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A C Choksi
Share Brokers Private Limited
INITIATION REPORT | BAJAJ CORP LTD. Sept 09, 2011
Strong Distribution network:
Bajaj Corp has established strong distribution network in past few years. It reaches
urban and rural consumers through 2.02 mn retail outlets serviced by 5690 direct
distributors and 10,085 wholesalers. Northern Region is the major market for LHO
category. Thus, approximately 49% of Bajaj corp’s stockists are based in North India,
which ensures high penetration of ADHO in rural and urban area in the region. Bajaj
Corp is rapidly expanding its distribution reach as its stockists strength has grown from
less than 1500 in FY05 to 5690 in Q1FY12. Going forward, the company is likely to
continue its thrust to strengthen its distribution reach to expand its market share in
LHO category. Bajaj Corp has 32 regional distribution centers which further distributes
to rural and urban stockists.
Approximately 80% sales are derived through dominant distribution channels:
Local Grocery stores and general stores are dominant distribution channels for LHO
category as approximately 79% sales occur through these channels. Approximately
80% of ADHO’s sales are derived through these channels. From distribution
perspective, retailers play an important role to push a brand or influence purchase of
consumers. Thus, ADHO which has already become a generic name for Almond oils
provides the company an edge over its competitors.
Moderate Competitive intensity:
Marico, Dabur, Bajaj Corp and Emami are the leading players in branded hair oil in
India. Hair oil category is unlikely to face fierce competition from MNCs as hair oils
are not widely used in different geographies across the globe. Although hair oil
category is highly penetrated, approximately 40% of total market is with unorganized
players. Hence, with rising income levels and changing consumer preference there is a
huge scope for all leading players to register healthy growth going forward. All four
domestic players are market leader in their own niche. While Marico is a leading player
with approximately 46% market share in branded CNO category, Dabur is leading in
Amla oil category with ~70% market share. On the other hand, Emami is a dominant
player in cooling oils with a market share of approximately 54.4% whereas Bajaj Corp
is market leader in LHO category. Thus, all the players have stable growth coming
from their flagship product whereas they are trying to gain market share in other hair
oil categories.
A C Choksi Institutional Research 15