S Ravikumar, President-Business Development, Bajaj Auto says healthier mix and exports will aid realizations to move northwards.
Bajaj Auto's realizations improved by Rs 1,000 per unit to Rs 58,500 for the quarter ended December (Q3), says S Ravikumar, President-Business Development of the company.
Ravikumar was speaking to CNBC-TV18 after the company posted third quarter earnings that beat analyst estimates.
Discussing the company's recent launches, he said Avenger volumes averaged 13,000 units per month during the quarter.
He is of the view that Bajaj's market share will reach 22 percent by end of March.
Below is the verbatim transcript of S Ravikumar's interview with Sonia Shenoy & Mangalam Maloo on CNBC-TV18.
Mangalam: Could you breakup your realisations in terms what your realisations per unit were in the domestic business and at the same time the realisations in your export business?
A: Realisations in domestic have improved because of the content of Avengers and of course the three-wheeler numbers have also been good in this quarter. I do not have the exact breakdown between the domestic and export, which you are asking for. The composite has moved up by about 1,000 plus to about Rs 58,500.
However, on the export we have had the benefit of the exchange rate. For Q3 our average realisation to dollar is about 66/USD and that has helped us. So the mix getting queue towards healthier high priced models like Avengers which came in at good 13,000 per month average for the quarter that helped, the three-wheelers helped, the higher market share in Pulsars helped the domestic realisation and that is why average revenue per user (ARPU) which was one-off the concerned points few quarters back from analysts' side and your side, you will see that growing quarter after quarter.
Sonia: Will you be able to close FY16 with 20 percent plus margin or given that you are taking some amount of price cuts in some markets like Nigeria and Argentina. You may have to close the year with sub-20 percent margins as well?
A: As I told you, Avengers in Q3 averaged 13,000 a month. We have already opened this quarter with 28,000 units in January and so Avenger component is going to do very well for the domestic because the full quarter average benefit will be sitting there in the domestic. Three-wheelers are doing quite great and Pulsars are doing great in domestic.
However, coming to export side, the average realisation for Q3 was about 66 and you know where the dollar has been in the current month, north of 67.5, closer to 68 and things like that. So on both these counts, both in terms of healthier mix and export realisation, we are going to see that the realisations are going to be heading, if at all northwards.
The next item is cost structure; cost structure is very much in control. All the base metals and input costs are under control. So 20 percent plus EBITDA for Q4 is very much there.
Sonia: Can you tell us more in detail about what is happening with the export markets because the last time we had spoken to Mr. Bajaj, he indicated that there is USD 10-20 price cut that you have taken in the Nigerian market. Since then what have the price cuts been if at all and in terms of volumes as well exports have fallen about 16 percent year on year at 4.1 lakh this quarter? What is the expectation for the Q4?
A: Let us talk about the full year. In the full year we would have love doing two million guidance that we gave at the beginning of the year but during the monthly number conversation, everything that is in our control is hunky-dory; market share are great, products are great, customer demand is great. Now that said the dynamic situation on the ground is in terms of purely dollar availability in a couple of markets but our distributors are at it, they are meeting all the bank chairmen, meeting the people that are required to be met, for example in Egypt things have dramatically improved. In December it was not good. In January and February it was okay.
In Argentina with new government the President was in distributor's factory, assembling the Pulsars. He has put nice set of policies. He has completely normalised the blue dollar in the actual dollar exchange rate and with this he is hoping that the dollar will start flowing in the normal way and dollar will be available for genuine exporters. So that said we have to see how it pans out because things have not become absolutely okay. I cannot say that but people are managing it and that is why I am saying in the month of January we did 132,000 units in exports, in the month of February, I am already sitting on a 140,000-145,000 type of a number. We hope the dollar in February is very much in the pocket. Let's see how March happens and if that also returns about a 140,000 then we are 400,000 plus type of number in export and that is okay.
We should be doing marginally more cumulatively as compared to last full year because last Q4 was bad as far as export is concerned. Our hope is that we will be able to do something like 1.82-1.83 million types of units for the full year.
Sonia: Just to get the sense of the market share, I read in your press release that your domestic motorcycle market share has improved quite a bit, overall what does the market share stand at at the end of this quarter and how will you end the year?
A: I would like to look at the retail market shares because again the wholesale numbers don’t tell the full story. We should be towards 18.5-19 percent type of a domestic market share exiting this quarter. However, like I told you, again from 13,000 average, even 20,000 in a month of December, we are having almost Rs 30,000 type of a number coming from Avenger that is straightaway 10,000 units extra, which is going to be 100 bps etc in market share.
I think the marriage season this time is kicking a bit early, so I expect even the lower end CTs and Platinas to do well in February or March.
March will see our Bajaj V, which is rocking the social media. It has evoked a nice response from our dealer community as well. So we should be somewhere around 22 percent type of market share in the month of March.
(Copy edited by Raveena Singh, interview transcribed by Mitali Mohite)