Impact of subdued domestic demand and a disruption in exports

Subdued domestic demand, higher input costs and a disruption in its exports saw Bajaj Auto Ltd. (BAL), the two-wheeler major, announce a 1 per cent higher net profit for the first quarter of 2012-13 at Rs.718 crore over the first quarter of 2011-12 on a 4 per cent higher turnover of Rs.5,048 crore.

In a statement, the company said export revenue for the quarter grew 3 per cent to Rs.1,738 crore while operating profit was up 5 per cent at Rs.961 crore and operating margin was at 19.4 per cent (19.1 per cent).

In motorcycles, the company saw a 1 per cent drop in domestic sales at 6.18 lakh units. Total motorcycle sales grew 2 per cent to 9.83 lakh units, while motorcycle exports grew 7 per cent to 3.64 lakh units despite BAL losing sales of around 20,000 units to Sri Lanka due to introduction of import barriers there.

Speaking to The Hindu, S. Ravikumar, Senior Vice-President, Business Development, said, “The new product launches and the actions taken during the quarter will definitely have a positive effect. In August, we will dispatch 30,000-35,000 units of the Discover 125 ST and the Pulsar 200 NS motorcycles — the all-new high value, high-margin models — and the second quarter will see the benefit of these. We will thus enter the festive third quarter with their production on stream.”

In commercial vehicles, total sales dipped 26 per cent to 96,348 units with domestic sales rising by 6 per cent to 44,837 units while exports were down 41 per cent at 51,511 units.

Its domestic market share was 40 per cent and the company claimed an 86 per cent share in the gasoline and alternative fuel passenger segment.

Its diesel passenger carrier segment grew 29 per cent against an industry growth of 10 per cent and its market share rose to 31 per cent (27 per cent).

According to Mr. Ravikumar, “We were exporting around 10,000 three-wheelers per month to Sri Lanka and this fell with the duty imposition there. Along with our distributor, we undertook measures such as rationalising costs and expect to export 7,000-7,500 three-wheelers from August onwards. Also, with political unrest in Egypt, there was a lull in exports. From August we will come back with exports of about 5,000-6,000 three-wheelers per month to Egypt.”

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