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Investor Presentation

August 2011

Industry Overview

Industry Size and Structure


FMCG Rs.133,876 cr (USD 29.8 bn)

Hair Care Rs. 10,243 cr (USD 2.3 bn)

8% salience

Shampoo Rs. 3277cr (USD 728 mn) (32.0%)*

Perfumed Oil Rs. 3175 cr (USD 705 mn) (31.0%)*

Coconut Oil Rs. 2151 cr (USD 478 mn) (21.0%)*

Hair Conditioners Rs. 204 cr (USD 45 mn) (2.0%)*

Hair Dyes Rs. 1,434 cr (USD 319 mn) (14.0%)*

Hair Oil Market

Coconut based Oils (50%)*

Heavy Amla based Oils (15%)*

Light Hair Oils (13%)*

Cooling Oils (12%) *

Others (10%)*

Perfumed Hair Oil Segment


Source: The AC Nielsen Retail Audit Report. Only branded products data for CY 2010

* Value based share of Hair Care Market

Hair Oil is > 55% of the overall hair care industry in India
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Hair Oil Market in India


Overall Hair Oil Market Volume
300,000 250,000 245,655 210,374 7,000

Overall Oil Market Value


5,862 4,971 4,498 3,707 Y-o-Y 31% Y-o-Y 21% 2,827 Q-o--Q 20.9% 10-11 833 696 610 472 Y-o-Y 40% Y-o-Y 29% Y-o-Y 14% 336 Q-o-Q 23.8% 10-11 Y-o-Y 19.7% Y-o-Y 10.5% Y-o-Y 17.9%

6,000

(In KLtr)

200,000 150,000 100,000 50,000 0 06-07 132560

172,528 Y-o-Y 16.8% Y-o-Y 6.7% Q-o Q 4.8% Y-o-Y 30% Y-o-Y 14%

(Rs. Cr.)

197,057

5,000 4,000 3,000 2,000 1,000 0

62,413

1,695

07-08

08-09

09-10

10-11

11-12 (3M)

06-07

07-08

08-09

09-10

11-12 (3M)

Light Hair Oil Volume


25,000 20,000 15,603 18,390 19,516 22,464 900 800 700

Light Hair Oil Value

(Rs. Cr.)
6,169

(In KLtr)

Q-o--Q 16.5%

15,000 10,000 5,000 0

600 500 400 300 200 100 0 06-07 07-08 08-09 09-10 11-12 (3M)

Y-o-Y 6.1%

Y-o-Y15.1%

Y-o-Y 33%

Y-o-Y 18%

11764

237

06-07

07-08

08-09

09-10

10-11

11-12 (3M)

Source: The AC Nielsen Retail Audit Report.

Light hair oils is one of the fastest growing segments in the hair oil market in India
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Light Hair Oil Market in India


Light Hair Oil Volume
25,000 20,000 15,603 900 22,464 800 700 610 472 Y-o-Y 19.7% Y-o-Y 40% Y-o-Y 29% Y-o-Y 14% 336 Q-o-Q 23.8% 10-11 441 350 Q-o-Q 28.3% 10-11

Light Hair Oil Value


833 696

18,390

19,516

(Rs. Cr.)

600 500 400 300

(In KLtr)

15,000 10,000 5,000 0

Q-o-Q 16.5%

Y-o-Y 6.1%

Y-o-Y15.1%

Y-o-Y 33%

Y-o-Y 18%

11764

6,169

237

200
100 0 06-07

06-07

07-08

08-09

09-10

10-11

11-12 (3M)

07-08

08-09

09-10

11-12 (3M)

Almond Hair Oil Market - Volume


12,000 10,000 8,108 8,000 9,300 11,021 500 450 400 350

Almond Hair Oil Market - Value

Y-o-Y 19%

(In KLtr)

Y-o-Y 54.5%

Y-o-Y 48.9%

Y-o-Y 35%

Y-o-Y 15%

Q-o-Q 20%

6,000 4,000 2,000 3978

Y-o-Y 51%

250 200 150 100 50 123

191

3,108

Y-o-Y 26%

5,988

Y-o-Y 23.5%

(Rs. Cr.)

