Bajaj Electricals cosies up to shoppers to take on MNCs

KOLKATA: Shekhar Bajaj regularly accompanies his wife on her shopping trips to Big Bazaar and other shops to talk to consumers about their choice of products. "What could be a better way to get the consumer's voice?" says the 63-years old CMD of Bajaj Electricals, who organises open customer forums wherever he goes for dealer meets and has already met some 10,000 customers this year as he looks for ways to protect his firm's leadership in the 5,200-crore small appliances market. "If you are directly involved with them (consumers), it's an added advantage since the market is becoming hyper competitive," says Bajaj, first cousin of Bajaj Group chairman Rahul Bajaj. Dutch MNC Philips is literally breathing down his neck after it acquired Preethi, a leading kitchen appliances brand in the South, earlier this year. "Its one brand we have to be cautious about," says Bajaj, who plans to use a combination of Bajaj in the mass segment and Morphy Richards in the premium segment to take on Philips-Preethi. Japan's largest durable maker Panasonic too has become aggressive in India and home-grown brands such as Havells are venturing into this segment, making the 2,741-crore Bajaj Electricals to bet on consumer-driven innovation to protect its turf. "We want to protect our territory by strengthening and launching newer products, and be a brand which is close to consumers. It's like creating a strong wall to prevent the multinationals and new players from entering our turf," Bajaj told ET after a customer meet in Kolkata. Bajaj Electricals is setting up its first dedicated R&D centre near Mumbai and finalising fresh investment plans to help its revenues grow almost 10 fold to 20,000 crore by 2020, says Bajaj. Bajaj versus Philips The overall small appliances market is estimated at 5,200 crore, growing 15-18% a year. The premium segment grows around 30% a year. Main brands in the industry are Bajaj, Philips, Panasonic, Preethi, Morphy Richards, Usha and Maharaja Whiteline, besides scores of regional brands. Bajaj and Philips are neck and neck in the small appliances market comprising kitchen appliances such as food processor, juicer-mixer and toasters, and domestic appliances such as geyser, room heaters and coffeemakers. Philips India president (consumer lifestyle) Anjan Bose says the company is making aggressive, focused investments to expand its product portfolio and strengthen its distribution network. Bajaj says the combination of Bajaj and Morphy Richards - the UK-based brand with whom Bajaj Electricals has an exclusive sales and marketing partnerships in India - can tackle the Philips-Preethi threat. "We want to sandwich Philips-Preethi combine with these two brands," says Bajaj. "If I had launched a premium segment, users wouldn't accept it since people perceive Bajaj as a value-for-money brand. However, they are ready to pay a premium for a foreign brand like Morphy Richards with added features."

Adidas' $1 shoes to be sold under Reebok brand in India

NEW DELHI: Reebok International is working to develop a "sustainable business model" as part of its German parent Adidas AG's plans to sell "one dollar shoes" in India. After conducting a pilot test for 5,000 pairs of shoes of an existing design of Reebok in three villages in Bangladesh last year, the firm is now planning to apply the learnings in India in the next stage, which it has termed as 'Phase III'. "The focus of Phase III is the development of the actual product and the development of a sustainable business model to ensure the program's long-term success," Reebok International spokesperson Daniel Sarro told media. During this phase, Reebok will be testing the technical feasibility of producing a durable, functional and affordable shoes-based on learnings from the Bangladesh market. When asked if the shoes would be priced at one dollar as envisaged by Adidas CEO Herbert Hainer, Sarro said: "The price of the product is unknown at this time. However, the goal of the project remains - to create an affordable product that meets the needs of the consumer." Having failed to get the desired result in its similar attempt in Bangladesh, the company is ensuring that in India they are taking the right steps to overcome the challenges. "Based on the staffing challenges learned in the previous phase (in Bangladesh), phase III is being conducted in India, where Reebok has a central headquarters and a range of staff that can dedicate the time needed to develop the product and test the business model," he said. In 2008, Hainer began discussions with Bangladeshi economist and founder of the Grameen Bank, Muhammad Yunus for developing, marketing and distributing a low cost footwear in Bangladesh in the form of a social business. Following the initial exploratory project, the Reebok Brand, based on its corporate responsibility focus, created a plan to move forward with the next phase of the project. "In the fall of 2010, Reebok proceeded with the second phase of the project, a pilot test of 5,000 pairs of an existing Reebok shoe in three villages in Bangladesh," Sarro said. However, there were a number of challenges that became evident during this phase of the project such as the lack of a permanent Reebok office or staff in Bangladesh to help with product and business model development, as well as import costs and taxes, he said.

