Consumer electrical equipment manufacturing firm Bajaj Electricals on Wednesday said it has gained market share in the consumer products segment in the past three years and despite rural stress, the company has twice the rural market share than that of competitors.

Share Market Live

NSE

“Our rural versus urban mix is different than the competition. Rural is soft right now from a demand cycle but we've gained market share in both markets. We don't put out numbers but it (rural markets) is a very high double-digit and that is almost 2x versus the competition. Therefore, our weightage on rural is much higher,” MD and CEO, Anuj Poddar told CNBC-TV18.

Though the rural economy is weak, Poddar believes the industry is only about a quarter away from rural markets coming back.

CNBCTV18.com reached out to Bajaj Electricals for comments on the factors leading to the firm’s increasing market share in rural areas but was yet to receive at response at the time of writing.

Speaking about the overall trend, Bajaj Electricals CEO said the company has been gaining market share following which its three-year CAGR has reached 14.3 percent for its consumer business, which he claimed is well ahead of the average industry and some of its peers.

His remark came a day after the company reported a marginal decline in its consolidated net profit to Rs 62 crore for the quarter ended September 30, mainly due to revenue degrowth and high-cost inventories. Its net sales slipped 6.41 percent to Rs 1,201.14 crore during the quarter under review against Rs 1,283.44 crore a year ago.

“We are in a tough environment, demand is soft. Some of that's baked into our numbers in terms of topline revenue. But we've tried to hold on to our profits. On an aggregate basis, as a company we've delivered better PBT,” he said.

Also Read: Inflationary headwinds hurt Bajaj Consumer Care's operating performance

Speaking about the segment breakup, he said lighting, which saw a strong recovery, was the highlight this quarter.“Our profitability in lighting has come out very strong this quarter,” he said.

He added that the engineering, procurement, and construction (EPC) business, which used to be loss-making for a long time, has again delivered profits this quarter.

In the consumer business, there has been some decline in revenue and profits but the firm was fairly well able to contain some of the contraction in profits and margins. “Some of that is carried forward of the legacy high-cost inventory due to commodity inflation. We are very confident that quarter three onwards you will see a reversal on the inventory cost and therefore margins will bounce back from quarter three in consumer business too,” he explained.

Poddar believes that in the upcoming quarters, the middle class or rural segment should be at the cusp of a turnaround as against the premium segment that has been firing the company for the last four years.

“The primary indicators of some of the FMCG companies, including the biscuit guys, etc. they're starting to see some traction from rural,” he noted. Poddar also cited CMIE data to say the salaried jobs in the organised sector are back and that would mean the middle class’ demand would see a rise.

Watch the accompanying video for more