300

284

129

0
06-07 07-08 08-09 Source: The AC Nielsen Retail Audit Report. 09-10 10-11 11-12 (3M)

0
06-07 07-08 08-09 09-10 11-12 (3M)

Almond Drops is the brand which is driving light hair oils and in turn the overall market
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Market Shares Trends (All India - Urban Plus Rural)

Volume MS
55% 50% 45% 40% 35% 30% 07-08 08-09 09-10 10-11 11-12 (3M) 38.4% 47.7% 49.1% 50.4% 60% 55% 50% 45% 40% 35% 30% 07-08 40.3%

Value MS
53.0% 54.2%

50.3%
46.5%

44.1%

08-09

09-10

10-11

11-12 (3M)

*Market Share in the Light Hair Oil Category


Source: The AC Nielsen Retail Audit Report.

Statewise Market Share


July10-Jun11 LHO Volume Saliency
5.9 5.2 7.0 9.4 20.3 1.1 6.3 5.1 1.2 1.2

Proportion % Urban Rural


67.3 70.8 83.3 100.0 65.9 60.4 55.2 41.6 57.8 69.7 76.3 34.1 39.6 44.8 58.4 42.2 30.3 23.7 32.7 29.2 16.7

ADHO Market Share % (Vol) Total Urban Rural


49.4 43.2 46.1 43.2 48.7 53.5 59.0 46.1 63.9 44.0 36.4 47.6 51.0 57.3 40.3 59.4 44.9 36.9 50.7 57.2 61.1 50.3 70.2 41.8 34.7 47.5 40.1 43.1 53.4 50.5 60.9

Source: The AC Nielsen Retail Audit Report.

All India (U+R) Punjab Haryana Delhi Rajasthan Uttar Pradesh (U+R) Uttaranchal Assam Bihar Jharkhand Orissa West Bengal Gujarat Madhya Pradesh Chattisgarh Maharashtra Karnataka Andhra Pradesh Tamil Nadu Kerala

8.0
5.9 10.4 1.6 7.7 1.2 1.7 0.6 0.2

65.2
75.4 49.0 66.4 84.6 91.8 71.7 97.1 85.0

34.8
24.6 51.0 33.6 15.4 8.2 28.3 2.9 15.0

28.2
54.0 62.8 53.6 51.7 59.0 36.4 22.0 9.3

29.2
53.0 65.3 49.1 50.6 59.5 42.6 22.6 10.7

26.4
57.4 60.4 62.4 57.8 53.3 20.6 1.0
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Light Hair Oil Market Key Characteristics


Rural Urban break up of LHO market Share of Distribution Channels in LHO market FY11
Modern Trade, 3%, (34%) Cosmetic, 5%, (-3%) Chemists, 7% (2.1%) Others, 6%, (8%)

Rural 33.0% Urban 67.0%

Urban dominated segment due to its relatively higher pricing

Gen Stores, 28%, (0%)

Local Grocer Stores, 51%, (12%)

Traditional channels dominate distribution, but alternate channels like modern retail demonstrating higher growth rate

(%) Growth rates; % - Market share

SKU wise break up of LHO market


500ml, 0.8% 300ml, 10.0% 2-5ml, 3.5% 20-45ml, 1.8%

Region wise break up of LHO market


South, 4%

250ml, 1.7%

50ml, 17.9%

200ml, 20.4%

75ml, 4.9%

100ml, 39.0%

Given the dominance of the urban market, larger units account for bulk of the sales. However, smaller units to increase rural penetration

West, 23% North, 51% East, 22%

Sales tend to be concentrated in the Northern regions of the country which is also the fastest growing zone