Punjab to issue 5,651 licences to wood-based industries

CHANDIGARH: The Punjab government today received approval from Central Empowered Committee (CEC) to issue licences to 5,651 wood-based industries units (WBIs) in the state giving a major boost agro-forestry in the state. While presiding over a high level departmental meeting Punjab Forest and Wild Life Preservation Minister Arunesh Shakir informed that these WBIs include 5,290 sawmills, 139 veneer mills, 203 plywood factories and 19 other units and the licenses would be issued to these units on the basis of one time payment. He said 360 WBIs established after 30 October 2002 were closed down in the state as per the orders of Supreme Court according to which "no state or Union Territory shall permit any unlicensed saw mill, veneer, plywood industry to operate an they are directed to close all such units forthwith. No state government or Union Territory will permit the opening of these units without the prior permission of the Central Empowered Committee. The Chief Secretary of the State will ensure strict compliance of this direction. Shakir said that with the concerted efforts of the Punjab government WBI once again would flourish in the state. He said at present 32 lakh cubic metre wood was available every year in the state and consumption of these WBI was 28 lakh cubic metre per year. For the consumption of surplus 4 lakh cubic metre wood approximately 200 new industrial units were to be set up which would also generate direct and indirect employment to thousands of youth in the state. Shakir said the government was working out the modalities of this project which could change the entire agricultural scenario of the state with large scale supply of cloned plants to the farmers in a sustained manner. The Minister further stated that the state government was also studying the possibilities to install Ply Factories at the behest of Punjab Forest Corporation with which more and more farmers could be motivated to plant trees like popular and eucalyptus. He said with the setting up of these factories, the Corporation would be in position to fix the MSP of agro forestry products which was long demand of the farmers of the state.

Cement price may go up by 1-2% in November: Crisil Research

NEW DELHI: The average price of cement, which stands at Rs 280 per bag of 50 kg, may go up by between Rs 3 and Rs 6 per bag in the current month on increased construction activity, according to report by Crisil Research. "Post the festive season, the construction activity and consequently cement demand will gain traction, which could lead prices to rise by 1-2 per cent, on a month-on-month basis, in November, 2011," Crisil Research Head Ajay D'Souza said. The average retail price of cement in the country rose by about six per cent month-on-month to Rs 280 per bag in October 2011. "Notable price hike in the Northern region in October, 2011, largely supported the pan-India price increase," he said, adding that on a yearly basis, the average pan-India retail cement price recorded an increase of almost 15 per cent during the month. D'Souza said the domestic consumption of cement in October remained almost flat resulting in just three per cent increase in demand during the April-October period of the current fiscal. "The subdued pace of construction activity in real estate and infrastructure segment is largely instrumental for this lacklustre demand," he said. India's total consumption of cement in October this year was 18.1 million tonnes, just 0.6 per cent up over the same month last year. It consumed 123 million tonnes cement during the April-October period of the current fiscal.

Ultratech Cement to invest Rs 11,000 crore to augment capacity to 62 mtpa

NEW DELHI: Ultratech Cement will invest Rs 11,000 crore to jack up its production capacity by 10 million tonnes per annum (mtpa) to 62 mtpa by the first quarter of 2013-14 fiscal. "The company has a capital outlay of Rs 11,000 crore to be spent over the next three years ... Orders have been placed for major equipment. These expansions are expected to be operational by Q1 FY14," the company has said in a letter to the shareholders. The company will use the proposed fund on clinkerisation plants through brownfield expansions at Chhattisgarh and Karnataka, installing waste-heat recovery systems, instituting bulk packaging terminal and setting up of ready-mix concerete plants. "Upon completion of this round of capex, company's Cement capacity will stand augmented by 10 mtpa to 62 mtpa, captive power from 504 MW to 674 MW and generation of green power through waste recovery from 4 MW to 65 MW," Ultratech said. The capacity expansion was being funded through a mix of internal accruals and borrowings, it said, adding that it has spent over Rs 1,100 crore on various capex initiatives so far during the first half of the current fiscal. Meanwhile, the company said the current surplus scenario in the domestic market was likely to continue for the next 2-3 years, but the growing input costs would squeeze margins. "Over the long-term, the sector is likely to grow over 8 per cent on the back of government's focus on infrastructure development and housing. Further, the enhanced capital allocation towrads infrastructure in the 12th Five Year Plan will give the desirde push to the sector," it said.

