Highlighting that Bajaj Auto has taken a hit of around ₹78 crore this financial year due to the “ambiguity” in the merchandise exports from India scheme (MEIS), Soumen Ray, CFO, Bajaj Auto, said there is an urgent need for the government to provide clarity on this scheme as well as the proposed Remission of Duties or Taxes on Export Products (RoDTEP) scheme.

When asked whether the government has done enough for the automobile sector amid the pandemic, and what support he expects from the government, Ray told BusinessLine, “I don’t think there is anything which has been done (by the government for the auto sector). There are two issues that need urgent attention. One is this whole MEIS fiasco. We have taken a hit of about ₹78-80 crore this quarter because of the whole ambiguity around MEIS. So, it is high time the government comes out and tells us what is going to happen...it’s in a very uncertain territory. The other thing is, the government is developing a proposal called RoDTEP. We would like the government to come out with it quickly because it will have its own compliances and norms so that we all can get prepared and be ready to embrace that new process.”

Earnings impacted

Bajaj Auto’s press statement on the Q2 results on Thursday said that the Director General of Foreign Trade's order on September 1, which restricted MEIS benefit on export, per IE code, to a maximum value of ₹2 crore, has impacted earnings. “The impact of the same, including reversal of MEIS for Q1/ FY21, is ₹78 crore — else, the EBITDA would have been 19.0 per cent.,” it said.

“I do not know whether it is ₹2 crore for one month or four months. We also have no clarity on what will happen to the April- August period. As an exporter, in this quarter, we have lost around ₹80 crore. So, giving me ₹2 crore really doesn’t help,” explained Ray. On the RoDTEP scheme, he said there should be clarity on what the scheme is about, what its compliance and norms are, and when it will be effective.

Demand situation

Talking about the demand situation, he said while three-wheeler sales remain subdued due amid the pandemic, in domestic two-wheelers, there are “early signs of encouragement in the festival season”.

“I would like to believe that we will grow marginally over last year’s festival season,” said Ray. Once the festival season gets over by mid-November, we will know how the industry is faring without the two impetus of the festival season buoyancy and pent-up demand from the lockdown days, he added.

On Bajaj Auto’s export plans, he said there are plans to focus and bolster its presence in the ASEAN region.

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