Bajaj Auto Jan total sales up 8% to 3.38 lakh units

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Bajaj Auto 's total sales in January rose a slow 8% from a year ago to 337,875 units, as the slowdown seen in the two-wheeler sector post the festive season continued.

Its exports rose 13% to 116,996 units during the month, also slower than the 25% growth seen in December.

Bajaj Auto's motorcycle sales grew 7% year-on-year to 294,439 units and commercial vehicle sales were up 14% to 43,436 units.

Over April-January period, Bajaj Auto's total sales are up 15% from a year ago at 36.70 lakh units.

Rajiv Bajaj, the company's MD told CNBC-TV18 that growth has tapered out but there is unlikely to be a de-growth.

He also expects exports growth to rebound again. Overall operating margins are likely to stay around 20%.

Bajaj said he was comfortable with an inventory of 18 days.

Bajaj Auto shares were trading down 0.7% at Rs 1,600 on NSE in morning trade on Thursday.

Below is an edited transcript of his interview on CNBC-TV18. Watch the accompanying video for more.

Q: Your numbers seem to have fallen a bit short of market expectations which were in the vicinity of Rs 3.45 lakh. Where you disappointed? Is volume momentum sluggish?

A: I won't say so. While it's clear that growth has tapered, what January clearly tells us is certainly there is no de-growth. In fact growth continues to be in double-digits in the sense that while our overall motorcycle sales have grown by 7% domestic sales at a retail level particularly have grown 10%. Similarly you would see that total three wheeler sales have grown by about 14% and exports also by a similar margin. So if you are in double-digit growth you have to be satisfied with that.

Q: Are there risks that you might slip into a high single-digit kind of growth if you look at the kind of numbers that you have reported for the current quarter?

A: I don't think so. I would like to think we will still be at a 10% plus level. January has been the first month in this financial year that exports have been as low as 13% in terms of growth. Typically we are around 25-30%, so that will rebound once again. Export being about 35% of what we sell will certainly push the weighted average up. It is incomplete to speak of sales without mentioning profitability. I like to say that while sales continue to be in double digits, in our case the operating margin continues to be in the 20% space.

Q: On motorcycle sales, are you more confident now in terms of what you can expect on a monthly sales trend for the first half of this calendar year? What products are still driving the sales growth that you are seeing on motorcycles?

A: Growth continues to be driven by our two primary brands Discover and Pulsar. If I remember right, Discover last month was about 110,000 vehicles and the Pulsar was about 75,000. If you add to that the Avenger and the KTM's that we make now, they were close to 2,000 last month. We are still in a situation where the more profitable brands make up almost two-thirds of our portfolio, so that's in terms of the mix.

In terms of the outlook, for the first half certainly I am more confident that the two new motorcycles we have launched last month look very good. New products are always in an uncertain situation till one actually is in the market place. The KTM will be in the market from this month and the Pulsar in early April. I am keeping my fingers crossed that those executions go well. That being the case the new fiscal year should begin very nicely for us.

Q: We hear that industry inventory levels are still at extremely high levels - 30 or 40 days in some cases. What exactly is the experience with two wheelers and for Bajaj?

A: In my view your information is largely correct. Our own stocks are about 18 days if I remember correctly. Our retail last month grew 10% to 215,000 vehicles. We have built 202,000 so our stocks have somewhat reduced in January but we think we are fine at 18 days. But industry stock levels as per the information I have are 30 days and in some cases even over that.

Q: What's the three-wheeler picture looking like for this month and for the quarter?

A: the three-wheelers are looking good. We are very close to capacity; we did 43,500 vehicles last month. We have been close to about 45,000 vehicles a month for most of this year. That will continue and particularly in the export markets, we are seeing a lot of traction for our petrol three-wheelers especially in Africa.

For example, Nigeria the largest market there just mandated a switch over from two stroke to four stroke vehicles. So every time a market evolves in terms of expecting more technically sophisticated products, it helps manufacturers like us.

Similarly, our diesel vehicles are doing particularly well in the domestic market. We have gained about 6-7% market share YoY basis on diesel vehicles so three-wheelers I could not be more satisfied both in terms of volumes and profitability.