Investor Presentation October 2011
Industry Overview
Industry Size and Structure FMCG Rs.133,876 cr (USD 29.8 bn) Hair Care 8% salience Rs. 10,243 cr (USD 2.3 bn) Shampoo Perfumed Oil Coconut Oil Hair Conditioners Hair Dyes Rs. 3277cr Rs. 3175 cr Rs. 2151 cr Rs. 204 cr Rs. 1,434 cr (USD 728 mn) (USD 705 mn) (USD 478 mn) (USD 45 mn) (USD 319 mn) (32.0%)* (31.0%)* (21.0%)* (2.0%)* (14.0%)* Hair Oil Market Coconut based Heavy Amla Light Hair Oils Cooling Oils Others Oils based Oils (13%)* (12%) * (10%)* (50%)* (15%)* Perfumed Hair Oil Segment Source: The AC Nielsen Retail Audit Report. * Value based share of Hair Care Market Only branded products data for CY 2010 Hair Oil is > 55% of the overall hair care industry in India 2
Hair Oil Market in India Overall Hair Oil Market – Volume Overall Oil Market – Value 7,000 300,000 5,862 245,655 6,000 250,000 4,971 210,374 197,057 5,000 4,498 (Rs. Cr.) 200,000 (In KLtr) 172,528 3,707 4,000 3,412 Y-o-Y 16.8% Y-o-Y 6.7% 132560 Y-o-Y 30% H-o-H 3.7% H-o-H 23.5% 150,000 Y-o-Y 14% Y-o-Y 10.5% Y-o-Y 17.9% 2,827.3 120,204 Y-o-Y 31% Y-o-Y 21% 3,000 100,000 2,000 50,000 1,000 0 0 06-07 07-08 08-09 09-10 10-11 11-12 (6M) 06-07 07-08 08-09 09-10 10-11 11-12 (6M) Light Hair Oil – Volume Light Hair Oil – Value 900 833 25,000 22,464 800 696 19,516 20,000 18,390 700 610 (Rs. Cr.) 15,603 600 (In KLtr) 487 472 15,000 500 12,463 Y-o-Y 6.1% Y-o-Y15.1% Y-o-Y 33% Y-o-Y 18% 11764 H-o-H 18% H-o-H 26.3% Y-o-Y 19.7% 400 335.6 Y-o-Y 40% Y-o-Y 29% Y-o-Y 14% 10,000 300 200 5,000 100 0 0 06-07 07-08 08-09 09-10 10-11 11-12 (6M) 06-07 07-08 08-09 09-10 10-11 11-12 (6M) Source: The AC Nielsen Retail Audit Report. Light hair oils is one of the fastest growing segments in the hair oil market in India 3
Light Hair Oil Market in India Light Hair Oil – Volume Light Hair Oil – Value 900 833 25,000 22,464 800 696 19,516 18,390 20,000 700 610 (Rs. Cr.) 15,603 600 487 472 15,000 (In KLtr) 500 12,463 11764 Y-o-Y 6.1% Y-o-Y15.1% Y-o-Y 33% Y-o-Y 18% H-o-H 18% Y-o-Y 19.7% H-o-H 26.3% 400 Y-o-Y 40% Y-o-Y 29% 335.6 Y-o-Y 14% 10,000 300 200 5,000 100 0 0 06-07 07-08 08-09 09-10 10-11 11-12 (6M) 06-07 07-08 08-09 09-10 10-11 11-12 (6M) Almond Hair Oil Market - Volume Almond Hair Oil Market - Value 500 12,000 441 11,021 450 9,300 400 10,000 350 8,108 350 8,000 284 300 Y-o-Y 19% 262 6,256 (In KLtr) (Rs. Cr.) Y-o-Y 54.5% Y-o-Y 48.9% Y-o-Y 23.5% 5,988 Y-o-Y 35% Y-o-Y 15% Y-o-Y 26% H-o-H 29.1% 250 6,000 Y-o-Y 51% H-o-H 20.9% 191 200 3978 4,000 123 150 100 2,000 50 0 0 06-07 07-08 08-09 09-10 10-11 11-12 (6M) 06-07 07-08 08-09 09-10 10-11 11-12 (6M) Source: The AC Nielsen Retail Audit Report. Almond Drops is the brand which is driving light hair oils and in turn the overall market 4
Market Shares Trends (All India - Urban Plus Rural) Volume MS Value MS 60% 60% 53.9% 53.0% 50.3% 50.2% 49.1% 47.7% 50% 50% 46.5% 44.1% 40.3% 38.4% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 07-08 08-09 09-10 10-11 11-12 (6M) 07-08 08-09 09-10 10-11 11-12 (6M) *Market Share in the Light Hair Oil Category Source: The AC Nielsen Retail Audit Report. 5
Statewise Market Share LHO Volume Proportion % ADHO Market Share % (Vol) Oct10-Sep11 Saliency Urban Rural Total Urban Rural All India (U+R) 100.00 66.1 33.9 50.2 48.5 53.6 Punjab 6.0 66.0 34.0 46.3 41.2 58.2 Haryana 5.3 80.4 19.6 47.2 44.8 57.8 Delhi 7.3 100.0 0.0 47.6 47.6 NA Rajasthan 9.1 66.8 33.2 49.9 48.9 51.6 Uttar Pradesh (U+R) 20.1 63.4 36.6 53.2 50.9 56.9 Uttaranchal 1.1 46.2 53.8 59.0 56.8 61.8 Assam 5.6 38.5 61.5 47.6 40.4 52.4 Bihar 4.8 53.4 46.6 65.4 61.8 70.5 Jharkhand 1.3 71.3 28.7 41.3 41.5 40.9 Orissa 1.3 46.4 53.6 44.1 44.2 44.0 West Bengal 8.0 58.6 41.4 28.4 29.4 26.7 Gujarat 6.3 79.6 20.4 53.6 53.0 55.1 Madhya Pradesh 10.2 49.2 50.8 58.8 61.3 56.2 Chattisgarh 2.3 50.5 49.5 50.6 47.2 54.9 Maharashtra 7.9 82.7 17.3 51.3 50.8 53.9 Karnataka 1.1 88.6 11.4 57.1 57.9 48.7 Andhra Pradesh 1.7 73.6 26.4 35.3 40.6 22.3 Tamil Nadu 0.6 91.9 8.1 24.1 25.4 1.2 Kerala 0.2 83.5 16.5 10.1 11.5 1.1 Source: The AC Nielsen Retail Audit Report. 6