Source: AC Nielsen 7

Company Overview

Bajaj Corp Ltd. (BCL) An Overview


Part of Bajaj Group which has business interests in varied industries including sugar, consumer goods, power generation & infrastructure development
Bajaj Almond Drops Hair Oil - A premium perfumed hair oil containing almond oil and Vitamin E Competitors Keo Karpin (Deys Medical), Hair & Care (Marico), Clinic All Clear (HUL) Bajaj Kailash Parbat Cooling Oil An ayurvedic formulation containing Sandal & Almond extracts Competitors: Himani Navratna Bajaj Brahmi Amla Hair Oil - Traditional heavy hair oil. Brand has been in existence since 1953 Competitors - Dabur Amla, Dabur Sarson Amla Bajaj Amla Shikakai Variant in the heavy hair oil segment catering to price conscious consumers Competitors - Shanti Badam Hair Oil (Marico)

Subsidiary of Bajaj Consumer Care Ltd. (BCCL)

BCL is the exclusive licensee of brands owned by BCCL Brands licensed to BCL for 99 years from 2008

3rd largest player in the overall hair oils segment


Key brand Bajaj Almond Drops Hair Oil

Market leader with over 54% market share* of LHO market Premium positioning commands one of the highest per unit prices in the industry

New Product Launch: Bajaj Kailash Parbat Cooling Oil Other brands - Brahmi Amla, Amla Shikakai and Jasmine (all hair oil brands) and Red / Black tooth powder

Bajaj Jasmine Hair Oil - A Jasmine flower perfumed hair oil. In demand due to cultural significance.

Bajaj Kala Dant Manjan An oral care product for the rural market.
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*Source: The 2011 AC Nielsen Retail Audit Report.

Bajaj Almond Drops - A Premium Brand


Strong Market Share Growth in Recent Years
60% 50% 40% 30% 20% 10% 0% 05-06 70 60 06-07 07-08 08-09 09-10 10-11 36.7% 31.4%

. . . But not at the cost of pricing power


50 45 40 35 30 25 20 15 10 5 0 46 35 38 40 42

46.5% 40.3%

50.3%

53.0%

28

29

30

32

Mar-03 Mar-05 Dec-05 Jul-06 May-08 Jul-08

Jan-10 May-10 Apr-11

Comparative Price of Different Brands for 100 ml in the Hair Oil Segment
Competitor Brands
46 34 27 23 48 42 37 36 42 50

(MRP of 100ml (Rs.)

50 40 30 20 10 0

Amla Shikakai Brahmi Amla Almond Drops Kailash Parbat


Source: The AC Nielsen Retail Audit Report, Kotak Institutional Research

Parachute

Keo Karpin

Dabur Vatika

Dabur Amla

Hair & Care

Navratna

Almond Drops has created a unique positioning for itself through initiatives like product differentiation (Almond based), focused marketing, unique packaging (glass vs. plastic used by competition etc.)
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Consumer Profile- Almond Drops


For Almond Drops the consumer is: Gender Male- 54% Female- 46%

Age Group 15 to 39 yrs ( 59% of users) Urban Vs Rural 61% are Urban consumers Socio Economic Class (SEC)- Urban A1- 11% A2- 16% B1- 15% B2- 12%

Source - IRS
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Strong Distribution Network


Distribution Network
The company reaches consumers through 2.02 mn retail outlets serviced by 5690 direct distributors and 10,085 wholesalers
50
130

Distribution Structure

Factory (5)
OWN Himachal Pradesh -2, Uttarakhand-1 THIRD PARTY - Himachal Pradesh-1, Rajasthan-1

45

178

59

Central Warehouse (1)

524

1288
125

418

280

Regional Distribution Centre (32)

324

559
139

339

404

192

Urban Distribution

Rural Distribution

218 221

MT - 44

Redistribution Stockist (1,720)

Super Stockist (161)

Sub-Stockist (3970)
78

Retail Outlets (967,804)1 Retail Outlets (1,062,008)1


1 - as on June 30, 2011

Over the years, BCL has created a large distribution network which can be leveraged to introduce new products

Organization Structure
Chairman Mr. Kushagra Bajaj
Vice Chairman Mr. R.F. Hinger
Director Sales & Marketing Mr. Sumit Malhotra

