2024. However, moderating inflation due to favourable market shifts, including a decline in energy and food prices, contributed to stronger-than-anticipated global economic growth.

Economic growth in the United States and several major emerging markets and developing economies has exceeded expectations during the second half of 2023. This upturn was driven by both public and private investments, sustaining consumption amid tight labour markets. With an overall spike in labour force participation and unwinding global supply chains, supply-side growth has also gained momentum.

According to the IMF, global growth, which was estimated to be 3.2% in CY 2023, is expected to remain the same in CY 2024 and CY 2025.

World Economic Outlook April 2024

Outlook

In the years ahead, a strong labour force, a surge in manufacturing activity, higher household incomes and favourable fiscal policies will drive the growth of the global economy.² The emerging market and developing economies (EMDEs) are expected to witness a growth rate of 4.2% in CY 2024. Global headline inflation is expected to remain anchored, falling from an estimated 6.8% in 2023 (the annual average) to 5.9% in 2024 and 4.5% in 2025.

Indian Economy³

The Indian economy has demonstrated macroeconomic resilience amid global headwinds. Buoyed by a robust financial system that is supporting its growth dynamics, India has maintained its position as one of the fastest-growing major economies.

As per the final estimate of National Statistical Office, the GDP of India has grown by 8.2% in India for FY 2024; which is the highest among major advanced and emerging market economies.⁴ This rebound in growth can be attributed to sound macroeconomic fundamentals, moderation of inflationary pressure and prudent public policies. Further, the easing of supply-side bottlenecks and the thrust on infrastructural capital expenditure have enabled economic growth.

Outlook

Going forward, India is expected to emerge as the third largest economy across the world by fortifying the financial system, promoting responsible innovation and driving inclusive growth as per the governments key priorities.⁵ The emphasis will remain on prioritising capital expenditure, infrastructure improvement, sustainable livelihood practices and the promotion of green energy. The Reserve Bank of India (RBI) will continue to focus on ensuring durable price stability and driving medium-term debt sustainability; thereby, further strengthening the financial sectors resilience and spurring new growth opportunities.

Industry Overview Consumer Products

Appliances

The confluence of several factors, including growing consumer aspirations, increasing demand for products that seamlessly integrate technology and modern design, and the continued evolution towards time-scarce contemporary lifestyles, has led to a shift in the consumer appliances industry in India. A notable trend is the faster growth of premium segments, wherein consumers seek products that offer innovative features, sleek aesthetics and superior performance. On the other hand, we are witnessing structural changes on the supply side as well, led by government incentives to boost domestic manufacturing. This in turn is leading to industry players (including contract manufacturers) investing in expanding their production capacity and a growth in indigenous component manufacturing. The consumer electronics and home appliances market in India is expected to increase in its market size by USD 2.3 billion from 2022 to

2027.⁶ The sectors long-term outlook remains promising, supported by the steady momentum in construction activity and housing sector demand, increasing penetration levels, greater premiumisation and faster churn of products. As the industry prioritises research, innovation, consumer-centricity, premiumisation, and sustainability, it is transitioning from a ‘Make in India to an ‘Innovate in India paradigm, poised to unlock opportunities for growth.

Fans

The ceiling fan industry in India is witnessing growth driven by several factors, including a shift towards energy efficiency, home renovations, technological advancements and rural electrification.

These factors, combined with mandatory regulations for star ratings of fans (based on energy efficiency) are leading to a churn in and upgrade of installed fans. In recent years, market players have introduced a wide range of energy-efficient fans, offering a plethora of choices to buyers. These include induction and BLDC motor-based models.

Moreover, the increasing spends on home interiors have led to a preference for premium and aesthetically pleasing products, including fans. Consumers are now seeking fans that not only provide functionality but also seamlessly integrate into interior design trends, leading to a demand for stylish and innovative fan models. Technological advancements include the increasing integration of IoT in fans to provide smart products that provide seamless connectivity in modern, smart homes. Prolonged and more intense summers with rising temperatures are another factor that will continue to boost overall fan usage and sales over the coming years.

The ceiling fan market in India is anticipated to achieve a milestone of 50.9 million units by 2032.

Human-Centric Lighting (HCL) is emerging as a key trend, optimising lighting to support circadian rhythms and improve well-being. Consumers are beginning to become aware of the concept of differing ‘quality of light emitted from various LED products in terms of its glare, flickering, consistency, etc. All of these elements have a bearing on our eyes and overall well-being. Additionally, customisable lighting solutions are gaining traction by providing aesthetic appeal and options for personalisation to complement diverse home decor and moods. Lighting products are taking on various form factors with an increased shift towards battens, recessed lighting panels and other fittings. Alongside these consumer-front changes, the industry is also witnessing supply-side changes. On one hand, there is a large segment of median players that have been getting squeezed out by competitive pressures, constant technological changes and price erosion. On the other hand, newer, smaller players continue to emerge as ankle-biters that use low pricing to pull away consumers.

