A Market Study of Fan Business in Guwahati City

REPORT SUBMITTED IN PARTIAL FULFILLMENT OF REQUIREMENT

FOR

POST GRADUTE PROGRAMME IN MANAGEMENT

BY

RUPAM DAS (EIILM/PGP/09-10/F052)

UNDER THE GUIDANCE OF

Prof. OINDRILA CHAKRABORTY

EIILM, KOLKATA

&

Mr. MRINAL DEKA

(Senior Executive Manager)

BAJAJ ELECTRICALS LIMITED

EASTERN INSTITUTE FOR INTEGRATED LEARNING IN MANAGEMENT

6, WATERLOO STREET, KOLKATA-700069

JUNE, 2009

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ACKNOWLEDGEMENT

At the onset I would like to express deep sense of gratitude to each and every personality in bringing up my summer internship project work to study the market of fans in Guwahati City.

I am extremely grateful to the management of ‘Bajaj Electricals Limited’ for giving us such an effective summer project.

We convey our immense thanks and gratitude to our external guide Mr. Mrinal Deka (Senior Executive Manager) and to our internal guide Prof. Oindrila Charkraborty.

I also take the opportunity to convey our heartfelt gratitude to our institute ‘EIILM’ and placement department for sending us to Bajaj Electricals Limited.

We are also thankful to all the people in Bajaj Electricals Limited, Guwahati for their kindly support and proper guidance towards this project. They have constantly endeavored to supplement our knowledge with significant contributions from their vast pool of experience and ideas which helped us to make our project.

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TABLE OF CONTENTS

Serial No. Content Page No.

1. Industry Overview 42. Company Profile 63. Objectives 74. Products 85. Competitors of Bajaj Fans 106. Research Methodology 137. Sample Design 148. Collection of Samples 159. Data Tabulation And Analysis 1610. Highest Selling Product of Different Brands 2611. Findings 3212. Recommendations 3313. Limitation 3414. Conclusion 3515. References 36

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INDUSTRY OVERVIEW:

In a hot country like India fans are a relief. Over the years it has come from being and held banana leaves to remote controlled multicolor designer fans fitted with exotic lights. The technology involved in the product is low. This has led to wide proliferation of the industry by many small scale manufacturers. The competition from small scale manufacturers is fierce and a continual worrying factor for the organized sector. Added to this is the necessary trends in the industry whose fortunes lie a lot with the level of housing construction in the country. Some major companies like CROMPTON GREAVES & RALLIFAN no longer generate the interest they did a few years ago in their product structure. In fact GEC Alsthom stopped producing fans from 1995 onwards. On the financial front, fans industry has suffered from a number of product problems. Shortage of working capital and high interest rate have constrained their resources. Rising input costs have hit profit margins. The seasonal as well as the cyclical nature of the industry also had an impact. No wonder the production had been erratic. In 1991-92 the organized sector produced 44.01 lakhs electrical fans. 52.22 lakhs in the previous year a decline of 15.7%.1992-93 was the year of slow down and sales did not grow. there was a increase of 5.4% in sales .1993-94 was recessionary but 1994-95 had about 7-8% growth rate. Next year turned out to be the same. 1996-97 was a year of slow down and the sales of organized sector did not exceed 50% of the total industry. The export market had a marginal growth (5%) in the year 1996-97. 1995-96 however was much better at 33% growth rate (source: PHDCCI). The industry is quite prone to cyclical changes and is presently passing through a bad year.

Fans are one of the largest domestic appliances industries in India. Over the years a number of players have entered the fan industry and stayed. The notable entrants in the past few decades are BAJAJ (60’s), USHA(70’s), KHAITAN & POLAR( 80’s).However 50% of the market is still unorganized. Such a characteristic has made the industry quite unique and an interesting area of study.

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Interesting features of the fan industry:

50% of the fan industry unorganized. No single market leader. Fakes & Trademark violations are rampant. Second hand market is very big. Very low product differentiation between competing brands. No major international company has entered into this sector even after

liberalization. Rural market constitutes major part of sales.

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COMPANY PROFILE:

Bajaj Electricals Limited was incorporated as Radio Lamp Works Limited under the Indian Companies Act, 1913 as a public company limited by shares, pursuant to a certificate of incorporation dated July 14, 1938. Subsequently the name of Bajaj Electricals Limited was changed to Bajaj Electricals Limited, pursuant to a fresh certificate of incorporation dated October 1, 1960.

