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Bajaj Auto, MD, Rajiv Bajaj told CNBC-TV18's Ronojoy Banerjee there are a slew of launches in pipeline and see little or no competition in the sports-bike segment.
it will not be easy for the TVS-BMW brand to compete in the space where Bajaj and KTM have been dominant for a long time.
It has been a rough fiscal for the auto sector . From passenger vehicles to two-wheelers, it’s been a struggle all across motown. Bajaj Auto , MD, Rajiv Bajaj told CNBC-TV18's Ronojoy Banerjee there are a slew of launches in pipeline and see little or no competition in the sports-bike segment.
Below is the edited transcript of the interview on CNBC-TV18
Q: You are to enter the Indonesian market by the end of the year. What are your plans going forward?
A: We are to enter the market in the next few months. We reached an in-principle agreement with Kawasaki in March 2012. In the past one year, we have worked on three major aspects one, alignment of on-ground distribution, sales and service which is pretty much on schedule.
Two, finer improvements in the product the benefits of which will be evident on every Pulsar sold globally, not just in Indonesia.
Three, efforts are on to improve the brand and its position in the marketplace.
Q: There is a lot of competition. TVS announced its alliance with BMW and expects its first set of motorcycles to be launched in India by 2015 . Experts feel that the alliance is also broadly modeled on your alliance with Kawasaki. How do you view competition with TVS -BMW’s launch of motorcycles in India by 2015? Is this a indication of the Indian two-wheeler market maturing?
A: My answer to that question will be a rather long. I see three similarities. When I compare the TVS-BMW alliance with that of Bajaj-KTM, the first similarity is the declared intention to launch on motorcycles in the 250-500cc segment. The second similarity is BMW’s plan to bring technology to the project. Thirdly, TVS obviously is to bring in a certain cost efficiency or cost arbitrage to the project.
Q: Are you confident of maintaining your dominant position of a 50-percent market share in the sports-bike category?
A: I don’t know the future anymore than anyone else does. But ever since the Pulsar was introduced in 2001, we have been by far the dominant leader in the sports-bike space and the track record for the last 12 years has been pretty good.
For a new entrant to come in and make an impact is tough. Let me give you a simple example, just because Honda and Toyota make small cars like Brio or Etios, have they been able to really challenge Maruti in the small car space? Similarly, it will not be easy for the TVS-BMW brand to compete in the space where Bajaj and KTM have been dominant for a long time.
Q: Regarding the mass segment, what kind of products have you line up on the Discover and the Pulsar platform for this year?
A: We have several launches lined up for this year. There are at least two new Pulsars- one that will be smaller than the Pulsar 200cc and another that will be much bigger. This is going to help us defend our leadership in this space and that is very important for us.
However our main focus will be on the Discover brand and segment. The launch of the Discover 100T in January and our ability to sell 25,000 - 30,000 units a month has given us a new foothold in the commuter segment because it is for the first time in our history that we are selling units of a 100cc motorcycle in such large numbers.
Q: You are lining up all these launches when the overall sentiment even in the two-wheeler space is not looking good. On Wednesday, the Society of Indian Automobile Manufacturers (SIAM) released its report which forecast that sales of the the two-wheeler sector is expected to grow 7-8 percent. Do you agree?
A: I haven’t seen the report. What we have at the end of the last financial year is this that growth in the motorcycle sector towards the end of the year will flat or somewhat negative- between zero and minus-5 percent.
The industry looks flat because stocks have been put into dealerships- according to our estimates, motorcycle-makers have added about 400,000 vehicles into dealership stock. By the end of the year, the growth rate of the scooter industry could also fall by 3 percent on a year-to-year basis.
Bajaj Auto stock price
On April 17, 2014, Bajaj Auto closed at Rs 2016.20, up Rs 15.80, or 0.79 percent. The 52-week high of the share was Rs 2193.85 and the 52-week low was Rs 1683.35.
The company's trailing 12-month (TTM) EPS was at Rs 112.15 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 17.98. The latest book value of the company is Rs 273.08 per share. At current value, the price-to-book value of the company is 7.38.
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