Concall Summary: Bajaj Consumer Care Q4FY20

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Business update

  • Q4 results were impacted drastically due to the lockdown imposed from 23rd March 2020
  • Before the lockdown, the hair oil industry wasn’t seeing good growth and overall growth in the industry was flat and rural growth was down
  • The hair oil market has slowed down even further
  • As a part of a strategy to increase market share in the hair oil industry, had already committed high advertisement expenditure
  • Ordering from all outlets have been lower since hair oil is not an essential commodity but a discretionary product
  • The operations were completely shut down till mid-April
  • As of now almost all sales personnel are in the market and getting orders
  • Have launched hand sanitizer under No Marks brand


  • IIFL
  • Pinebridge Investments
  • Investec
  • Goldman Sachs Asset Management
  • ICICI Asset Management
  • Spark Capital
  • MK Investments
  • Maybank
  • Care PMS
  • Countercyclical investments
  • Banyan Capital


  • The management had not declared an interim dividend for this year because in the January board meeting the thought was on how much money could be needed for new product launches
  • Ideally, the primary and secondary sales over a 9m period are equal but currently, wholesale outlets are dropping their stocks and that is tricking down to the distributors as well
  • The last quarter usually accounts for 28-30% of revenues and sales in March are back-ended because all incentives and extra schemes are given towards the end of the month for primary sales
  • On the advertisement expenditure, the visibility for the whole year is not too great and looking at the situation every month
  • Have started on-air advertisements from June
  • The overall ad spends were around 28% and the company has spent 17% on ad spends and rest on sales promotion
  • Post lockdown opening, the major issue was that the wholesale markets in urban cities were in containment zones and thus weren’t able to open up and service the retail market
  • Have been getting good demand from rural areas who are directly asking for supplies because the wholesale markets weren’t able to service
  • There is a significant downtrading in hair oil that is visible
  • The current slowdown in the hair oil category could be a blip but in the last three decades have never seen such a slowdown in this industry
  • There is no new dividend distribution policy and the current reduced dividend is a temporary deviation from the current policy
  • On the micro-segmentation policy, currently waiting out to see how the markets open up and evolve and will take a decision on this post the current problems being sorted out
  • The biggest strength of the company currently is the employees that are on rolls and one weakness of the management has been that implementation of processes have been slower
  • Over the next two quarters not looking at following any fixed model and would be flexible in approach to see how the market changes post-COVID
  • In January & February, the light hair oil had flat growth and the only category that was growing was Amla hair oil
  • Have been test marketing anti grey hair oil across a few channels in modern trade stores. It is currently a very small market in India
  • The LLP prices have not crashed by a lot and the management is surprised because the LLP prices have not fallen down even after the fall in crude prices
  • The management will discuss with the board the concern of the shareholders over the lower dividend the company has declared
  • The royalty with the promoters cannot change and the 1% royalty continues for the next 99 years
  • No remuneration is paid to the Bajaj Family apart from Mr. Apoorv Bajaj who handles the CSR activities for the company
  • There has been no significant decrease in the core raw material prices
  • The management is not considering any price increase for products in the current environment
  • Have been trying to increase direct distribution and mostly in the rural markets
  • The management expects the hand sanitizer demand to continue in the future and thus would consider hygiene based products in the future
  • The management has converted the hair oil plant in Ponta Sahib to a hand sanitizer plant and thus is very committed to this business
  • Currently have stopped work on the corporate office because of construction problems but will talk about further clarity on that in the next few months
  • Currently, the only factory that is under a tax break is the Guwahati region and looking at working out how more production could be shifted to that location
  • Have a small hole in the bottle because the management wants customers to use less hair oil because that is less sticky and sticks with the brand resonation
  • A buyback is currently not under consideration and promoters have earlier mentioned their wish of increasing stake back to 51%
Also Read on FinMedium:  Concall Summary: Dharamsi Morarji Chemical Company Q4FY20

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Karan Sharma

Karan Sharma

The Concall Summary Guy | CFA | Investor
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