BENGALURU: Note: (1) Bajaj Corp’s Limited (Bajaj Corp) Advertisement and Sales Promotion (ASP) expense comprises two parts – Advertisement (Ad) and Sales Promotion (SP). The ASP figures have been obtained from the Company’s investors’ presentations over various quarters and the Ad Exp from its financial results. SP results have been obtained by deducting the Ad Expenses from the ASP. The figures in the investors’ presentations have been rounded off by the company and hence are assumed as approximate. Consequently the SP figures are assumed to be approximate.
(2) Bajaj Corp Limited is a subsidiary of Bajaj Resources Limited (BRL) and is an exclusive licensee of the brands owned by BRL for a period of 99 years starting 2008.
(3) Rs 100 lakh = Rs100,00,000 = Rs 1 Crore = Rs10 million.
Bajaj Corp’s mother brand is Bajaj with sub brands/products such as Bajaj Almond Drops Hair Oil, Bajaj Kailash Parbhat Cooling Oil, Bajaj Brahmi Amla Hair Oil, Bajaj Amla Shikakai, Bajaj Jasmine Hair Oil, Bajaj Kala Dant Manjan, and creams, soaps, face washes and face scrubs under the brand name Nomarks.
Bajaj Corp spent Rs 33.45 crore (17.8 per cent of Total Income from operations or TIO) in Q2-2015 towards advertisement and sales promotion (ASP), which was 19.8 per cent more than the Rs 27.92 crore (17.6 per cent of TIO) in the year ago quarter and 9.6 per cent more than the Rs 30.53 crore (16 per cent of TIO) in the immediate trailing quarter. In HY-2015, the company’s ASP at Rs 63.97 crore (17.9 per cent of TIO) was 11.8 per cent more than the Rs 56.45 crore (17.2 per cent of TIO) in HY-2014. The company’s ASP shows an upward trend in terms of percentage of TIO as well as in absolute rupee terms across 11 quarters starting Q2-2012 until Q2-2014.
The company’s advertisement expense (ad expense) in Q2-2014 at Rs 12.38 crore (6.6 per cent of TIO) was 1.7 per cent lower than the Rs 12.60 crore (8 per cent of TIO) in Q2-2014 and 6 per cent less than the Rs 13.17 crore (6.6 per cent of TIO) in Q1-2015. For HY-2015 the company’s ad expense of Rs 25.55 crore (6.7 per cent of TIO) was 7.9 per cent lower than the Rs 27.58 crore (8.4 per cent of TIO) in HY-2014. Overall across the 11 quarters under consideration, Bajaj Corp’s ad expense shows a downward trend in terms of percentage of TIO
At the same time, the company’s SP shows a linear upward trend, indicating that it is depending more on sales promotion activities. Its SP expense at Rs 21.07 crore (11.2 per cent of TIO) was the highest during the 11 quarters under consideration in terms of absolute rupees. Please refer to fig A below.
Bajaj Corp’s TIO shows an upward linear trend during the 11 quarter period under consideration. However, its PAT has shown a downward trend both in terms of absolute rupees as well as in terms percentage of TIO. Please refer to fig B.
The company had earlier announced that it was focussing on rural penetration to tap the increase in disposable income of rural India and to convert rural consumers from unbranded to branded products by providing them with an appropriate value proposition. The initiative seems to be working. In its investor presentation for Q2-2015, Bajaj Corp says that in Q2 FY 15 its Bajaj Almond Drops Hair Oil got 39.8 per cent of its sales from Rural India. The company reports volume growth in rural India by 5 per cent (Urban + Rural) = {-1.2} per cent, hence showing a decline in the urban market) and claims a market share in rural India of 63.1 per cent (urban + rural = 58.5 per cent).
