Expect bike sales at around 3.5 lakh in Apr '11: Bajaj Auto

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Expect bike sales at around 3.5 lakh in Apr '11: Bajaj Auto

In an interview with CNBC-TV18, Rajiv Bajaj, MD, Bajaj Auto, speaks about the January sales numbers and gives his outlook going forward.

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Bajaj Auto January total sales were up 18% at 3.13 lakh units on year-on-year (YoY) basis. The company's January motorcycle sales were up 18% at 2.76 lakh units on YoY basis.

In an interview with CNBC-TV18, Rajiv Bajaj, MD, Bajaj Auto, speaks about the January sales numbers and gives his outlook going forward.

Below is a verbatim transcript of his interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.

Q: 3.13 lakh is a good number for the month, can you just break that up for us and where you saw that month-on-month growth?

A: It was infact our best January ever. The growth has been all round thankfully. We have grown almost 20% in motor cycles to 276,000. Three-wheelers are up to 38,000, which has a growth of 15%, there we lost out a little bit because we couldn't ship out to Egypt towards the end of the month.

In terms of our exports, it has been a great month inspite of that we are up 44% to 104,000 vehicles, which takes us past the one million vehicles exported in a year mark for the first time ever. So that is a nice record as well. On the whole, I can also say that this growth has not come at the expense of profitability. We are still very much in that 20% EBITDA space.

Q: This jump on bikes is large, 2.76 versus 2.43, A] what did Pulsar and Discover contribute to that growth? B] Is this a runrate you think you will probably hit against for the next few months closer to 2.7-2.8 range?

A: The Pulsar and Discover together is still 70% of total motorcycle sales. Of the domestic, it is more than that, it is again close to 85% because in the export we have another brand Boxer.

In terms of sales going forward, my own anticipation is that we should hold on to this number in February, which has simply 10% fewer days. But from March, I honestly expect this to go up because as I have said before, we have two initiatives ruling out in March, 130 new dealers become operational and we have a new Discover in the market place. So, I am certainly hopeful that from March, we exceed 300,000 bikes and get close to 350,000 bikes from April quite honestly.

Q: For January, what is your market share at?

A: Our market share is back to where it was up until November which is between 32% and 33% overall. We had slipped in December. But as I had explained, that was primarily because our billing was in line with the secondary sales, whereas some of our competitors had overstocked in December that has evened out now. So, I think we are back to 32-33% where we were.

Q: You said you are holding 20% margins, but are the pressures intensifying from the raw material front and that is showing up on some of your peers numbers in the four-wheeler space? How confident are you of holding on to this EBITDA number?

A: We are pretty confident because ten months of the year is over and infact, from what I can see even what we had anticipated, a slight increase in some of the commodities this quarter onwards hasn't taken effect yet. So, I think the commodity cycle has pretty much peaked out, I said this before. In terms of peer, if we just look at the money they spend in trying to push products in terms of advertising and sales, that is many times more than what is happening on the commodity front.

Q: Do you expect any slackening of consumer pull in 2011 because of the kind of inflation we are running? Mapped against previous years of high inflation, does it affect two-wheelers as an asset class at all?

A: Certainly, it can only hurt, it cannot help. But I would look at it like this that the more macro issues like what the RBI does etc is a little less relevant to our consumer. If I may say so, our consumers' lifestyle or sentiments is a little more affected by the price of potatoes and petrol. Let us put it like that. Now, he has been buying vegetables at Rs 65 a kilo and in the city of Pune, he has been buying petrol for almost Rs 65 a litter, so if that has not dampened anything yet. I believe Hero Honda has had a 20% growth, TVS has had a 30% growth, and we had a 20% growth. So, far things are holding so I think we should still see a very solid double digit growth going forward.

Q: To whose loss is this market share gained for you because when we last spoke there was an improvement both on the market share stats of TVS Motors and Hero Honda, so how does the pie break-up now?

A: In terms of motorcycles, if we look at this year because we have gained share through the year then as I have said before, there is virtually an exact exchange of market share of about 7-8% points between Hero Honda and ourselves. I think we have gained about 8% on market share and they have lost exactly the same number because between Hero Honda and us is 83-84% of the market. So, the reason neither of us gained anything from HMSI or TVS or Yamaha is simply because they have nothing to offer.