Currently, the industry is estimated to be worth USD 4.70 billion in FY 2024; it is projected to reach USD 6.77 billion by FY 2030, growing at a CAGR of 6.29% between 2024-2030.⁸

Professional lighting

The market for professional lighting solutions is expanding in tandem with infrastructural growth and new constructions and projects. With India witnessing a strong infrastructural capex cycle, professional lighting will continue to ride that wave. This transcends several user industries and applications such as stadiums, highways, tunnels, airports, metros, commercial buildings, logistics, data centres, etc.

The thrust on urbanisation, rejuvenation and beautification of urban centres, monuments, tourist places, religious centres and public architecture is also leading to a spike in demand for architectural and facade lighting solutions. Technological evolution and smart lighting, allow for greater use cases of lighting integration with overall digitisation and adoption of smart and sustainable systems across industries, be it manufacturing, retail, real estate or several others. This is not just enhancing the overall lighting value proposition and industry size but in due course will also lead to business model evolution – towards end-to-end solutions and service-based pricing.

Company overview

Bajaj Electricals belongs to the well-known and reputed Bajaj Group. The Company upholds a rich legacy spanning over eight decades. Since its inception in 1938, the Company has remained steadfast in its mission to enrich the quality of life. A leading player in the fast-moving electronic goods (FMEG) sector, Bajaj Electricals offers an array of Consumer Products (Appliances, Fans, Non-electrical kitchen aids) and Lighting Solutions (Professional and Consumer Lighting). Through a network comprising over 700 distributors, nearly 2,00,000 retail outlets and more than 600 consumer care centres across India, the Company strives to enhance the quality of life of its consumers from the moment they wake up to the moment they end their day.

With a focus on innovation and customer centricity, Bajaj Electricals continues to raise the bar on meeting the needs of all segments of Indias diverse consumers and their varied needs and aspirations.

Business segment overview Consumer products

The consumer products business of Bajaj Electricals features an extensive selection of appliances, fans and non-electrical kitchen aids meticulously crafted to align with changing consumer preferences. From everyday kitchen essentials to an assortment of home appliances, under four brands, the Company offers a diverse range of products. Committed to staying at the forefront of technological advancements and emerging trends, it consistently elevates and enhances its offerings. This dedication to innovation has enabled the Company to consistently meet customer expectations for years.

Bajaj Electricals has employed a multi-brand strategy known as the ‘house of brands approach, wherein each brand presents a distinct and compelling consumer proposition. This signifies the new Bajaj Electricals with plans to consolidate all recent launches and improve communication around these brands.

BAJAJ

BAJAJ- Built for Life

Consumer trends indicate that individuals today are characterised by their ambition and resilience, demonstrating a consistent drive to outperform and achieve their dreams. Their dynamic and fast-paced lifestyles demand home appliances that seamlessly integrate into their routines and provide reliable performance without any disruptions.

Recognising this, BAJAJ has introduced a unique and targeted positioning that focuses on the promise of durability, articulated as ‘BUILT FOR LIFE, offering a compelling value proposition to its customers. The new brand positioning underscores the brands promise of durability and endurance through industry-best durability-centric features in new models, coupled with superior aesthetics and functionality. These tough-built appliances are engineered to keep going and deliver an uninterrupted experience, causing little or no friction to the consumers life, so that theyre always unstoppable.

The latest product launches are built on the attributes of ‘Durable, ‘contemporary and ‘modern, the brands revised portfolio features cutting-edge technology that resonates with consumers. These innovations have garnered widespread acceptance from both consumers and channel partners, setting new industry standards.

These advancements, accompanied by a proactive marketing approach including online launches, retail activations, and digital campaigns, have driven significant growth, with new launches contributing over 30% to total revenue basis last 2 years launches. Through comprehensive research, the Company has tailored products to meet diverse consumer needs, ensuring broad market coverage across various price points and segments.

Brand positioning efforts

The brands nationwide positioning was reinforced through multimedia campaigns targeting key product categories like fans, air coolers, water heaters, and mixer grinders, emphasizing product efficiency and durability. Also leveraging digital platforms, the brand promoted its new proposition, expanded online presence, engaged with consumers, and increased subscriber bases through various campaigns. At retail outlets, the focus was on strengthening last-mile conversions and leveraging collateral to make the brand more visible and accessible.

Nex – Feel the Future

The Company launched a new brand of premium fans, Nex, marking this as a key milestone in the evolution of Bajaj Electricals as an organisation into a ‘House of Brands. The Nex brand and products will plug a key need-gap in the marketplace and complement the existing portfolio. Nex puts human experience at the forefront by combining intelligence with human intuition. The brand promise of performance rests on the three pillars of Air Experience, Differentiated Technology, and a Fluidic Design Language. After considerable investments in R&D over the last few of years, the Company launched a unique and differentiated offering that addresses the core needs of Indian consumers.

