Bajaj Electricals Limited: High Voltage Transformation?
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Case Code: BSTR311 Case Length: 19 Pages Period: 2000-2008 Pub Date: 2009 Teaching Note: Available |
Price: Rs.300 Organization: Bajaj Electricals Ltd. Industry: Electricals and Electronics Countries: India Themes: Turnaround Management, Organizational Structure, Distribution |
Abstract Case Intro 1 Case Intro 2 Excerpts
"One should periodically destroy one's organizational structure. Not because it has become a necessity, but also to avoid complacency setting in."
-Shekhar Bajaj, Chairman and Managing Director, Bajaj Electricals Ltd, 2002.
Introduction
For the financial year ending March 31, 2008, India-based consumer electrical products manufacturing company, Bajaj Electricals Limited (BEL), posted a sales turnover of Rs.13744.2 million and a net profit of Rs.730.7 million. This signified an annual top-line growth of 27.4 percent over the previous year.
This was in contrast to the dismal picture that the company had presented in the late 1990s and early 2000s. At that time, though BEL had been engaged in multiple businesses, it was operating as a single unit with uniform practices and strategies applied across the product and business lines.
It had developed a high debt structure due to its ambitious investment plans of diversification into the high masts and high poles market. Its die casting business was running losses and its existing product lines were facing reduced margins and the associated problems of a mature market across its product groups. Consequently, its profits had declined gradually in 1998, 1999, and 2000 and it had posted an operating loss of Rs.28.1 million and a net loss of Rs.27.1 million in 2001. BEL decided to appoint an external consultant to review the operations of the company and suggest improvements across all areas including sourcing, distribution, cost management, customer satisfaction, and organizational structure and strategies in 2000. Based on the recommendations of the consultant, BEL underwent an overhauling exercise which it called 'Mission Excell' in 2001.
The program included a slew of measures including exiting loss making lines of business, taking a relook at existing product lines and focusing on the profitable ones, and a number of other strategic and operational measures to reduce costs, increase margins, and stimulate volume growth. The measures comprised exiting its loss making die-casting business, financial and organizational restructuring exercises, a complete revamp and expansion of its supply and distribution chains to better conform to industry standards and tackle competition, cost reduction measures such as working capital and inventory reductions, better pricing and marketing strategies including brand positioning, advertising, and promotions...
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