India Cements earns its highest EBITDA from Chennai Super Kings

CHENNAI: India Cements has earned its highest-ever EBITDA from IPL franchise Chennai Super Kings (of Rs 32.8 crore) in Q2, according to brokerage firm Motilal Oswal. This has come on the back of IPL revenues of Rs 51.5 crore. In the first quarter, IPL fetched India Cements more revenues - Rs 84.8 crore. However, EBITDA was only Rs 6.6 crore. The Q2 EBITDA from IPL was more than double of what Motilal Oswal had forecast (about Rs 15 crore). The operating performance of India Cements got a boost from this and the company's total EBITDA was at Rs 252 crore on revenues of Rs 1,092 crore in the second quarter. The company posted a Q2 net profit of nearly Rs 70 crore, from a loss of over Rs 33 crore this quarter last year, amid capacity overhand and sluggish demand in its bread-and-butter South market. But net profit was lower than the Q1 figure of Rs 102 crore. In the first half, IPL revenues were Rs 138 crore, about 6% of total revenue.

DAP imports Rs 3,500 per tonne dearer due to dollar rise: IFFCO

CHANDIGARH: The rise in the US dollar value against the rupee has led to a Rs 3,500 a tonne increase in prices of fertiliser (DAP) imported from other countries to meet the domestic requirement, a top official of Indian Farmers Fertiliser Cooperative Limited (IFFCO) has said here. "Rs 3,500 a tonne is a direct impact of US dollar (appreciation against rupee)," IFFCO Managing Director U S Awasthi told reporters here when asked about the impact of the rising dollar on domestic prices of fertiliser. "Earlier, the US dollar was Rs 45 and now it has reached Rs 50 (against rupee)," he said, adding that dollar appreciation had an impact of prices of fertilisers in the country. He further said IFFCO has passed on the impact of the dollar appreciation to farmers. IFFCO is eyeing the import of 6 million tonnes of DAP in the current fiscal, as against 8 MT of DAP last fiscal. IFFCO imports fertiliser from various countries, including the US, Russia, Japan, Morocco, Tunisia, Israel, Jordan, etc. Awasthi said at present, IFFCO sells DAP at a price of Rs 18,100 per tonne, while it gets a subsidy of Rs 19,700 per tonne from the Centre. Besides fluctuation in foreign exchange rates, an increase in the price of DAP in international markets over the last five months has also led to a rise in the landed cost of the fertiliser. Awasthi pointed out that IFFCO currently imports DAP at a price of USD 677 a tonne, as against USD 612 per tonne in the month of June. Expressing concern over the indiscriminate use of fertiliser by farmers, the IFFCO MD emphasised on using green manure, biofertilisers and nutrient-enriched organic manure in a balanced manner for soil rejuvenation. "The time has come to educate farmers to rejuvenate soil through the application of biofertiliser, green manure," he asserted.

Bhilwara Group to invest Rs 245 cr in Mandideep HEG plant

BHOPAL: In a bid to become the leading graphite electrodes manufacturer in the world, LNJ Bhilwara Group plans to invest Rs 245 crore in its Mandideep-based plant near Bhopal to raise production levels from 66,000 metric tonnes per annum (MTPA) at present to 80,000 MTPA. "HEG Limited, one of the largest manufacturers and exporters of graphites electrodes in South Asia, will make an investment of additional Rs 245 crore for scaling up its plant, which shall be completed by mid of next year," Group Chairman Ravi Jhunjhunwala told reporters here last evening on the eve of the Golden Jubilee of the group. "By then (mid of next year) the company shall start producing 80,000 MT of graphite electrodes per annum making it world's largest integrated manufacturing plant," he said. "The current capacity of the Mandideep plant is 66,000 MT per annum, which required an investment of Rs 1,123 crore. The company recorded a turnover of approximately Rs 1,300 crore during the financial year 2010-11. With this installed capacity, we are the world's largest single site producers of graphite electrodes," Jhunjhunwala said. On the occasion, the Group's founder L N Jhunjhunwala recalled his association with Madhya Pradesh in the early 70s when he decided to set up HEG Ltd in Mandideep in 1972. The company, which is a part of the Rs 5,000 crore Bhilwara Group, today stands tall as a Rs 1,300 crore company. He also expressed his gratitude toward the people and leaders, specially former Chief Ministers of the state Arjun Singh, Sunderlal Patwa, Kailash Joshi and Digvijay Singh for extending full cooperation to the group on the occasion. The inaugural function of the Golden Jubilee will be held in the state capital today and will be inaugurated by Madhya Pradesh Chief Minister Shivraj Singh Chouhan.

