Jaideep Nandi appointed as CEO from Jan 1 2020. He was previously with Asian Paints and Berger Paints.
https://www.linkedin.com/in/jaideep-nandi-4411775/?originalSubdomain=in
Appointing a CEO from outside is a reflection on company management and culture. Why didnt they groomed some internal candidate for the post.
I think small size of employee pool with in that small management pool, not always possible to have the talent you need in the changing environment. We should look new hire quality. He may not deliver but unlikely to destroy.
One similar example I am closely aware of is Mahindra Holidays. They brought Rajiv Sawhney from outside in 2011, than again Kavinder Singh - in 2014
MHRL too is struggling to deliver returns to shareholders. And as you mentioned, outsider CEOs being churned within 3-5 years is part of the problem.
IMO, internally promoted employee and a CEO serving long tenure provides consistency to the business.
In my opinion MHRLâ problems predates even their IPO in 2009. More on that is written in the MHRL thread. My limited point here is, big group like Mahindra also has management problem in one of their small size business, I will attribute it to small size.
yes, ideally one will like to see management succession from within. But I will give some discount to it considering the size. Also in small companies Chairman has greater control. Kushagra Bajaj even attends the earning calls.
On the other hand if you see they are working with an external consultant for shaping up product and market strategies. That should also reflect on lack of managementâ capabilities, isânt? Already a known thing!
Disclosure : Invested ~2%
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Donât you think chairman knows about internal staff and their capabilities more then minority share holders .
BTW chairman is also largest shareholders and well wisher of the company .
So letâs wait and allow sometime.
Also would be good to understand âŚHow did paint company performed under his leadership.
As that will give us fair idea about his ability and understanding of target consumers base and other related things.
Promoters have constantly been puting in money in Uptown. In 5 Years, they hav doubled their investment. However the turnover for this company has been nil throughtout the 5 years. Seems like they are taking out money from the company through their subsidiary.(Data has been taken from annual report)
Small companies always have limited managerial bandwidth on account of their size, limited product offerings and inability to pay top dollar. So one can look at it two ways- a) they do not have managerial capabilities or b) they recognise their limitations and are willing to look at external resources to help them.
Against total investment of Rs 126 crs the asset base is only Rs 78.8 crs. Which means that the balance Rs 48 crs has been spent towards losses incurred over several years. What is the purpose of this subsidiary? From its name it looks like a real estate holding company with no business activity.
Read last few posts and looks concerning to me on one hand while on other someone said this is for their own office space. Can anyone say if this is a red flag or a known fact for their office space? Thanks
In general, think Mr. Shishir Bajaj dont comes on Bajaj cropâs concalls however he did joined during last call. Guess, to soothe nerves after 22% stake sale in August. He himself took this Uptown property question. Per him, this uptown property will work as corporate HQ for his group of companies.
If I recall correctly, he mentionedâŚnot much CapEx needed for now on Uptown however some ~25cr. Fitouts expected after 18 months. Recommended to go through last concalls. Some good insight.
Tarun
Disc: no investment.
Hiring a CEO from outside in my opinion in this case is a good thing because the company is trying new strategies to promote growth which is substantiated by the fact that they have hired outside consultant to guide them. I remember reading an article w.r.t. hiring CEOs which concluded that if the company is doing good with existing strategy then an internal candidate should be considered as he would posses in depth knowledge whereas if a company wants to try/explore new strategy its better to get a candidate from outside as he would bring new perspective to the company.
Concall Highlights
⢠Macro:
The Overall hair oil industry growth declined sequentially (from 4.4% volume growth in 1QFY20, 1% volume growth in 2QFY20 to -1% volume growth in 3QFY20) led by rural slowdown and liquidity issue.
All the sub segments of the hair oil industry except low cost Amla hair oil category have declined in both volume and value terms.
⢠3QFY20 Result Update:
The Companyâs volumes de-grew by 8% YoY with ADHO volume decline by 7.2% YoY led by rural slowdown and de-grew to the extent 3% while urban grew by 1% in 3QFY0.
