Bajaj Auto confident of maintaining 3 lakh sales figure

In an interview to CNBC-TV18, Kevin Dsa, VP-Finance, Bajaj Auto said that the company can maintain the 3 lakh motorcycle sales run rate. He also expects the industry to grow at 6% in the first quarter of FY13.

Below is the edited transcript of the interview with CNBC-TV18. Also watch the accompanying video.

Q: Looks like a pretty strong month for you, especially on the motorcycle side. Can you just break up the performance you have had and what categories have contributed to this figure?

A: You said this is a very good month for us. It turns out to be best of April that we have seen. And what is noteworthy for us is the export performance where we have achieved the highest possible exports in the history of the company. We got figures of about 1,69,000.

Across the board, we have seen the domestic side doing well. We have crossed about 2,00,000 number of motorcycles and all segments have been performing well. Having said that, I would like to still caution that my view of the industry for the next quarter would be at about a 6% growth.

We are performing as per that and we do not look at domestic and exports as two separate segments. Bajaj for me is more of a global player and if you see that the industry growth would be at about 6%.Bajaj’s overall growth will also be in excess of 6%.

Going forward, with the Discover launches coming in place, a space which today has about 64% of the market share, we just have about 20% market share. I believe, we are very confident of exceeding the market growth in the domestic market as well.

Q: When we spoke last with Rajiv Bajaj (MD of Bajaj Auto) he indicated that maintaining this 3 lakh unit run rate as well is becoming more challenging if nothing else. Given what you have done this month on motorcycle sales what is it that you think you may do going forth on a monthly basis on motorcycle sales itself, 3 lakh plus or can 3 lakh hold comfortably?

A: I believe 3 lakh should hold comfortably. This is because we have just launched one of the variants of the Discover in mid-April. Going forward, we are having a separate set of launches that will be coming up in May and June.

So, together with the exports I feel that a 3 lakh number is definitely a maintainable number going forward.

Q: Two part question on the issues that people think are plaguing the auto space right now one, have you seen any impact at all in terms of that excise duty hike and second, is it getting tougher with Honda now in the space?

A: Let's put it this way, competition will always be there. The idea is not whether the competition is there or not but, does the company have the capabilities to meet the competition and whether we are on a very sound footing or not. So, minus competition would be a dream world.

The issue is, internally do you have the products, do you have the management bandwidth, do you have the technology to take on the competition and I think we are very well placed in that matter. To that extent it’s not a concern, it’s an opportunity as well as a challenge.

As far as the second question about the excise duty is yes, the Rs 1,000 price hike has to some extent dampened the segment. But, more importantly, just a Rs 1,000 increase is not relevant. There is a general sentiment in the market that is affecting it.

Like I had mentioned earlier on 2 January, when I had forecasted a 6% growth for the industry in the fourth quarter, it was looked at with a bit of skepticism. But, that’s what the reality is.

However, despite the excise duty hike of about Rs 1,000, I would forecast a 6% growth for Q4 but, hopefully end the year as an industry in the band of about 10-12%.

Q: Confident of that FY13 volume target of 5 million units?

A: Pretty much confident at this stage, driven by the domestic sales as well as the exports. FY12 was relatively a year of consolidation for us because we had product launches in the earlier two years where we grew by over 30-35%.

Last year we didn’t have the products and all the product rollouts are really taking place in FY13. Therefore, very confident to beat the market and 5 million should be doable.