In 1964, Matchwell Electricals (India) Limited, ("Matchwell"), a manufacturer of electric fans became a subsidiary of Bajaj Electricals Limited and subsequently, with effect from July 1, 1984, the business and undertaking of Matchwell was amalgamated with Bajaj Electricals Limited.

In the financial year 1993-1994, Bajaj Electricals Limited entered into a joint venture with Black & Decker Corporation, United States, for the manufacture and marketing of power tools, household appliances, and related accessories, through a separate company named Black & Decker Bajaj Private Limited, ("Black & Decker Bajaj"). During the financial year 1999-2000 Black & Decker Bajaj became a 100% subsidiary of Bajaj Electricals Limited upon Bajaj Electricals Limited acquiring a further 50% of the shareholding thereof from Black & Decker Corporation, pursuant to which Black & Decker Bajaj was renamed as Bajaj Ventures Limited. However, the financial year 2002-2003, Bajaj Electricals Limited divested 50% of its shareholding in Bajaj Ventures Limited and Bajaj Ventures Limited ceased to be a subsidiary of Bajaj Electricals Limited.

In January 1998, Bajaj Electricals Limited established a new manufacturing unit at Chakan near Pune and commenced operations of manufacturing of fans and die-cast components. The production of fans at our manufacturing activities of the Matchwell unit also was gradually shifted to our Chakan unit.

Bajaj Fans is the third largest player in India. Bajaj Fans offers attractive range of ceiling, table, pedestal, wall mounted, exhaust and fresh air fans. The company has also recently launched air circulators, heavy duty exhaust fans for industrial use, as well as pumps and motors for domestic use. Bajaj Fans also have a new range for Kids with Disney characters called “Bajaj Disney Fans”. These fans have the Mickey and Friends series as well as the Little Mermaid series.

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Objectives

• To find most important reasons of selecting Bajaj fans.

• To find out the sales of various types of fans of Bajaj Fans

• To find the most competitive brands of Bajaj fans.

• To know the competitor’s strategy.

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PRODUCTS

Ceiling Fans: In ceiling fan Bajaj fans have Maxima, Bahar, Bahar Deco, Crest, Chetak, Zoom, Grace Gold DX, Pride, Energy Smart, Crystal, Crystal DX, Max Deco, Excel, Elite, Ultima, Regal Gold, Regal Gold(4- Blade), Disney, Spectrum, Vintage, Crown CR, Woody, Euro and Elegance.

Bajaj fans also have Bajaj Magnique Ceiling Fans which comes in six types LX 101, LX 102, LX 103, LX 104, MX 05 and MX 06.

Most of the fans come in White and Brown colour while there are fans like Max Deco, Regal Gold, Elegance come in wide variety of colours other than white and brown whereas Disney fans comes in prints of Mickey Mouse and friends and Little Mermaid and friends. There are fans which come in one colour only like Elite which comes in Bianco and Regal Gold which comes in Ivory colour and also Crown CR 2 comes in Pearl Bianco colour only.

Table Fans: In table fans Bajaj fans have fans like Bajaj Midea, Bahar DX, Elite, Spectrum ST 01 and Victor VT 01.

All types of table fans have in different colours of blades. Bajaj Midea have blades are in Blue, Pink and also colourless. While Bahar DX have blades in Crimson Red and Dark Blue colour whereas Elite blades have Pink and Blue colour, Spectrum ST 01 have Blue and White while Victor VT 01 have colourless blades.

Pedestal Fans: Similarly like ceiling fans and table fans Bajaj fans have a wide variety in pedestal fans. The models are Bajaj Midea, Elite, Spectrum SP 01, Victor VP 01, Victor VP R-01 and Tez Farrata.

Victor VP 01 and Victor VP R-01 have colourless blade. Spectrum SP 01 has blades in blue and white colour. Elite have blades in Pink and Blue. Bajaj Midea has blades in Blue, Pink and Midea also have colourless blades. But Tez Farrata comes in grey colour only.

Wall Fans: The walls fans have models namely Bajaj Midea, Elite, Spectrum SW 01, Victor VW 01 and Victor VW R-01.

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Wall fans mostly have colourless blades like Bajaj Midea, Victor VW 01 and Victor VW R-01. Bajaj Midea has Blue and Pink colour blades also. Spectrum SW 01 has blades of blue and white colour while Elite have blade in blue and pink colour.

Personal Fans: Bajaj Fans have two models in personals fans which are Ultima PT 01 and Ultima PW 01 and both of them comes in one colour i.e. blue.

