Bajaj Auto looking at 20% growth this fiscal

Our Bureau Mumbai | Updated on November 10, 2017 Published on March 31, 2011

Mr. Rajiv Bajaj Managing Director, Bajaj Auto(left)and Mr. S. Sridhar, President Motorcycle Business, at the launch of the new Discover 125cc DTS-i in Mumbai on Thursday. - Photo: Paul Noronha   -  Business Line

Bajaj Auto, which will wrap up 2010-11 with sales of 3.82 million bikes and three-wheelers, is looking at a 20 per cent growth this fiscal. This targeted number will also extend to its exports, now at 1.2 million units, and spare parts business which by itself will contribute Rs 1,500 crore to the company's topline.

Mr Rajiv Bajaj, Managing Director, said here on Thursday that the 20 per cent EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) margin which had been maintained for the first three quarters of 2010-11 would hopefully be achieved in the fourth quarter too ‘with a bit of a struggle'.

“We did not want to sell more (the company had set itself a goal of four million units) and compromise on EBITDA. In my view, that is the power of strategy where we are not tempted to go in for low pricing and report higher numbers,” he said.

The occasion was the launch of the Discover 125 priced at Rs 45,500 (ex-showroom, Delhi). It is expected to help the company achieve monthly sales of 1.5 lakh units of the brand by the second half of this fiscal.

According to Mr Bajaj, the quality side of the business was important and this fiscal would, therefore, be an investment for the future. “There will be a completely new line-up of the Pulsar and Discover brands in the second half from a new platform,” he said.

This initiative is expected to keep Bajaj Auto ‘in good shape for the next two to three years' after which it could look at the possibility of producing seven to eight million units annually. Mr Bajaj was also categorical that motorcycles would continue to be prime focus given that the company's share was barely ten per cent of total world production.

It is here that KTM, the Austrian bike maker in which Bajaj Auto has a near 40 per cent stake, will play a big role in the international gameplan. “Qualitatively, KTM is more important to us for mature markets where Yamaha and Honda rule the roost. KTM will help from the viewpoint of a smart entry strategy,” he said.

This is because the Pulsar and Discover brands, which are doing good business in Latin America and Asean, will find the going a lot harder in these advanced markets. KTM would act as the spur to setting up a network which will then offer these value-for-money products to customers.

Back home, Bajaj plans to put out ‘more than one' KTM bike in the second half of this fiscal. Shipments of the Duke 125 to Europe have already begun and the intent is to increase numbers though there have been glitches in supply of pistons from a local component manufacturer. Plans are also underway to launch a bigger Kawasaki bike during the year.

As for the ultra-low cost car being planned with Renault-Nissan, Mr Bajaj said it would, in all likelihood, be produced at the company's Waluj plant in Aurangabad which has utilities in place to assure savings of around Rs 300 crore. “There will be electric vehicle learnings from Renault-Nissan which can then be used for our bikes and three-wheelers,” Mr Bajaj said.

The product will roll out of a platform that will produce three-wheelers too. The idea is to help grow this business by 30 to 40 per cent over the next three years from the present levels of 40,000 units a month.

Published on March 31, 2011

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