Nex marked its presence in the Indian market with the introduction of a range of premium ceiling fans that deliver a remarkable 20% higher air thrust under the fan, as compared to its conventional counterparts. This heightened performance of Nex products is attained by leveraging an advanced technology platform known as Aeirology™. This technological innovation enhances the performance of the fan by optimising the design of the motor and blade, for added user convenience.

To gauge the preliminary response to the brand and its products, Bajaj Electricals launched Nex on e-commerce during the calendar year 2023. Following the debut of Nex ceiling fans on various e-commerce platforms, the Company has received exceptional reviews, highlighting the outstanding quality, performance and designs of its products. All the fans have also achieved a commendable 4-star rating on Amazon.

After witnessing strong online channel reviews, the Company launched the brand across various offline formats towards the end of FY 2024. The brand garnered positive responses from dealers both in terms of product design and performance.

The Nex portfolio currently offers a range of ceiling fans including the Dryft Series, the highlight of which is its low-noise ABS, and the Glyde Series crafted with premium aluminium blade. Going forward, Nex will expand its product offering to include IoT-enabled ceiling fans, a diverse range of TPW fans, and air coolers.

Morphy Richards – Happiness Engineered

The iconic British brand - Morphy Richards redefines the way consumers interact with their home appliances. The brands thoughtfully crafted luxury kitchen and home appliance portfolio comes with a blend of cutting-edge technology and contemporary design enabling the brand to offer more than just appliances – it delivers an elevated lifestyle.

Sophisticated designs, sleek form factors and advanced functionalities differentiate the Morphy Richards range of products. The products are priced at a premium to reflect their quality and exclusivity. The marketing endeavours for the brand are directed towards affluent consumers who value intuitive, well- engineered and aesthetic appliances.

The brand has consistently launched a slew of new products through the year, offering consumers with user-friendly options for modern households. Morphy Richards launched digital toasters and kettles in the breakfast and beverage segment, thereby enhancing its portfolio to meet consumer demand in this category. In FY 2024, the brand further diversified its portfolio with the introduction of stand mixers, multicookers, air ovens, zero-oil radiators and its flagship product, the Caf? Artisan as a top selling brand, hence catering to diverse culinary needs. Morphy Richards also unveiled its two-in-one manual and digital air fryers. Notably, these air fryers have also earned the distinction of being products of ‘Amazons Choice garnering high ratings from delighted customers. The brand also introduced the Grind Pro Maxx, a 1000-Watt mixer grinder tailored to the preferences of consumers in South markets.

The Grind Pro Maxx 1000W mixer grinder has won the ‘Good Design award in FY 2024.

Additionally, the Company expanded its home appliance offerings to include garment steamers and induction cooktops, catering to various household needs. During the reporting period, Morphy Richards entered the personal grooming market by introducing an extensive range of grooming products tailored for both men and women. This product line includes hair straighteners, hair dryers and trimmers.

As part of its endeavour to position itself as a premium lifestyle brand, Morphy Richards has leveraged collaborations with mainstream celebrities, chefs, lifestyle influencers and vloggers for greater visibility and engagement. The brands concerted efforts during festive quarters have significantly elevated brand recall among affluent audiences, with campaigns resulting in a remarkable 190% increase in digital engagements. Throughout the year, Morphy Richards maintained a robust digital footprint, present with campaigns across various digital channels securing over 200 million views. These campaigns have effectively redirected nearly eight lakh potential consumers to Amazon, showcasing strong purchase intent.

The new line of male and female grooming products, accompanied by the ‘Oh So Rich! campaign, has achieved over 100 million views, driving strong demand and e-commerce traffic. The brands personalised grooming campaign reached a high traction of over 10 million men and five million women consumers. Delighted by the success of these products, Morphy Richards intends to include innovative products like cordless hair straighteners and BLDC hair dryers to reinforce its commitment to meeting the diverse grooming needs of consumers.

Nirlep – Everyday Health

In keeping with the increasing consumer focus on adopting healthy eating, the brand positioned itself as a facilitator of these lifestyle choices. This involved the introduction of an innovative line of pressure cookers with stainless steel, aluminium and hard-anodised variants. These pressure cookers are equipped with a unique ‘Nutrivent Technology that delivers optimised nutrient retention rates during cooking. The product launch was accompanied by a targeted digital marketing campaign in key markets such as Mumbai, Thane, Kolhapur and Indore.

In the fiscal year, Nirlep launched its innovative, differentiated cookware range with ‘Silver Ion Technology. Most consumers are unaware that bacteria accumulation continues even after a thorough wash of their cooking utensils. The unique ‘Silver Ion Technology prevents bacteria accumulation on cooking utensils stored in cabinets.

