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Bajaj Auto to operate at 50% capacity in May, eyes savings of Rs 200 crore from cost cutting in FY21: Rajiv Bajaj

On salary reductions and cost-cutting measures, Bajaj said, “We have already implemented almost all of the cost-cutting measures. It will save us somewhere between Rs 150 crore and Rs 200 crore this year."

April 30, 2020 / 10:25 AM IST

Rajiv Bajaj, Managing Director of Bajaj Auto, on April 29 said the company will resume operations at plants only when dealerships open up, adding that he expects the two-wheeler manufacturer to operate at about 50 percent capacity next month.

Prime Minister Narendra Modi on April 27 told states that India has to work on restarting the economy as well as continue the fight against COVID-19. Several states are keen to extend the lockdown in hotspots.

Track this blog for LIVE updates on the COVID-19 pandemic

"In the last one week itself we have seen some positive developments, specifically our Pantnagar plant has been given approval progressively to operate at full capacity, which of course we cannot till our dealerships open up. However, we have that approval on the supply side. Progressively we are saying that we are getting same approval for our Aurangabad plant," Rajiv Bajaj said in an interview with CNBC-TV18.

Bajaj, however, said the Chakan plant outside Pune has not received a nod for production, which is unfortunate as that is the company's main export plant.  "However, yesterday we received permission to shift goods from there, which we did not have up until yesterday,” said Bajaj.

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"In the month of April, fortunately because we do export, we will see sales of something like 30,000-35,000 number. In May, we are looking at operating at about 50 percent of our capacity across all our plants put together which points to about 200,000 vehicles. Again the majority would be for exports. In June, we are hoping – subject to how things are unlocked – to record something in excess of 250,000 vehicles, which means we are about our two-third capacity. So from this point of view, it is not so bad for us but that is again because half of what we make is exported," he added.

Speaking about salary reductions and cost-cutting measures, Bajaj said, “We have already implemented almost all of the cost-cutting measures. It will save us somewhere between Rs 150 crore and Rs 200 crore this year. However, what we have continued to clearly communicate to our people is that there are no plans to cut jobs and we are not going to cut jobs at this stage. We are a large profitable company, thanks to our employees. We are going to do everything we can to keep the company going as well as it can in these times without cutting back on salaries of employees.”

When asked what would be his two key recommendations to the government, he replied, “I would make only one recommendation which is we cannot save ourselves out of this crisis. We have to sail ourselves out of this crisis. If the government cannot reduce goods and services tax (GST), there are other suggestions I had made with respect to the insurance, with respect to the absurd safety norms that were brought in last year. If those things are corrected at the front end and there is some liquidity brought in the NBFCs etc, demand side will be fine.”

Source: CNBC-TV18
CNBC-TV18
first published: Apr 29, 2020 04:32 pm

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