Freshair Fans: There are basically four models in this category namely Bahar, Freshee MK II, Maxima DX and Maxima DX-G 02.

Bahar and Freshee MK II comes in one colour only i.e., Metallic Grey. And Maxima DX and Maxima DX-G 02 come in two colours which are White and Black.

Heavy Duty Exhaust Fans: The models in this category are Comfort MK II and Supreme. Comfort MK II comes in Steel grey and Supreme comes in Military Green colour.

Cooler Fan: The only model in this category is Comfort which comes in Grey colour only.

Air Circulators: There are two models in this category which are Supreme Wall and Supreme Pedestal. And both the models come in one colour only i.e. Military Green.

FHP Motors: There are also two models in this category namely Supreme and Supreme MK II. And both comes in one colour only i.e. Black.

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Competitors of Bajaj Fans :

Havells:

Havells India Limited is the largest and India’s fastest growing electrical and power distribution equipment manufacturer with a strong global footprint. Havells enjoy enviable market dominance across a wide spectrum of products and services, including Industrial & Domestic Circuit Protection Switchgear, Cables & Wires, Motors, Fans, Power Capacitors, CFL Lamps, Luminaires for Domestic, Commercial & Industrial applications & Modular Switches covering the entire gamut of household, commercial and industrial electrical needs.

Havells entered fan business in mid-2003 and has emerged as one of

the fastest growing fan brand in the Indian market. Havells has captured the

customer's fancy with innovative designs and excellent finishes. From

premium fans in exquisite antique finishes to fans specially designed for

kids to dual color fans and super speed fans. Havells offers a complete range

to meet varied individual needs.

Main products of Havells are Ceilinf Fans, Table Fans, Wall

Mounting Fans, Pedestal Fans, Air Circulator Fans, Ventilating Fans and

High Speed Fans. The new products of Havells are Ventil-Air DX-WE and

Ventil-Air DX C.

Usha:

Usha International Limited, a Siddharth Shriram Group company, is

one of India’s leading consumer durable manufacturing & marketing

companies. Usha International has an enviable distribution network spread

across the length and breadth of the country.

The main products of Usha fans are Ceiling fans, Table Fans, Pedestal

Fans, Exhaust Fans , Tower Fan, Dynao Fan and Box Fan.

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Crompton:

Crompton Greaves (CG) is part of the US$ 4 bn Avantha Group, a

conglomerate with an impressive global footprint, operating in over

10 countries. Crompton Greaves is India's largest private sector

enterprise. It has diversified extensively and is engaged in designing,

manufacturing and marketing technologically advanced electrical

products and services related to power generation, transmission and

distribution, besides executing turnkey projects. The company is

customer-centric in its focus and is the single largest source for a wide

variety of electrical equipments and products.

The Fans Division of Crompton Greaves is the market leader in

India and has been so for over a decade. CGL is the largest fan

manufacturing firm in the country, continuously striving for customer

satisfaction and delight.

The main products of CGL are Ceiling Fans, Cabin/ Tower

Fans, Domestic Exhaust Fans, Personal Fans, Table Fans, Wall

Mounted Fans, Pedestal Fans and Industrial Fans. .

Khaitan:

For decades, the Khaitan name has been synonymous with

quality fans in India with 19 offices located across the country. Good

quality, great performance and novelty in design are some of the

assured features of any product from Khaitan.

The Khaitan name is renowned for innovations as well which is

reflected in the design of pioneering product concepts such as Freshair

fans, and models in the mini category.

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The main products of Khaitan fans are Ceiling Fans, Table

Fans, Pedestal, Wall and Cabin Fans, Fresh Air Fans, Portable

Multipurpose Fans and Economy( Zolta) Fans.

Orient:

Orient Fans, was inducted into the corporate major C. K. Birla Group,

in 1954, which has pioneered various business ventures in India and

abroad and is among India’s prominent business houses.

It started with a production of 15,000 fans a year and has today grown

to a production capacity of over 4.5 million units, covering a wide range

of Ceiling Fans, Table Fans, Wall Mounted Fans, Stand Fans, Exhaust

Fans and Multi Utility Fans and is the largest manufacturer of fans in

India.

Orient Fans has a pan India presence with 24 depots, a well organized

distribution network of over 3500 dealers and more than 40000 retailers.

Together, they have helped it to become a household name in India.