President Operations Mr. Apoorv Bajaj CFO Mr. Dilip Maloo


Company Secretary DGM Finance
DGM Finance

GM Sales Mr. Sudhir Taneja


Sr. Manager Treasury DGM Sales AGM- West

GM Marketing Mr. Gurpreet S. Amrit

GM- HR Mr. S. Chatterjee

Sr. Manager Finance Works Manager Purchase Manager

Sr. ManagerFinance

Sr. ManagerEDP ManagerLogistics Regional Commercial Managers

RSM North 1

RSM North 2

QC Manager

RSJM Central

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Financial Information
Summary Income Statement
Particulars (In Rupees Crores) Sales (Net) EBITDA EBITDA Margin Net Profit after Tax* Net Profit Margin

Summary Balance Sheet


Particulars (In Rupees Crores) Shareholders Equity Total Debt Net Fixed Assets Investments (Bank FDs, Bank CDs &
Fixed Maturity Plans of Mutual Funds)

Q1 2012 Q1 2011 2010-11 2009-10


106.58 26.60 24.96% 28.42 26.66% 81.71 28.69 35.12% 22.71 27.79% 358.67 108.93 30.37% 84.10 23.45% 294.58 97.74 33.18% 83.91 28.49%

Q1 2012 Q1 2011 2010-11 2009-10 404.85 21.95 418.21 -35.31 47.59 18.31 30.61 -1.33 376.31 21.97 396.06 -41.72 25.67 18.36 11.24 -3.93

* Net profit for 2010-11 is after exceptional items of Rs. 18.96 Crore (IPO expenses). Net profit for 2011 before exceptional item will be Rs 99.28 Crore

Net Current Assets

Sales Break Up in Q1 2012 by Brand


Key Highlights
Strong demonstrated growth track record Among the highest EBITDA margins in the industry The company has allotted 45 Lacs equity shares (face value Rs. 5) by means of an IPO in August 2010 at a price of Rs. 660 Consequently the paid up Equity share Capital and securities premium account have increased by Rs. 2.25 Crores and Rs. 294.75 Crores respectively Subsequently in May 2011 the shares of face value of Rs. 5/each were split into 5 shares of Re. 1/- each. Hence the total number of shares rose to 1475 lacs from 295 lacs Net Current Assets includes Provision for Dividend & Corporate Dividend Tax of Rs. 32.68 Crores.
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EBITDA & PAT Performance


(Rs. in crores)

Particulars EBITDA Profit Before Tax (PBT) Profit After Tax (PAT)

Q1 FY12 26.60 35.65 28.42

Q1 FY11 28.69 28.36 22.71

YoY% -7.29% 25.68% 25.16%

2010-11 108.93

2009-10 97.74

YoY% 11.45%

105.08
84.10

101.56
83.91

3.47%
0.23%

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Profit & Loss Q1 FY2012


In Rs. Crores Net Sales Other Operating Income Material Cost % of Sales Employees Cost % of Sales Advertisement & Sales Promotion Exp. % of Sales Other Expenses % of Sales Q1FY12 106.58 0.10 50.66 47.54% 5.41 5.07% 12.60 11.82% 11.41 10.71% 26.60 24.96% Q1FY11 81.71 0.10 32.55 39.83% 4.19 5.13% 8.16 9.98% 8.22 10.05% 28.69 35.12% -7.29% YoY% 30.44%

EBITDA % of Sales
Other Income % of Sales

9.54 8.95%
0.02 0.47 35.65 0.00 35.65 7.23 28.42 26.66% 1.93

0.13 0.16%
0.02 0.44 28.36 0.00 28.36 5.65 22.71 27.79% 1.82 25.68% 25.68% 25.16%

Finance Cost Depreciation


Profit Before Tax & Exceptional Item Exceptional Items Profit Before Tax(PBT) Tax Expenses Profit After Tax(PAT) % of Sales Diluted EPS (Rs.)

