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| Bajaj Auto net doubles to Rs 590 crore |
| BS Reporter / Mumbai Jul 23, 2010, 01:14 IST |
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Robust demand for newly-launched bikes and premium recoveries in high capacity motorcycles more than doubled Bajaj Auto’s first-quarter standalone net profit to Rs 590 crore. In the year-ago quarter, the country’s second-largest bike maker had posted a net profit of Rs 293.49 crore.
The company also met analysts’ expectations, who had expected the bottom line to be in the range of Rs 575 crore to Rs 590 crore.
The company’s board today announced one bonus share for every held. Bajaj Auto’s shares rose to an intra-day high of Rs 2,504, before closing at Rs 2,490.20, up by 3.15 per cent, on the Bombay Stock Exchange.
In the quarter through June, net sales rose 65.5 per cent to Rs 3,737 crore, against Rs 2,258 crore in the same quarter last year. Sales of vehicles (two- and three-wheelers) went up 69.5 per cent to 9,28,336 units, compared to 5,47,662 units last year.
 A sharp increase in the prices of essential raw materials, such as steel, aluminium and rubber, among others, during the quarter impacted margins. Cost of raw materials consumed rose 80 per cent during the period.
S Ravikumar, senior vice-president (business development and assurance), Bajaj Auto, said: “There was tight control on costs during the quarter, which has resulted in substantial savings. Besides higher volumes of bigger and sportier motorcycles, better pricing of new products and focused sales promotional activities have improved overall performance.”
Like its competitors, Bajaj Auto too expects raw material prices to ease in the coming months. “Materials as a percentage to operating income rose to 71.1 per cent from 66.2 per cent during the quarter. We expect this ratio to cool down however not substantially in the coming months,” said Ravikumar.
The company raised the prices of some products by one to two per cent during the quarter, he said.
A two-year write-off of funds allocated for the voluntary retirement scheme of the Akurdi plant’s employees was completed during the last quarter. A sum of Rs 360 crore was set aside for this. Therefore, the item was not present in this quarter’s accounts.
The company’s two main brands, Discover and Pulsar, contribute over 80 per cent of the domestic sales.
The company’s overall market share improved to 33 per cent in this quarter, against 30 per cent last year. Pulsar sales averaged 76,000 units per month and is close to Bajaj’s target of one million units per year.
Like market leader Hero Honda, Bajaj Auto also experienced production constraints which limited sales. It also said that from July 10, an additional capacity of 300,000 units per month for motorcycles would go on stream.
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