Light Hair Oil Market – Key Characteristics Rural – Urban break up of LHO market Share of Distribution Channels in LHO market – FY11 Modern Others, 6%, Trade, 3%, (8%) (34%) Cosmetic, 5%, (-3%) Traditional Chemists, 7% Rural channels dominate Urban dominated (2.1%) 33.0% distribution, but segment due to its alternate channels Urban relatively higher Local Grocer like modern retail pricing 67.0% Stores, 51%, demonstrating Gen Stores, (12%) higher growth rate 28%, (0%) (%) – Growth rates; % - Market share SKU wise break up of LHO market Region wise break up of LHO market 500ml, 0.8% 2-5ml, 3.5% South, 4% 20-45ml, Given the 1.8% 300ml, dominance of the Sales tend to be 10.0% 250ml, 1.7% urban market, concentrated in larger units the Northern West, 23% 50ml, 17.9% account for bulk regions of the North, 200ml, 20.4% 75ml, 4.9% of the sales. country which is 51% However, smaller also the fastest East, 22% units to increase growing zone rural penetration 100ml, 39.0% Source: AC Nielsen 7
Company Overview
Bajaj Corp Ltd. (BCL) – An Overview Part of Bajaj Group which has business interests Bajaj Almond Drops Hair Oil - A premium perfumed hair oil containing almond oil and Vitamin E in varied industries including sugar, consumer goods, power generation & infrastructure Competitors – Keo Karpin ( Dey’s Medical), Hair & Care (Marico), Clinic All Clear (HUL) development Subsidiary of Bajaj Consumer Care Ltd. (BCCL) Bajaj Kailash Parbat Cooling Oil – An ayurvedic formulation containing Sandal & Almond extracts BCL is the exclusive licensee of brands Competitors: Himani Navratna owned by BCCL Brands licensed to BCL for 99 years from Bajaj Brahmi Amla Hair Oil - Traditional heavy hair 2008 oil. Brand has been in existence since 1953 3 rd largest player in the overall hair oils segment Competitors - Dabur Amla, Dabur Sarson Amla Key brand – Bajaj Almond Drops Hair Oil Bajaj Amla Shikakai – Variant in the heavy hair oil Market leader with over 54% market share* segment catering to price conscious consumers of LHO market Competitors - Shanti Badam Hair Oil (Marico) Premium positioning commands one of the highest per unit prices in the industry Bajaj Jasmine Hair Oil - A Jasmine flower perfumed New Product Launch: Bajaj Kailash Parbat hair oil. In demand due to cultural significance. Cooling Oil Other brands - Brahmi Amla, Amla Shikakai and Jasmine (all hair oil brands) and Red / Black Bajaj Kala Dant Manjan – An oral care product for the rural market. tooth powder *Source: The 2011 AC Nielsen Retail Audit Report. 9
Bajaj Almond Drops - A Premium Brand Strong Market Share Growth in Recent Years . . . But not at the cost of pricing power 60% 50 46 53.0% 50.3% 42 45 40 46.5% 50% 38 40 35 40.3% 32 35 36.7% 30 40% 29 28 30 31.4% 30% 25 20 20% 15 10 10% 5 0% 0 05-06 06-07 07-08 08-09 09-10 10-11 Mar-03 Mar-05 Dec-05 Jul-06 May-08 Jul-08 Jan-10 May-10 Apr-11 70 Comparative Price of Different Brands for 100 ml in the Hair Oil Segment Competitor Brands 60 50 48 50 46 (MRP of 100ml (Rs.) 42 42 37 40 36 34 27 30 23 20 10 0 Amla Shikakai Brahmi Amla Almond Drops Kailash Parbat Parachute Keo Karpin Dabur Vatika Dabur Amla Hair & Care Navratna Almond Drops has created a unique positioning for itself through initiatives like product differentiation Source: The AC Nielsen Retail Audit Report, Kotak Institutional (Almond based), focused marketing, unique packaging (glass vs. plastic used by competition etc.) Research 10
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 11
Strong Distribution Network Distribution Network Distribution Structure Factory (5) The company reaches consumers through 2.02 mn OWN – Himachal Pradesh -2, Uttarakhand-1 retail outlets serviced by 47 THIRD PARTY - Himachal Pradesh-1, Rajasthan-1 5913 direct distributors and 11,057 wholesalers 50 181 Central Warehouse (1) 59 132 1329 Regional Distribution Centre (32) 526 442 294 130 345 353 571 147 Urban Distribution Rural Distribution 200 433 Super Stockist (145) MT - 68 238 Redistribution Stockist (1,756) 235 Sub-Stockist (4023) 82 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 12
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