This technology is available with the Nutrihealth Pro and Nutrihealth ranges of cookware and also boasts multiple other features such as sturdy handles, induction cooking compatibility, and PFOA free 5-layer coating. Nirlep Cookware with ‘Silver Ion Technology is slated to be in stores in 8 markets.

To drive long-term growth, Nirlep consistently enhances its product efficiency and production capacity through its state-of-the-art manufacturing facilities and well-integrated supply and distribution channels. Simultaneously, the Company is taking significant strides to foray into newer geographies and cater to underserved markets. Furthermore, Nirlep underwent a strategic repositioning during the year under review. It is now emphasising ‘Everyday Health, in collaboration with renowned chef Kunal Kapur, who serves as a brand advocate to foster consumer engagement. This message has been conveyed through digital channels and in-store retail networks in targeted markets, ensuring heightened visibility and subsequent purchases.

Review of distribution channels Trade sales channel

The trade sales channel continues to be a core competitive distribution channel in strengthening market share. With a network of over 700 distributors and a retailer base of over 2 lakhs, the Company has implemented network optimisation initiatives among channel partners to facilitate targeted distribution and expand its market footprint. By leveraging advanced technological tools such as Power BI for internal sales teams, SFA apps for frontline sales teams, and retailer apps for retailers, the Company has enhanced the efficiency and performance of its sales operations. These efforts have not only enabled portfolio diversification but also generated improved returns on investment. The adoption of a commercialisation process for new products ensures tracking and governance of the seeding plan for all newly launched products. In December 2023, the Company introduced the new Nex premium range of fans in the trade channel.

Alternate channels

In FY 2024, the alternate channels accounted for approximately 43% of the total revenues of the consumer products segment, registering a year-on-year growth of around 19%. This growth can be attributed to shifting consumer buying behaviour. Consistent implementation of key strategic initiatives across both, retail (online and modern trade) and institutional (corporate and government) channels contributed to this growth.

The e-commerce channel reported year-over-year growth of approximately 22%. Bajaj Electricals maintained its leadership in the Small Home Appliances (SHA) segment through strategic platform mix adjustments and effective vendor flex implementation. The Different Model Different Channel (DMDC) structure also helped sustain growth. Throughout the year under review, targeted digital marketing campaigns were executed to enhance visibility, which resulted in good growth for fans, air coolers, and personal grooming products. To top it all, the exclusive launch of the Nex brand on e-commerce platforms and the success of personal grooming products under Morphy Richards have been the key highlights. The growth in the modern trade channel was driven by strong contributions from both National Format Retail (NFR) and Regional Format Retail (RFR) stores. Throughout the year, various in-store activations such as bulk outs, stacking displays, drop shots, aisle optimisation, cross promotions, and combo offers were promoted to stimulate purchases. The Company effectively capitalised on the festive market to further enhance growth. Total sales in this channel experienced a year-on-year growth of approximately 25%. In FY 2024, the focus remained on securing new listings, executing promotional activities as well as launching new product categories and exclusives.

The institutional channels witnessed steady 10% year-on-year growth. There has been a steady expansion in the government channel, including the canteen stores department (CSD) and Government e-Marketplace (GeM), registering a year-on-year growth of 11% during FY 2024. The surge in demand was driven by government initiatives, such as the introduction of ‘Made in India SKUs, one-to-one replacement of imported and phased-out items, and ground-level activations.

Consumer care

At Bajaj Electricals, nurturing enduring consumer relationships remains a foremost priority. To that end, the Company consistently implements a plethora of consumer care initiatives. This consumer-first approach enables the Company to improve its products in response to changing consumer preferences. In FY 2024, the Company has implemented the Online Call Resolution (OCR) process within its call centre, leveraging digital tools to enhance the efficiency and speed of resolving consumer complaints. The digitisation of customer interactions for service purposes will significantly streamline processes, leading to customer loyalty and increased brand value.

The Company has also made efforts to expand its service network to expedite the service delivery and grievance handling processes. The recent expansion of the Companys service network has yielded notable improvements in call resolution, surpassing 98% within a timeframe of less than two days.

While digital engagement tools such as chatbots and WhatsApp call registration have gained acceptance among contemporary customers, there remains a preference for voice communication among many consumers. The Company has also introduced digital interaction channels, including video chat, which has positively impacted the Companys ability to address and resolve customer concerns.

The invaluable feedback received from consumers has played a crucial role in refining the soft skills of the Companys service engineers. This, in turn, has facilitated their professional development, ultimately enhancing the quality of customer interactions. These initiatives have helped Bajaj Electricals achieve a notable increase in customer satisfaction, as evidenced by an impressive Net Promoter Score.