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Sales Performance
Sales (Value) : Q1FY11 v/s Q1FY12
120 In Rs. Crores Cases (In Lacs) 100 80 60

Sales (Volume): Q1FY11 v/s Q1FY12


8.00 6.00 4.00 2.00 0.00

40
20 0

81.71

106.58

6.81

8.17

Q1FY11

Q1FY12

Q1FY11

Q1FY12

Sales for the quarter ended Jun11 has increased by 30.44% value wise and 19.96% volume wise over corresponding quarter of previous year.

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Statement of Brandwise Sales (Volume & Value)


STATEMENT OF BRANDWISE SALES (VOLUME - In Cases ) Product ADHO KPCO BAHO ASHO OTHERS
TOTAL

Q1 FY12 765858 28777 14125 4451 4249


817460

% to Total 93.7% 3.5% 1.7% 0.5% 0.5%


100.0%

Q1 FY11 654856 0 14888 6232 5494


681470

% to Total 96.1% 0.0% 2.2% 0.9% 0.8%


100.0%

% Increase over corresponding period of Previous Year

19.96%

STATEMENT OF BRANDWISE SALES (VALUE - In Rs. Crores)

Product ADHO KPCO BAHO ASHO OTHERS


TOTAL

Q1 FY12 97.59 5.42 2.44 0.47 0.66


106.58

% to Total 91.6% 5.1% 2.3% 0.4% 0.6%


100.0%

Q1 FY11 77.96 0 2.33 0.66 0.76


81.71

% to Total 95.4% 0.0% 2.9% 0.8% 0.9%


100.0%

% Increase over corresponding period of Previous Year

30.44%

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Breakup of RM/PM Costs (for FY11)


Key Raw & Packing Material LLP Glass Bottles Perfumes & other additives Refined Veg. Oil Corrugated Boxes Caps Others % to Sales 19.2% 11.8% 3.5% 3.7% 2.4% 2.3% 3.8% % to Total Cost 41.1% 25.3% 7.6% 8.0% 5.1% 4.9% 8.1%

TOTAL

46.6%

100.0%

* Consumption is 46.6% of Sales


*For Bajaj Almond Drops

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Change in Prices of Key Ingredients


Per Kg Rates of LLP
100 80
Amount (Rs.)

Per Kg Rates of Refined Oil


60 61.91 49.92 50 66.51 40 30 56.70 52.18

86.26

60

40
20 0 56.92

44.49

20
10 0

Q1 FY 11 v/s FY 12

FY 10 v/s FY 11

Q1 FY 11 v/s FY 12

FY 10 v/s FY 11

During the current quarter company faces major increase in the prices of its raw materials key ingredient namely LLP (Light Liquid Paraffin), Refined Oil . Price of LLP increased to Rs 86.26/Kg from Rs 56.92/Kg in Q1 FY11 i.e. an increase of 51.55%. This has adversely affected the overall profitability of the company. Prices of Refined oil for the Q1FY12 increased from Rs 49.92 per Kg to Rs 61.91 per Kg witnessing an increase of 24.02% over previous year. Prices of our other key ingredients (except glass bottles with 17% increase) have remained more or less on the same level.
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Growth Strategy
Strategy
Market share gains from other hair oil segments

Action Steps
Convert coconut hair oil users to light hair oil users through sampling, targeted advertising campaigns, product innovation and creating awareness about product differentiation including communicating the advantages of switching to lighter hair oils. Aim for a market share of 65% by the year 2015-16 Tap the increase in disposable income of rural India and convert rural consumer from unbranded to branded products by providing them with an appropriate value proposition Among its key competitors, our Almond Drops is the only brand which is available in sachets a marketing initiative to penetrate the rural market BCL has over the years created a strong distribution network across 2.02 mn. retail outlets which can be optimally utilized by introducing new products BCL intends to extend Almond Drops platform developed by its Almond Drops Hair Oil brand to other personal care products to leverage on the strong connotation of Almonds with nutrition

Focus on rural penetration

Leverage existing strengths to introduce new products

Pursue inorganic Opportunities

Will seek inorganic growth opportunities in the FMCG and hair oil market as part of growth strategy The inorganic growth opportunities will focus on targeting niche brands which can benefit from BCLs strong distribution network so that they can be made pan India brands

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