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| Bajaj Auto net up 8% to Rs 130 crore |
| BS Reporter / Mumbai May 22, 2009, 00:33 IST |
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Better margins on non-commuter bikes through premium pricing and softening of raw material prices helped India’s second-largest bike producer Bajaj Auto to post an increase of almost 8 per cent in net profit at Rs 130 crore.
This was despite a drop of 20 per cent in sales of units during the last quarter of F09. Bajaj Auto saw total sales at 440,269 for the quarter as compared to 552,588 units.
The company, which had reported a profit of Rs 120 crore during the same quarter in F08, is looking to sell most of the current years’ output in the domestic market itself as export demand will be flat, senior company executives said today. They added that a softening of input prices during the last quarter helped in improvement of margins.
Income from operations dipped by 10 per cent to Rs 1,787 crore for the reporting quarter ended on March 31, 2009 as against Rs 1,984 crore posted in the year-ago period.
Excise duty payout was minimised as the company increased production at its excise-free plant at Pantnagar, Uttarakhand.
Unlike its arch-rival Hero Honda which has penetrated the rural market actively, Bajaj Auto will keep its focus largely on the urban two-wheeler buyer. Rajiv Bajaj, managing director of the company, said that Bajaj Auto will not pursue the rural market aggressively unless it has a product which can serve that market.
“We don’t have a product which will reach the rural segment. We have to get our product right and that will hopefully happen with the launch of the mid-segment bike due to be launched in July,” Bajaj said.
Bajaj Auto will be launching a mid-segment bike (perhaps in the 115cc-135cc category), which will be very crucial for the company’s future prospects as most of the volumes are expected from this segment alone.
The company also appeared bullish on its new venture in China where it has started production of a low-cost bike, built mainly to serve the Chinese market as well as underdeveloped two-wheeler markets like Nigeria. It will export about 14,000 units of the low-cost bike to Nigeria while 20,000 units will be sold in China itself.
In addition, face-lifted versions of the Pulsar, which is Bajaj’s flagship model, are expected to improve sales in the domestic market. Thereafter, a three-wheeler cargo and passenger carrier will be launched in August and December respectively. It will also launch a four-wheeler cargo carrier by next year.
Low-cost car by 2011
Rahul Bajaj today said the company was optimistic about sticking to its earlier deadline of 2011 for the completion of the project.
“This should be the car that no other car major can develop due to the extensive low-cost engineering features it will have. It would be suicidal to develop a car which is not different from what is already there in the market. We have to position the car correctly,” Bajaj explained.
When asked about the delay in signing the memorandum of understanding (MoU) with Renault and Nissan, Bajaj said branding of the car has delayed matters.
“The issue of brand has delayed the signing of the MoU. Branding is the key and it cannot be Bajaj-Renault-Nissan together,” he said.
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