Outlook

Bajaj Electricals has embarked upon a rejuvenation of its Consumer Products business. This is being strategically driven under a ‘House of Brands approach, constituting its 4 brands viz. Bajaj, Nex, Morphy Richards, and Nirlep, with each brand being sharply defined to cater to diverse consumer needs and segments. Under the brands, the entire product portfolio is being revamped to fill in the white spaces, deliver superior features and propositions, and include more premium offerings. The next two to three years will see the Company continuously launching new products as a part of this revamp. Alongside this portfolio revamp the Company is enhancing its go-to-market to strengthen its presence across faster-growing channels such as e-commerce (including quick commerce) and modern trade while reinforcing its trade channels presence. The Company remains committed to growing its Consumer Products business through meaningful innovation that enriches the lives of its consumers.

Lighting solutions

In order to drive long-term profitable growth in a hyper-competitive sector, the Company is focused on innovation to rise up the value chain. Across its professional and consumer lighting segments, the Company leveraged its R&D capabilities to develop and launch new products that cater to the differing needs of various customer segments.

Professional Lighting

In FY2024, Indias professional lighting industry experienced robust growth, fuelled by technological advancements, urbanisation, and a shift towards energy efficiency. LED lighting solutions gained prominence owing to an increased awareness about environmental sustainability and government initiatives for promoting energy conservation. Aesthetic and functional lighting solutions became sought after, with both, businesses and consumers emphasising on ambiance enhancement alongside illumination. The year also saw intensified competition among domestic and international players, leading to product innovation and strategic partnerships. With continued investments in infrastructure and regulatory support, the professional lighting market is poised for sustained growth, catering to diverse sector-specific needs and driving further advancements in the industry.

Throughout the year, the Company launched a range of innovative lighting products, including visually comfortable office lighting solutions and stylish linear lights for captivating ceiling designs, expanding our market presence into previously underserved segments. Also, the Company reinforced its dedication to sports lighting excellence with the introduction of lightweight, high-wattage sports lights suitable for upgrading existing stadiums. These lights quickly gained traction and secured notable installations, such as at the Hyderabad Cricket Stadium.

Expanding its footprint within smart cities, the Company has bolstered its network of installed smart light points and achieved successful implementation of smart and connected streetlights in Durg. The Company is currently engaged in the commissioning of the marquee Mumbai Coastal Road Tunnel project. With innovative connected solution, adhering to the international lighting standards, ensuring efficiency and compliance with global guidelines. Motorists will now experience the apt amount of light during transit through this tunnel as our lighting system automatically adapts to the ambient sunlight during entry and exit of the tunnel. This gives confidence to drivers and also aides energy savings.

Overall, FY2024 marked a period of innovation for us in the Indian professional lighting market, as we led the charge in driving advancements and meeting evolving industry demands.

Consumer lighting

The consumer lighting landscape has undergone a transformation, marked by a decline in value growth as a result of technological advancements and the extension of LED product life cycles. There is also a noticeable shift in consumer behaviour from viewing lighting solely as a functional necessity to embracing it as an essential element in improving the aesthetic appeal and ambiance of their living spaces. To effectively address these changing consumer preferences and market dynamics, the Company is focussing on product categories that reflect the evolution. The strategic imperative will be to expand offerings in the ceiling category, electrical accessories and inverter solutions. This strategy not only promises to increase the realisation per light point, but also works seamlessly with the current overall premiumisation strategy. The strategic blueprint of the business places a strong emphasis on innovation and consumer-centric product development. The determination to conceptualise and deliver superior products that seamlessly integrate cutting-edge technology with deep-rooted consumer insights exemplifies the Companys commitment to pioneering excellence. Recognising the critical role of the go-to-market strategy in driving long-term growth and market penetration, the business is steadily increasing engagement with key stakeholders throughout the value chain. The outreach efforts take a multifaceted approach, ranging from deepening collaborations with key retailers to increasing engagement with influential stakeholders like electricians. Initiatives like the Shining Star Programme and targeted engagements with key retailers and influencers demonstrate our commitment to building long-term partnerships that yield tangible rewards. In line with market expansion efforts, the Company is dedicated to increasing brand visibility and salience in key markets. The aim is to strengthen the market positioning and deepen resonance with consumers by making strategic investments in brand building and increasing brand presence.

Given the critical role that our sales force plays in driving revenue growth and market expansion, the Company is redoubling down efforts to build capability and talent within the sales teams. By providing the sales force with the necessary tools, resources, and expertise, the Company aims to increase their efficacy and effectiveness in navigating the complexities of the marketplace. Finally, to ensure operational excellence, Bajaj Electricals remains committed to increasing efficiencies and optimising demand and supply-side operations. The Company intends to streamline operational processes, improve agility and strengthen supply chain resilience by judiciously implementing operational best practices and leveraging technology.

Integrating digitisation into BAJAJs lighting solutions

In the past year, BAJAJ has significantly innovated in the smart lighting solutions sector, targeting B2B clients with a blend of new-age technologies. Its achievements include deploying Smart Utility Poles, Connected Poles, and pioneering NBIoT and LoRa-based outdoor lighting, alongside tunnel lighting innovations. The Company has also ventured into consumer markets with BLE + WiFi-enabled smart bulbs and battens, emphasizing commitment to energy efficiency and intelligent lighting.

