The Hindu Business Line : Bajaj Auto net drops 4%, vehicle sales up 8%

Pune, July 10 Bajaj Auto Ltd has recorded a 9 per cent increase in turnover and a 4 per cent drop in net profit for the first quarter of 2008-09 when compared with the same period last year.

The company’s vehicles sales went up by 8 per cent this quarter over the corresponding period last year, with motorcycles sales increasing by 13 per cent and exports going up by 33 per cent.

According to the company, rising interest rates and lack of finance options continue to restrain industry growth. In the 125-cc plus category, Bajaj Auto witnessed a 21 per cent growth in sales.

Exports now constitute 31 per cent of motorcycle sales, with exports of motorcycles registering a 49 per cent growth in the quarter under review. The company launched the new Bajaj Discover DTS-i this month, which will be followed by four new launches in the 125-cc plus category during the year.

Market conditions

Bajaj Auto, which makes two- and three-wheelers, said lacklustre market conditions were reflected in the company’s commercial vehicles sales. It expected commercial vehicle sales to grow in the second half of this financial year on the back of two new products, one each in the passenger and the goods segments.

The company has said that the impact of unrealised loss consequent to foreign currency fluctuations, in respect of hedging instruments represented by forward covers to hedge future exports, totalling Rs 97.95 crore were carried as hedging reserve to be ultimately set off when the underlying transaction happened, in the profit and loss account.

Two MoUs

Answering shareholders’ queries at the annual general meeting on Thursday , Mr Rajiv Bajaj, Managing Director, Bajaj Auto, said the company is on the verge of signing two memorandums of understanding (MoU), one for manufacturing body of the car and the other for making engine and transmission.

The company’s shares closed at Rs 494.15 on the BSE on Wednesday, up from Rs 450.85 on Wednesday.

The body manufacturing is a joint venture between Bajaj (50 per cent), Renault (25 per cent) and Nissan (25 per cent). The engine and transmission manufacture is a joint venture between Bajaj (51 per cent) and Renault (49 per cent).

He said the MoUs would be signed by the end of July. The engine and transmission would be manufactured at its Chakan facility and the roll out is expected in early 2011. Asked about the four-wheeler project, Mr Bajaj said the project would be implemented at its Waluj facility in Aurangabad and would be a light commercial vehicle. The first roll out is expected by the middle of next year.

He said that the sales projections for the two wheelers were about 2.5 million vehicles.

On the voluntary retirement scheme that has been offered by the company to its Akurdi workforce, he said there are 2,700 employees at the Akurdi plant. Of this only about 700 are required to be engaged in the research and development, and engineering. About 2,000 workers were in excess and a "VRS agreement had been reached that each employee would get about Rs 17.7 lakh if they accept, over a period of time. People are keen to do so but certain factors within the employee workforce are not agreeable. The union has also not been able to sell the agreement but we hope that the matter is solved soon." Bajaj Auto, which had about 20,000 employees (12 years ago) has brought the number down to little more than 2,500 employees.

Related Stories:
Bajaj Auto VRS plan hits roadblock
Auto cos post higher sales in June
Bajaj Auto earns Rs 121-cr profit in Q4

More Stories on : Financial Performance | Two/Three Wheelers | Cars | Bajaj Auto Ltd

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page