L&T looking overseas to beat local slowdown: R. Shankar Raman, CFO

MUMBAI: Larsen and Toubro, India's biggest engineering conglomerate, is targeting overseas revenue growth as part of a strategy to beat a slowdown in Asia's third-largest economy, the firm's chief financial officer said on Monday. Ships-to-software firm Larsen last month slashed its order growth guidance for the financial year to March, as it warned of project deferrals and sluggish investor appetite in India thanks to high interest rates and a gloomy economic outlook. "It's essentially an India de-risking strategy," R. Shankar Raman told an Investment Summit in Mumbai, saying the company was targeting 15-20 per cent of revenue to come from overseas markets, compared with 10-12 per cent last year. "We will try to expand in the international market...Today our international business is largely in the Middle East, but hopefully in passing years the Far East will start giving more orders." India has pledged to spend $1 trillion on upgrading its creaking power plants, railways and ports in the five years to 2017 to deal with a key bottleneck to continued growth. Private cash has been pencilled in for half of that. But investments have slowed in recent quarters, as stubbornly high inflation, 13 interest rate hikes since early 2010 and rising commodity prices bite. Companies also point fingers at a policy paralysis in New Delhi. Larsen, with a market capitalization of $15 billion, has aggressively targeted overseas projects in recent months and has announced since August $1.1 billion in new foreign contracts, mainly for hydrocarbon firms in the Gulf region. The firm secured a $250 million contract to build a pipeline for Thailand's top oil and gas explorer PPT Exploration and Production Plc in August. "The Far East, some areas of Africa and South America have some interest for our products. We have just opened up a few offices," Shankar Raman said. PROJECT DEFERRALS India is likely to grow at around 7.6 per cent in the 12 months to March 2012 compared with 8.5 per cent a year earlier, according to a Reuters poll. Industrial output has slowed, consumer confidence is waning and investments are being put on hold. "The (domestic) opportunity spectrum around this time last year was coming around to $100 billion," said Shankar Raman. "We find that half of that $100 billion has got deferred." Larsen, which gets more than 80 per cent of its revenue from the domestic market, cut its order growth guidance for the current fiscal year by a third to 5 per cent last month, blaming slowing investments and rising competition. "We've not seen any cancellations in our order book. There are deferments. People are sitting and waiting and watching," said Shankar Raman, adding that he expected deferred projects to come back on-line during the 12 months to March 2013. Larsen shares erased early gains of 0.7 per cent and fell 1.7 per cent on Monday after the comments. At 12:40 p.m. (0710 GMT) the shares were down 0.5 per cent at 1,237.95 rupees in a subdued Mumbai market down 1.4 per cent. The 73-year-old firm, which bears the name of its two Danish founders, is looking at an initial public offering (IPO) in its Infrastructure Development Projects Ltd (IDPL) unit, after a successful listing of its finance arm in August. "IDPL is another entity where we need to find a permanent solution for capital growth plans," said Shankar Raman. "In the ultimate analysis, I would visualise this company to be another listed entity in the group, seeking capital from the market for its own growth plans," he said, adding any potential listing was likely to happen within three years. Larsen will not reduce its prices in a quest to secure market share, Shankar Raman said, and would instead focus on reducing costs and increasing productivity across the firm as it works through an order book worth around $28 billion. The company is not desperate "because we think we have the balance sheet to withstand tough times," he said. "I am not worried about the next eight to 10 quarters. I don't have large debt to service so ultimately what is the pressure on me? I have the window of time." The firm still expects to see order book growth of 12-15 per cent over the next five years, Shankar Raman added. Larsen has said it expects revenue to grow 25 per cent in the year to March 2012, from 439 billion rupees ($8.5 billion) a year previously. Shares in the firm have fallen almost 40 per cent this year, double that of the drop in the benchmark index, wiping more than $8 billion off the firm's market value.

Ravin Cables to invest Rs 200-cr; eyes 4-fold sales by FY16

MUMBAI: Bullish on growth, power cable manufacturer Ravin Cables is eyeing an over four-fold rise in revenue to Rs 3,000 crore by FY16, when its expansion and diversification plans would be complete, a top company official said today. "Though there is a slowdown in the cable industry at present, we expect the scenario to change some time soon. We are eyeing Rs 3,000 crore revenue in the next four years," company chairman and managing director Vijay Karia told PTI here. The government has set a target of 1,00,000 MW additional capacity during the 12th Plan period beginning next April. At present, the company's revenues stands at Rs 700 crore of which exports contribute to nearly Rs 100 crore. Ravin has also embarked on an investment plan of Rs 200 crore for capacity addition as well as setting up a new super specialty facility to cater to the growing demand from the cable industry, which is currently Rs 15,000 crore. "We have diversified our scope and plan to enter new segments such as renewable energy, including solar and wind, specialty cables for the auto segment as well as for cranes and submarine cables. We will be spending around Rs 20-25 crore in setting up a separate super specialty facility in Pune that will cater to these segments," he said. The company already has two units one in Pune and another in Middle East with a capacity of 36,000 tonne each. Last year, Ravin signed a joint venture agreement with the Italy-based Prysmian Group to manufacture all kinds of cables - low, medium and high-voltage as well as specialty cables. Prysmian has picked up majority 51 percent stake for about Rs 200 crore.