Central to its advancements is the CITISOL SAAS platform, which leverages AI-based edge computing for superior lighting management. This platform offers clients insights into usage patterns, optimizing energy consumption, and enhancing operational efficiency. As the Company continues integrating IoT and AI into its offerings, it aims to be at the forefront of the smart lighting solutions industry, delivering value to its clients.

Outlook

In the consumer lighting sector, the Companys focus remains on launching smart lighting products across various categories. Additionally, the Company is exploring several technologies aimed at enhancing the connectivity of the products and making them more accessible to consumers in the B2C market.

In the professional lighting sector, the Company aims to introduce high technology solutions meeting the unique needs of its customers across various sectors.

Overall, the Company intends to continue to pursue the path of leveraging innovation to move up the lighting value chain and thereby provide enhanced value to its consumers and customers.

Research and development

At Bajaj Electricals, the tireless efforts of the R&D team empower us to sustain our performance in a dynamic market. Keeping product innovation at the core, we are adapting to new-age processes, adopting advanced technologies, and sharpening our skillset to render functionally superior products. It not only enables us to retain a competitive edge but, also opens new opportunities for sustainable progress.

During FY2024, the Company continued to invest in the laboratory infrastructure and computing infrastructure to develop more durable, efficient, and novel products. By enhancing the research capabilities, we were able to launch highly competitive products with faster time to market. We are enhancing the culture of innovation, with the vision of enhancing the quality of life and ensuring sustainability.

Innovation Ecosystem

Bajaj Electricals has entered into an MOU with IIT Bhubaneswar to support the 100-Cube startup initiative at the IIT Bhubaneswar Research and Entrepreneur Park. This initiative aims to establish 100 startups, each with a valuation of Rs 100 crore by 2036, coinciding with the centenary celebrations of Odishas state formation.

In keeping with the brands positioning strategy of ‘Built for Life for the consumer products category, Bajaj has employed top-tier design and development practices. This is helping us in First time-right, reduced design and development time with faster time to market of best-in-class products. These methodologies also help to mitigate development risks, resulting in new products with remarkably extended lifespan and energy efficiency.

As per our continued commitment towards sustainable development, we have identified areas such as energy efficiency, packaging, product life, and alternative materials to achieve the ESG goals. Overall, the Company running multiple projects for sustainability solutions under the Energy Efficiency, Packaging, Product life, and Materials domains.

To identify opportunities for enhancing quality, reducing costs, and delivering greater value to consumers in both existing and new products, the Companys R&D team regularly conducts competitive benchmarking across technology, features, and trends. Competitive benchmarking is also a standard procedure that the Company follows for any new product development, enabling optimisation of performance at a minimal cost.

Human resources

Bajaj Electricals prioritises the continual improvement and advancement of its employees abilities across essential roles. The organisation holds a steadfast conviction that a motivated and proficient workforce, coupled with an accommodating workplace atmosphere, is essential for sustained prosperity. Additionally, the Company has established a stringent Human Rights Policy, demonstrating its dedication to fostering a compliant business atmosphere, preventing instances of child and forced labour, eliminating discrimination, upholding freedom of association, and ensuring a safe and healthy working environment for all stakeholders.

Talent acquisition in FY 2024 (Including Trainees)

Bajaj Electricals has been recognised as a ‘Great Place to Work for the fourth year consecutively with Company level score increasing year after year, and increased participation from employees. This indicates a higher confidence amongst employees to voice their opinion. The engagement score of women employees and newly hired employees have also seen an improvement over the years. Fostering diversity and inclusivity remains an ongoing endeavour across all tiers and departments within the Company. In the fiscal year 2024, the Diversity and Inclusion (D&I) Council directed its efforts toward initiatives geared towards empowering women, raising awareness among managers and employees, hosting engagement sessions, and enhancing the percentage of women within the organisation. Additionally, to cultivate a conducive working atmosphere, we have introduced women-focused initiatives like flexible work schedules and maternity support, aiming to bolster their skills and enable them to contribute equally to the Companys growth.

Women employees at the organisation level

To ensure the continuous growth of its employees, Bajaj Electricals has instituted a learning and development programme focusing on both functional and behavioural training. In the fiscal year 2023-24, the Company introduced a comprehensive learning portal, providing employees easy access to all learning and development-related resources. Among the initiatives launched during this period was the refreshed ‘Pygmalion (high potential identification & development) programme, tailored to align talent requirements with individual employee aspirations. The ‘Pygmalion programme, saw the participation of 160 employees, aimed at identifying their developmental needs, ultimately aiming to nurture a talent pipeline and offer career advancement opportunities to top-performing individuals within the organisation.

