Inflation shrinks Bajaj Electricals Q4 profit by 28%

BL Mumbai Bureau | | Updated on: May 19, 2022
Anuj Poddar, Executive Director, Bajaj Electricals

Anuj Poddar, Executive Director, Bajaj Electricals

Company becomes net debt free after more than two decades

Electronics and lighting equipment manufacturing company, Bajaj Electricals saw a 28 per cent year-on-year (y-o-y) decrease in profits for Q4 to ₹39.35 crore from ₹54.60 crore reported in the same quarter last year. Revenue from operations rose by 3.8 per cent to ₹1,293.26 crore from ₹1,245.56 crore. 

Although the company achieved the milestone of being debt-free at the end of FY22 (after 20 years), annual profits for the company shrank by nearly 32 per cent to ₹1,28.52 crore. Anuj Poddar, Executive Director at Bajaj Electricals told BusinessLine, that profits have shrunk due to rising input costs due to commodity inflation.

“For ,Q4FY22 Bajaj Electricals has not taken corresponding price hikes to the rising input costs, which has affected our margins,” Poddar explained. Like most consumer durables, Bajaj Electricals hiked prices by 5 per cent in April. Regarding future price hikes, Poddar noted that those might be taken as the industry decides. “At the moment, however, we are seeing commodity softening, so we will have to wait and watch,” Poddar said when asked whether the company will hike prices firther.

Commodity headwinds

In its commentary, Bajaj Electricals stated that muted rural demand has affected growth. For instance, the consumer product segment saw flattish growth due to subdued rural demand and lower offtake in e-commerce. Gross Margin & EBIT dilution in this segment was mainly due to commodity headwinds, especially as no price hikes were taken in Q4-FY22. 

Shekhar Bajaj, Chairman and Managing Director of Bajaj Electricals Limited, said “This is a remarkable quarter for the company, as we have become net debt free after almost a span of more than two decades. Our disciplined execution in the EPC division, coupled with a strong focus on the collection of receivables and calibrated approach towards EPC has helped us achieve this feat. Our CP Division continues to show strong double-digit CAGR growth of 18%. Fans have surpassed ₹1,000 crore annual sales milestone and continues to grow even further. Our EPC Division has delivered positive EBIT for the quarter”  

Poddar added that the illumination segment for the company did particularly well despite of industry-wide de-growth, growing by 16 per cent and gaining marketshare. 

Published on May 17, 2022
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