The Hindu Business Line : Bajaj Electricals looking at buys

Looking ahead
The acquisition could possibly be in lightings, luminaries and electrical appliances or even in a new product, such as inverters.
The company will spend Rs 25 crore on brand building and advertisements next year.

Mr Shekhar Bajaj, CMD

Chennai , Jan. 5

Bajaj Electricals Ltd is looking at opportunities for acquisitions — brands or companies, but would prefer the former, the company's Chairman and Managing Director, Mr Shekhar Bajaj, told Business Line on Friday.

While the acquisition could possibly be in any of its products lines — lightings, luminaries and electrical appliances — it could also be in a new product, such as inverters.

Getting into marketing inverters is high on Mr Bajaj's agenda. "It is a Rs 1,000-crore market," he said.

Mr Bajaj said the company would launch its first inverter within the next six months. The product could be outsourced or be from an acquired company. Mr Bajaj said he preferred the outsourcing model as that gave him enough flexibility in procurement, while still giving him adequate control over quality. All this, without having to invest much.

Indeed, the company's major investment plan is in its engineering services division, which undertakes lighting projects such as high mast lighting and lighting of stadiums and also produces transmission towers. The company plans to invest Rs 30 crore in its Ranjangaon facility to raise the processing capacity from 30,000 tonnes of steel to 50,000 tonnes. But generally, contracting out production is the preferred model. While all the lightings (lamps and tube lights) are produced by a group company, all the luminaries (light fittings, special and flood-lightings) are bought out. Similarly, 100 per cent of Bajaj appliances are bought out. Seventy per cent of its fans are supplied by vendors.

Bajaj Electricals will spend Rs 25 crore on brand building and advertisements next year, Mr Bajaj said. In the current year, its ad spend is expected to be around Rs 20 crore.

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