RESEARCH METHODOLOGY

Research Type:

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Descriptive Research: I did a research on the market f fan business in Guwahati City. My main objective was to understand out the most important parameters based on which customers buy fans. My other objectives are to find out the sales of various types of fans of various competitor brands and I also tried to find out various strategies of competitors in fan industry.

Data Source:

Primary Data: All the data I used in my research are primary data because those were collected directly from field.

Research Approach:

Personal Interaction: My research approach was basically personal interaction because I directly went to the retailers and dealers and communicate with them about the concern matter and gathered all the necessary data.

Research Instrument:

Company Prepared Instrument: I used a company prepared questionnaire as my research instrument.

Sample Design:

Sample Size:

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The total sample size was 50. Out of 50 samples 42 were retailers and 8 dealers. The 8 dealers I have surveyed are as follows:

Modern Electricals Trading Company K. L. Electricals Rhino Electricals Asian Electricals Fancy Electricals DewLights Laxmi High Tension Samay

Sampling Technique:

Judgmental Sampling: I used Judgmental Sampling Technique because I collected all the information from those dealers who were selected by the company.

Convenience Sampling: I used Convenience Sampling partly because I collected all the information from those members of the population who were conveniently available for it. It is not advantageously placed to get information required.

Sample Area:

My sample area was Pan Bazaar, Fancy Bazaar, Adabari, Chandmari and Ganeshguri.

Collection of Samples

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I have collected all the samples from various sample areas as mentioned above. For collection of the samples following steps are taken:-

a) Firstly, I took all the lists of various dealers and retail outlets to be visited by us in order to know about the market properly.

b) Secondly, according to the given lists I visited the aforesaid dealers and retail outlets namely Modern electrical, Rhino electrical, Asian electrical, Fancy electrical, etc.

c) Thirdly, we collected data’s from the dealers and outlets which we have visited.

d) Fourthly, after collection of those data, next method is the compilation of all those data.

e) By recommending or giving our own suggestions the entire methods which we are following in driving the project will attain its fulfillment.

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MOST SELLING BRAND IN FANS

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32%

24%19%

12%

9% 4%

HavellsBajajUshaKhaitanOrientOthers

Analysis:

It was observed that most of the customer (32% of the total sample population) prefer Havells fans which is followed by Bajaj (24% of the total sample population) while 19%, 12% and 9% of the total sample population is preferred by Usha, Khaitan and Orient and remaining 4% is prefer other brands.

Competitors of Bajaj Fans

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42%

28%

18%

12%

Havells Usha Orient

Khaitan

Analysis:

From the survey I came to know that the Havells is the major competitor of Bajaj fans followed by Usha, Orient and Khaitan.

Most Important Parameter for the Sales of Bajaj Fans18

Quality Service Price Advertisement0

50

100

150

200

250

300

Analysis:

According to the retailers and dealers the most important parameter for the sale of Bajaj fans is the Quality of the Bajaj fans, while Service also very important for the sale of Bajaj fans. But price is not very important factor for the sales of the fan while according to retailers and dealers the advertisements of Bajaj fans are not very effective so they are also not a very important factor in the sale of Bajaj fans.

Most important parameter for increase in sales of Bajaj Fans

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Fast & Regular Af-ter Sales Service

Reduce Price Improve Quality Advertisement at Rural Area

0

50

100

150

200

250

300

350

400

450

Analysis

From the above table which is obtained from the collected data one can easily understand that Fast and Regular After Sales Service is an important factor for the increase in sales of Bajaj Fans. We can easily understand that the other factors like reduction of price, improvement in quality and advertisement in rural area can also help in increasing the sales but not to a large extent.

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Parameters which inclined dealers towards Bajaj Fans

48%

34%

18%

Easy Accessibility To MarketBrandBetter Business Oppurtunity

Analysis

From the above we can say the Easy Accessibility to Market is most important factor for the inclination of dealers towards Bajaj fans. Also the brand name is influencing the dealers while better business opportunity is also a important factor.

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Sales per Month of Various Fans

41%

20%

18%

12% 9%

Ceiling FanWall FanPedestal FanExhaust FanIndustrial Exhaust Fan

Analysis:

The highest selling fan of Bajaj is the Ceiling Fan(40% of the sales) followed by Wall Fan(21% of the sales) and Pedestal Fan(18% of the sales) while Exhaust Fan(9% of the sales) and Industrial Exhaust Fan(2% of the sales) are on the lower side.

