Amidst weak domestic demand for its bikes and three-wheelers, Bajaj Auto managed to grow its net sales by 7 per cent in the June 2014 quarter over the year-ago period.

This was helped by robust volume growth of 22 per cent in exports along with improved realisations (₹59.9 to a US dollar now vis-à-vis ₹55.6 in June 2013 quarter).

But despite exports contributing 40-45 per cent to the total revenues, this performance did not carry through fully to the bottom line.

Net profits for the June 2014 quarter remained flat around ₹740 crore achieved a year ago.

Deprecation jumped by 55 per cent, thanks to the changed norms for calculation of the same under the new Companies Act.

Next, the company, which normally has operating margins of 19-20 per cent, achieved only 17.6 per cent this time.

This is one percentage point lower than the April-June 2013 period.

Although its premium bikes ‘Pulsar’ and exports held fort, loss of operating leverage from its volume bikes — Discover series and three-wheelers — along with input price increases, hit the margins.

Outlook Even as growth in the domestic auto industry is expected to pick up over the next few months, the Discover brand is not on a strong wicket.

Over the last two years, the market share of Discover bikes has halved to 12 per cent.

The company is depending on the Discover 150cc to be launched shortly to rev up numbers and regain lost ground.

Growth for Baja Auto will also see support from Pulsars’ double-digit growth and through new permits for three-wheelers that have been opened up in States such as Maharashtra.

These are segments are expected to show volume growth of around 20 per cent in the coming quarters.

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