The SPRINT programme has brought fresh perspectives and innovative solutions to business challenges. Following a year-long training period, participants have transitioned into roles previously managed by lateral hires, with the benefits of these programmes set to be realised in the forthcoming financial year.

All learning and development initiatives are integrated through a digital platform named the Learning Management System (LMS), featuring an extensive array of over 500 learning courses. Bajaj Electricals actively encourages employees to pursue higher education through its Executive Education Policy. Depending on the nature of their roles, the Company also supports or facilitates certification courses from recognised institutes

Learning courses available through Learning Management System (LMS)

Bajaj Electricals offers diverse platforms to its employees to express their opinions on organisational successes and areas requiring improvement such as Townhall meetings, the Annual Engagement Survey, an AI chatbot, HR connect sessions, All Hands Meetings, and Face-to-Face sessions with leaders. Working in tandem with the HR department, leaders within the Company diligently review the feedback received and take proactive steps to implement necessary changes. This collaborative effort ensures that employee suggestions and viewpoints are not only acknowledged but also acted upon effectively. There is a noticeable year-on-year increase in employee participation in surveys and an improvement in engagement scores.

Employee engagement score

The Company ensures that all employees have abundant opportunities to excel and showcase their capabilities to the fullest extent. Those who demonstrate exceptional performance and uphold the Companys values are duly acknowledged and rewarded across all levels.

In acknowledgment of outstanding contributions, the Company has launched the ‘Achieverz programme, a tri-annual initiative focused on rewarding and recognising excellence. This programme commemorates the remarkable achievements of employees through quarterly, semi-annual, and annual accolades.

Bajaj Electricals has established the ‘Sarvottam Club to recognise exceptional achievers. This distinguished club grants its members the privilege of a fully sponsored international excursion in order to motivate its outstanding employees.

Employee safety

Bajaj Electricals has devised an EHS & ESG Annual Training Plan aimed at enhancing employee safety. This comprehensive plan identifies training needs for all staff and workers, encompassing both routine and specialised activities. New employees and workers undergo EHS induction training, while activity-specific EHS training is provided to all employees.

These EHS training initiatives have significantly contributed to fostering a culture of safety within the organisation. An incident-reporting culture has been cultivated, encouraging all employees to proactively report near misses, unsafe acts, and conditions. Reported incidents are tracked with a comprehensive action plan, resulting in improved closure rates for open EHS actions, particularly concerning high-risk activities such as machine safety, work at height, and electrical safety.

Integrated supply chain management & manufacturing

Throughout FY 2024, global geopolitical challenges persisted, prompting adjustments within supply chains to mitigate against the consequent volatility and complexity. The Company diligently monitored the situation, assessing the impact on sourced items from various regions and their interdependencies. Updated risk management plans were implemented, while close intra-team communication facilitated prompt responses. As part of Bajaj Electricals supply chain strategy, the Company initiated programmes such as ‘Hello Local for import localisation, aligned geographical sourcing, supplier consolidation, and vendor development. Additionally, proactive measures were taken to stock items susceptible to disruptions, with input from a cross-functional team. These endeavours aimed to bolster resilience through localised sourcing, mitigating reliance on single sources where feasible and fostering closer proximity to customers.

The ‘hello Local programme has significantly reduced import reliance, in the past three years, driven by ‘Make in India and efforts to de-risk imports from China. Quality control measures and a growing base of local players have accelerated progress. Exploring SKD/CKD assembly, the Company has also adopted a ‘Glocalisation approach to source global-quality products locally.

Transitioning to Mulya 2.0

A platform for supplier innovation

Over the past three years, the Company has been diligently working on a significant initiative called ‘Mulya aimed at recognising and rewarding suppliers and employees for their cost-saving contributions within the supply chain. Under the Mulya initiative, the supply chain team has conducted various activities such as Value Addition Value Engineering, negotiations, optimisation of bought-out components, packaging and volume consolidation.

The platform Mulya has transitioned to Mulya 2.0, marked by a heightened emphasis on value creation, operational enhancements, and cost-efficiency initiatives. Throughout FY 2024, the Company has solicited and analysed the ideas of both its dedicated workforce and valued partners within its ecosystem. The implementation of these concepts has led it to achieve significant savings, surpassing H 80 crore.

Quality assurance

With in-house manufacturing of technologically advanced premium products, there have been significant quality enhancements in Bajaj Electricals products. The Company has adopted various cutting-edge technologies to ensure the uninterrupted processing of products without any compromise on quality. Moreover, the Company adheres to industry best practices and automation to streamline its operations. The Company has also undertaken Lakshya Projects primarily to guarantee that process controls and existing processes are continuously improved. Bajaj Electricals deploys advanced measurement techniques while concurrently developing its facilities to ascertain rigorous product testing. To further enhance its competencies and strengthen collaborative relationships with its supply partners, the Company is also investing in their training and empowerment.