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Retailers keeping various fans

45%

19%

36%

Table, Pedestal & Wall FansExhaust FansCeiling Fans

Analysis:

Maximum retailers keep all kinds of fans but if go by the numbers of fans I observed that the Table, Pedestal and Wall fans are kept in large numbers. Secondly ceiling fans and Exhaust fans are kept in much lesser numbers compared to table, pedestal, wall and ceiling fans.

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Category of Fans kept by Retailers

27%

21%28%

15% 9%

EconomySub economyPremiumHeavy DutyHeavy Duty Exhaust Fans

Analysis:

The retailers keep mostly Economy and Premium category fans . Secondly retailers are interested in keeping Sub economy class of products.

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Retailers keeping Tattoo Fans

12%

88%

Keeping Tatoo fanNot Keeping Tatoo fan

Analysis:

The new product of Bajaj Fans is the Disney which have print of Mickey Mouse and friends and Little Mermaid and friends. Most of the retailers (88% of the retailers) are not keeping these fans while only 12% of the retailers are interested in keeping this type of fans.

Highest Selling Product of Different Brands

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Havells Exhaust Fan

DX ( Rs. 1245)

Pedestal Fan

Swing (Rs. 2060)

Ceiling Fans

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(Rs. 1710) (Rs. 1565)

Velocity

Table Fans

Swing ZX (RS. 1595) Swing LX (Rs. 1570)

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Velocity ( Rs. 1660)

Wall Fans

Swing (Rs. 1675) Swing (Rs. 1705)

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Usha Exhaust Fans

Turbo Jet (Rs. 1055 to Rs. 1155)

Table Fans

Mist Air(Rs. 1600) Concord (Rs. 1645)

Ceiling Fan

Swift (Rs. 1300) New Zen (Rs. 1470)

Super Economy

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Orient Ceiling Fans

Deluxe Summer Chill

Table Fans

Deluxe Supreme

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Exhaust Fans

Hill Air

Wall Fans

Wall 44

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Findings

Most selling brand in fans in Havells followed by Bajaj and Usha.

Major competitors of Bajaj Fans are Havells, Usha, Orient and Khaitan.

The most important parameters for the sales of Bajaj Fans is the quality of Bajaj Fans.

The most important factor to increase the sales of Bajaj Fans is fast and regular after sales service.

Dealers inclined towards Bajaj Fans due to the easy accessibility to market.

The highest selling fan of Bajaj is the ceiling fan which is followed by wall fan and pedestal fan.

Maximum retailers keep all kinds of fans. But the table fans, walls fans and pedestal fans are kept most.

Maximum retailers are not keeping the new Disney fans of Bajaj.

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Recommendations

• Bajaj should go for aggressive marketing to capture the market share of Havells like giving lucrative schemes and offers to snatch the market share of Havells.

• Should utilize the untapped potential in the rural market.

• Bajaj should update product design.

• Poster, signboard, hording, should be put on the roads and advertisement should also be given in news paper, mega gin, television etc.

• Company should improve after sales service of the product as it is one important factor of the sales of consumer product.

• Company should introduce low cost product to satisfy the need of lower or model class people

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Limitations

The time was too short and so it was difficult for us to do a detailed market survey

Sample size & sampling area small with respect to overall population of areas.

All retailers and dealers did not respond to the survey.

We are considering all responses are true.

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Conclusion:

Now at the very end of two months of grueling office and field work when we sit and try to think about the things we have learned the first thing that comes in our mind is getting a taste of the flavor of proper organizational culture. The second most important lesson has been our knowledge about the fan business, an extremely profitable and established business in the first world countries and an emerging sector in our country. But the most important benefit of this Internship Project has been the sharpening of our survey skills, which as MBA students we believe will greatly help us in our corporate life. For any good work there is usually an esoteric side. In this case it has been the practical experience of working in a group in a renowned company. This ability is usually considered as the most important quality that an individual must have to be a successful in his job. The past two months it seems has opened a new dimension in our life enriching us with knowledge, beliefs and skills necessary to be successful in life.

The project helped me to understand the market of fan business in Guwahati. I finally I would like to thanks Bajaj Electricals Limited & my external guide for giving me the opportunity to carry out my project successfully.

References:

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Books & Author(s):

Kotler, Keller, Koshy, Jha (2009), Marketing Management, Pearson Prentice Hall, India

Cooper, Schindler (2006), Business Research Methods, Tata McGraw Hill, India

Websites:

www.bajajelectricals.com www.wikipedia.org www.google.co.in

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