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“Bajaj Auto is becoming a boringly predictable company,” says Mr Rajiv Bajaj, Managing Director, reacting to the second quarter numbers released on Thursday.
As he puts it, there is no reason for surprises any longer with the ‘less is actually more' mantra working like a charm for many quarters now. The reference is to the brand strategy in motorcycles and three-wheelers where the Pulsar, Discover and RE have played a key role in boosting sales and profits.
Exports on par
With exports also growing at a rapid pace, Mr Bajaj believes the day is not too far off when the company's domestic and international business will be evenly balanced. “We are already nearing the 40 per cent mark in exports and are confident that this will only grow in the coming years,” he said.
This is an important part of the Bajaj Auto strategy to grow its motorcycle business beyond India. As part of the ‘less is more' credo, the company is steering clear of scooters for the moment and focusing on motorcycles in ASEAN, Latin America and even Europe with the KTM alliance. Likewise, the three-wheelers are also on a roll with Q2 export numbers up 44 per cent at 82,000 units.
Outlook bright
“We expect the second half of this fiscal to be as good, or even better, than the first,” Mr Bajaj said. To drive home the point, he cited the motorcycle business which grew eight per cent in the domestic market this quarter. The Pulsar also staged a revival and the company is now confident that the overall growth momentum in bikes will continue in the third and fourth quarters.
More importantly, the Discover product mix shows over 50 per cent of the market opting for the more expensive 125cc and 150cc options (against the Discover 100). From Bajaj Auto's point of view, this translates into better margins as the transition gains pace.
The momentum in exports is expected to increase and if the rupee continues at the 48-49 levels against the dollar; this is welcome news from the viewpoint of higher earnings for the second half. Mr Bajaj said the Centre's recent decision to incentivise exports (by one per cent) would result in another Rs 30 crore coming in during October-March 2012. Finally, commodity prices are expected to stay flat for the rest of the fiscal.
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