Bajaj Auto may have recorded a year-on-year profit growth of 4.6 per cent to ₹901 crore in the quarter ended December 2015, but the growth has not come from its core operations. A doubling of other income to ₹199 crore predominantly due to forex gains and a flat tax expense of ₹395 crore in this quarter has contributed to the profit growth.

At the operating level, the company’s operating profit dropped by about five per cent compared to the December 2014 quarter, impacted by muted sales. Exports bring in about 40-45 per cent of the total revenues for Bajaj Auto and export revenues declined by 15 per cent to ₹2,281 crore in this period. Benign input costs have not had much of an impact on the operating margins either. It remained at 21 per cent, at the same level as the year-ago period. The only solace is that the launch of new bikes in the Avenger series and the Pulsar RS 200 in the domestic market, helped move up average realisations by 2.4 per cent as these are offered in the premium segment. Hence, despite a 3.3 per cent fall in overall volumes (domestic and exports), the company managed to contain the drop in net sales at one per cent to ₹5,463 crore.

Export markets While the company may continue to show moderate volume growth in the domestic markets, volumes and realisations could slow further on the export front. Its key export markets such as Nigeria and Egpyt are facing tough times from the fall in oil prices and non-availability of US dollars for imports. This may bring down the demand for its vehicles and also force the company to take more price cuts. As against the original target of 20 lakh units for this fiscal, the company has exported about 15.4 lakh units until January 2016.

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