The Slowdown in FMCG and Hair oil Industry has also impacted the companyâs trade channels but the company has refrained from increasing credit period given to distributors which in turn has reduced the inventories at distributors end.
The Bain strategy is been extended to the second state in India after positive results from west Bengal where the company implemented Bain strategy first.
Higher Ad & Pexpense (TV advertising) has increased ADHO market share in total hair oil to 10.4% in Dec-19.
The Company has launched ADHO SKU of 160 ml with a motive to increase market share in sub Rs.100 price range in hair oil category.
For the Company, CSD channel de-grew by 31% YoY while Nepal sales dropped by 13% due to decline in imports in 3QFY20.
The Companyâs direct reach stood at 5.2 lakh outlets and aims at taking it to 8 lakh outlet.
For the Company ecommerce grew by 80% and contributes ~1% to the business.
The Companyâs cash as of 3QFY20 stood at Rs. 450 cr.
⢠Management Guidance:
The Company targets to double hair oil market share in next 4-5 years led by investment behind its brands, cluster based approach and higher media expense.
The Management expects Ad & Pto remain higher for next few quarters on account of implementation of Bain strategy in other parts of India.
The Management do not expect major spike in cost of goods sold for next quarter.
The company is open for acquisitions provided it has reasonable valuations. The company is looking to acquire small and regional brands in hair oil category
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Bajaj Consumer Q3 Results!
Q3 FY20 IP:
Strategic Choices:
- Focus on Hair Oils/Increase Share (Because all households use, it is in Indian Nature, Large & Growing Fast, Increase SKUs, Expand direct distribution, Maximize reach)
- Micromarketing (Cluster based Marketing, cater to unique needs, already executed in 2 states and is showing success)
- Focus on Alternate Channels
- Leveraging Digital Platforms
- IT & Automation Tools
- Developing Manpower
Q3 FY20 CC:
The company closed the quarter with the operating income of 205 Crores. The operating income has declined by 7% vis-Ă -vis the Q3 of the last financial year. The volume has also shown a decline of 8%. The EBITDA to sales ratio is at 27.1% which is a decline of 560 basis points versus the EBITDA shown last year same quarter. The EBITDA for the quarter is 56 Crores which is a decline of 23%. PAT and PBT are Rs.50.1 Crore and Rs.60.7 Crores respectively.
The hair oil industry continues to see a sequential slowdown in growth rates as against of 4.4 volume per growth in the Q1 of the financial year. The Q2 slowed down to 1% and in this quarter a decline of 1%, so major contributor to this slowdown remains the rural sector which has seen a decline of 3% in this quarter. On the other hand urban volume growth has shown a minimal 1% growth. All the subsegments of the hair oil industry except the low cost Amla hair oil have declined in volume and sales in this quarter.
The slowdown in FMCG and especially in the hair oil industry has affected the trade channels also. The cash tranche that has been visible over the last three quarters is even more pronounced this quarter. This has posed our channel partners to relook at their investments more critically. Their trade receivables have gone up and hence to balance the exposure they are reducing the paid up stock. Other companies have begun to give credit to their distributors whereas we have refrained from giving extra credit there has been a reduction in this distributor stock.
Our association with BAIN has now been extended into the second state in India. The first state where we tried the strategy of micro segmentation continues to show a growth in sales which is markedly different to the offtake of growths of the total hair oil as per Nielsen and also our own national secondary sales growth. In the second state we were already the single largest hair oil brand and we are already seeing early signs of success. The micro segmentation forms the basis of the BAIN brand accelerator entails formulating different strategy for each state and even within the state to ensure that the consumers are aware of the differential benefits of our Deep Bajaj Almond Drops we are now spending more and more on TV advertisement. The increased level of our advertising has helped us increase the market share of Almond hair oil and total hair oil and we have reached the share of 10.4% in the month of December 2019. In the rural areas our first approach was building distribution and as you would know it takes much more time to build distribution in the rural areas and that is why it is taking a slightly longer, even in state 2 if you see rural will react much more slowly than the urban area.