Bajaj Electricals has implemented process automation, leading to the delivery of higher-quality products with fewer defects. Automation has further facilitated predictive process monitoring, resulting in substantial cost savings with a year-on-year reduction in the Cost of Poor Quality (COPQ) by 35% in the last two years. To further enhance customer satisfaction, the Company has introduced innovative and energy-efficient products that comply with statutory and regulatory requirements. Offering quality products at affordable prices remains a priority. Timely responses to customer feedback and concerns underscore the Companys dedication to customer satisfaction. Moreover, periodic audits and reviews of the Quality Management System (QMS) are conducted to continuously maintain and improve standards. Additionally, the Company evaluates the performance of its supply partners, ensuring reliability and accountability throughout its supply chain.

Information technology

Over the past year, Bajaj Electricals digital transformation has significantly deepened, with strategic enhancements in Artificial Intelligence (AI), Machine Learning (ML), Advanced Analytics, and Robotic Process Automation (RPA). These technologies have been successfully deployed across essential systems such as the Transport Management System (TMS), Warehouse Management System (WMS), and Demand Forecasting. A cornerstone of our digital infrastructure is the seamless integration with SAP S/4HANA across vital modules, forming a cohesive, agile business ecosystem that lays the groundwork for further digital advancements leveraging Cloud, AI, IoT, Big Data, and cybersecurity enhancements.

Modules integrated with SAP S/4 HANA

• SuccessFactors (Human Capital Management)

• Distributor Management System

• Warehouse Management System

• Product Lifecycle Management

• Transportation Management System

• Demand Forecasting

• Ariba (Vendor Management)

• Customer Engagement

In its go-to-market strategy, Bajaj Electricals has rolled out the Pragati Dealer Management System and DSO Apps across a broad network of distributors and sales representatives. The ongoing implementation of order automation is poised to further refine our processes. These steps underscore our relentless pursuit of optimising customer experiences and operational productivity, focusing on AI-driven innovation, IoT for product development, and robust data-driven decision-making facilitated by advanced analytics and Power BI.

Particulars FY 2024 FY 2023 YoY Change

EBITDA margin 7.5% 8.6% -13.1% EBIT margin 5.1% 7.1% -28.0% PBT margin 3.7% 6.2% -39.7% PAT margin 2.8% 4.4% -36.1% Debtors turnover 3.47 3.42 +1.5% Inventory turnover 3.80 3.43 +10.7% Interest coverage ratio 3.73 7.93 -53.0% Current ratio 1.21 1.32 -8.2% Return on net worth 7.83% 11.97% -34.6%

Risk management

The Board of Directors at Bajaj Electricals shoulders the responsibility for overseeing risk management and internal control functions. This involves establishing the Companys risk tolerance, consistently evaluating and overseeing major risks, and examining internal audit reports concerning internal controls and risk assessments. For a comprehensive understanding of the risk management process, the key risks of the Company, and the strategies employed for risk mitigation, please refer to page 030 of the report.

Internal control

The Company has established and maintained well-defined internal controls that are tailored to suit the size, scope and complexity of its operations. The key internal controls were found to be functioning effectively throughout the year. An external consultant was engaged as an Internal Auditor to assess the strength of internal controls, covering all business units, offices, factories and critical operational areas. The design, adequacy and operational efficiency of the Companys Internal Financial Controls are reviewed by both the external consultant (Internal Auditor) and the statutory auditor. These controls were developed in accordance with the requirements outlined in the Companies Act, 2013 and the Guidance Note issued by the Institute of Chartered Accountants of India. The Company maintains written Standard Operating Procedures (SOPs) and risk & control registers for all business divisions and functions, outlining process flows, key risks and critical controls. These SOPs and risk & control registers are regularly reviewed and adjusted by the business in response to changes in workflow, process and controls. The external consultant (Internal Auditor) assessed the internal financial controls and found certain non-significant automated controls not configured which were mitigated by compensating manual controls. Any control weaknesses identified were promptly communicated to the process owner and remedial actions were implemented or agreed upon in a timely manner.

Disclaimer

The statements within this management discussion and analysis outlining the Companys objectives, projections, estimates, and expectations are deemed ‘forward-looking statements according to relevant laws and regulations. It is important to note that actual results may differ significantly or materially from those stated or implied. Key developments that could impact the Companys operations encompass competition, employee expenditures, substantial shifts in Indias political and economic landscape, environmental regulations, tax legislation, legal proceedings, and labour relations.

These statements do not guarantee future performance and should not be excessively relied upon. Forward-looking statements inherently encompass both known and unknown risks and uncertainties that may result in future performance and financial outcomes differing significantly from any projected future performance or results expressed or implied in such forward-looking statements. Readers are cautioned against placing excessive reliance on forward-looking statements. Unless required by applicable securities laws, the Company does not commit to updating forward-looking statements in the event of changes in circumstances or alterations to managements estimates or opinions.