Bajaj Corporation to go for acquisitions, tap rural market for growth

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NEW DELHI: FMCG firm Bajaj Corporation Ltd (BCL) plans to pursue acquisitions targeting niche brands and tap rural areas to push growth, particularly in light hair oil segment, where it aims to have a market share of 65 per cent.

The company, which has key brands, Almond Drops, Brahmi Amla, Jasmine, Kailash Parbat, Amla Shikakai in its hair care portfolio, said it “will seek inorganic growth opportunities in the FMCG and hair oil market as part of growth strategy.”

In an investor presentation, the company said: “The inorganic growth opportunities will focus on targeting niche brands, which can benefit from BCL’s strong distribution network so that they can be made pan India brands.”

Focusing on the hair oil segment, the company said it plans to convert coconut hair oil users to light hair oil users “through sampling, targeted advertising campaigns, product innovation and creating awareness about product differentiation, including communicating the advantages of switching to lighter hair oils”.

Spelling out the target, the company said it would “aim for a market share of 65 per cent by the year 2016-17” in the lighter hair oils segment.

Quoting AC Nielsen Retail Audit Report, November 2015 data, the company said hair oil market stood at Rs 8,972 crore, while that of the light hair oil market was at Rs 1,517 crore.

In FY 2014-15, BCL had a total consolidated revenue of Rs 857.17 crore.

Emphasising on the importance of rural market in its strategy, the company said it would tap the increase in disposable income of rural India and “convert rural consumer from unbranded to branded products by providing them with an appropriate value proposition”.

“Among its key competitors, our Almond Drops is the only brand which is available in sachets – a marketing initiative to penetrate the rural market,” the company said.

In the light hair oil segment, 64 per cent consumption is from urban areas and the rural markets contribute 36 per cent, the company said, however adding urban market dominated the segment due to its relatively higher pricing but rural is leading the growth.

The company also said it would leverage on its existing strengths to introduce new products.

“BCL has over the years created a strong distribution network across 2.92 million retail outlets, which can be optimally utilised by introducing new products,” it said, adding it “intends to extend ‘Almond Drops’ platform developed by its Almond Drops Hair Oil brand to other personal care products to leverage on the strong connotation of Almonds with nutrition”.

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