The endeavour to reduce operational cost is continuing and there has been a 133-basis point reduction in manpower cost. However, the investment in advertising and sales promotion has gone up by 597 basis points this has led to the drop in EBITDA margins. We stand by our commitment to invest behind our hair oil brands to ensure that we double our market share in hair oils over the next four years to five yearsâ time. On the cost front we have exhibited our capability to absorb fluctuations in our RM PM even this quarter you will not see a major jump in the cost of goods sold and despite spikes in fuel prices we have been able to keep the purchase price of LLP well under control.
Another key initiative has been to automize our sales and supply chain processes. To this effect we have started implementation of SAP and also the use of Artificial Intelligence to improve the efficiencies of our sales force. To help our frontline sales team members we are working with a start-up to use Artificial Intelligence in improving the efficiency of the team. The app being developed has a capability to highlight outlets that can buy more to re-route beeps and also train the representatives on the go.
Finally, I would like to also welcome Jaideep Nandi into the Bajaj family. Jaideep joins us after successful 29 years long career in Asian Paints. Currently, designated as the CEO he is undergoing an accelerated integration programme so that he can start contributing to the growth ambition of the company.
Jaideep Nandiâs talk in Concall: I have spent about month and ten days or more into the trying to understand how this category works, so twoâthree things clearly coming out are clearly with Almond Drop we have a brand which is extremely strong that puts up actually in a strong foundation that is not nothing unknown to all of you guys that clearly is coming to me as an area which can be a great foundation from where we can start. So some of the strategic choices that the company has already embarked on whether be it BAIN, whether be it investments in the various areas like SAP, Selina which was AI tool for the front end sales guys I mean that itself would put in exactly what Sumit was saying, one side we are investing on you are looking at the ad spends going up so we want to bring our brand into a far greater space you see some works that will happen on our main flagship brand. On the other side with BAIN we are also looking at segmenting the market a little more focused we have had some learning in the last seven months to eight months as to where possibly we can shop in our strategy and that would I think will be the going forward for the next one year our focus will put our heads down and focus on what we need to achieve for the next one year. Get some confidence back across all of us and then we will look at what we need to do maybe a little later as to how the three years to five years will pan out.
Q2 FY20 CC: (For Comparison)
We are almost on the verge of finalizing between two people and hopefully that new person should join by January of 2020 in the role as CEO, that does not mean that Sumit Malhotra is going anyway in the near term because there will be a handholding period.
Let me emphasize this would mean that we would be significantly increasing our A&P spends as we go forward and go pan India. Today we spend between 16% to 18% on advertising and sales promotion, we could operate to as much as 23% to 24%, which could mean that once we go pan India, which could mean that we would sacrifice on margins in the short-term maybe for a year or so, but we are okay with that as long as we get increased market share.
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We are pleased to inform you that our Company has
launched a new Product âBajaj Nomarks Hand Sanitizerâ
The product contains natural ingredients and helps to fight germs in this pandemic time.
Company seems to have been pro-active!
Every company on the block is releasing a sanitizer, even Radico Khaitan & Asian Paints. They wouldâve been left behind if they didnât release one. I believe that govt. is also forcing the companies to release such products.
Have been buying Bajaj consumer care from these levels. Not the same pedigree of Marico or Dabur but pls compare the market caps and the size of opportunity ahead for Bajaj. They have some very neat products. Have been using the Dabur almond oil for years but I must admit Bajaj almond oil is not too bad! Itâs now a matter of better rural penetration and distribution. At this price point, Iâm happy to eat up a 10 percent yield until the stock moves.
Pls check, I think they have not paid dividend this yearâŚafter promoters sold significant stake to reduce pledge. Pls correct me if wrong. Thanks
Pls. check the concall after promoter sold portion of his pledged stake. There was mention of building new office (for both bajaj consumer and shared office for other promoter companies!) hence dividend will fall - promoter had mentioned it if I recollect it right