Bajaj April sales surge 34% MoM to 3.36L; mkt share at 19%

Sonia: Can you tell us what the total sales was, what the motorcycle sales was this month?

A: Very happy to report the break of the new fiscal year with good set of April numbers. We have done in total 3,36,000 units that is domestic plus exports of which motorcycle is about 2,86,000 and commercial vehicles is about 5,500. That is a, let say compares to about 3,31,000 of last April which is just about a 1 percent growth.

However, in these days sequential growth is much more important. Commercial vehicles was highest ever sales in any April clocking 50,500 which is about 58 percent growth over the last April. Exports have done well at 1,62,000 units which is about 7 percent growth over last April.

Latha: Where exactly is the turn around happening are urban sales picking up which particular brands did well?

A: I will give you the full colour to the entire numbers. The story of the February, March & April, if I may call it FMA is that of the entry segment in motorcycles in domestic which went from strength to strength. February we just did about only 1,15,000 units now domestic motorcycles and that went up to 135 in March and in April we have done 1,61,000 units.

This was, let us say if we compare January of this year to April of this year while most players have either stagnated or de-grown we have posted this type of volume growth. This has resulted in about 400 basis points market share growth which is around 15 percent couple of months back is today standing at close to about 19 percent.

Latha: For exports you mean?

A: This is, I am just taking only domestic motorcycles now. Because domestic was the real pain area for us if you recollect export continuous to do well. I will come to exports a bit later. This again has been the story of the entry segment within the domestic motorcycles typically we used to be doing about 40,000-45,000 numbers with about a 23 percent type of a market share. On the back of strong Platina and re introduced CT model doing very well for us. We clocked 80,000 numbers in the entry segment in motorcycles and we have gone to about a 40 percent type of a market share.

Now this has been the story of the last three months. As you know recently we have launched the full faired Pulsar which is Pulsar RS which is got a very strong reception in the market. The auto media has also sort put big thumbs up for that product.

Sonia: Last month the CT100 and the Platina self start had done a total of 60,000 units, this month how much have you done?

A: We have done a total of 80,000 units in those two brands.

Sonia: What could the run rate be for the next couple of months for these two brands?

A: It has got some more juice left. We will not be surprised if it crosses the three digit mark and stays there.

Latha: Can you give me a word on the quality of two wheeler sector demand? I know here it is individual players who have their own niches but as a market is it improving?

A: Let me just complete my Pulsar story because here again after the RS full faired version we have put two more models – the Adventure Sport 200 and 150. These two models, the ramp up is happening now. So, during this next three months that is April, May and June the top end premium segment is going to see a good growth while the entry segment is going to hold on.

This typically is about 45-50 percent. Half the market of the industry is comprised of these two segments and in this we will be delivering about 150,000-160,000 units in just these two segments. So, that augurs well for us. If you just combine these two segments and just leaving out the executive segment, we should be doing something like 1.5 times of the next competitor there. So, that is good news.

H2 is when the focus will shift to the mid-segment that is the executive segment where we have to get our action right. There are lots of things which are being worked out but about that we will be able to talk a bit later. So, H2 will focus on the mid-segment. I think we are back on the track as far as domestic motorcycles are concerned.

Sonia: Can you tell us a little bit about what is happening on the export front because at 1.62 lakh it is a 64 percent jump month-on-month that you have seen. Which are the markets that have recovered and going ahead which are the markets that will lead to the growth?

A: I have always told you that Q4 has somehow many big markets for us negatives in many markets or geopolitical situations came together in Q4. Q4 was a huge depressed thing for exports and we are always telling that come April the exports are going to rebound; that is what has happened.

If I can put some colour to the numbers, for example, Nigeria which went through the elections and currency and all that, today has reported a 41,000 units retail of motorcycles. Egypt similarly which had currency problems and all has clocked 8000 three wheeler in this month. April is a very good month for Sri Lanka normally and that has again clocked about 10,000 three wheelers and 9500 bikes even excluding the government bonanza.

All this is giving us a good visibility for the next few months. At least in the near-term there is stability and our May numbers may be still better than the April numbers in exports. So, exports is doing quite okay as we predicted.

Latha: Your motorcycles sales, not to takeaway from the month-on-month improvement but year-on-year are still a little lower than the year ago April. Are you very confident that the domestic motorcycle market also will pick up in May?

A: Certainly yes, because as I told you the CT and Platina that segment, still the juice is left and we are finding very good traction. These are the marriage months in the North and these are very big months for this segment. Come holiday and the college season the Pulsar typically picks up. Pulsar is where we have got our product line up and new product action already going. The ramp up will happen in next month and certainly we are on good track there.

Sonia: From this 19 percent domestic motorcycle market share that you are currently at what could you be targeting say in the next 3-6 months?

A: Certainly end of the year we should be somewhere around 23-24 percent type of a market share.

Latha: Just a word on the margins, not this story of a monthly sales numbers but is it looking like it is getting better since you all are in a low commodity prices scenarios?

A: I should take you back to also the three-wheelers right now because three-wheelers in domestic again last year, in the full year we did a very good market share improvement from about 50 to 55 percent in domestic three-wheeler passenger segment and that is where we play. We don’t play in the cargo area and we see the momentum still continuing very well. Three-wheelers are strong products, Pulsar is a strong product from the margins point of view.

Exports, I don’t have to tell you about the exchange rate, where it is and how it is beneficial for a large exporter like us. So backed by all this and of course commodity prices being soft, recently we have seen the last couple of days, couple of weeks some strengthening of the very minor strengthening. Our materials department has done a very good job in negotiating good contracts for steel products and some aluminum components for the full year. In the next year, we are on strong wicket in exports combination of currency plus or our hedging policy is delivering good things. We are quite confident that 20 percent plus EBITDA is certainly in the pocket.

Sonia: Have you taken any pricing action in the export markets to drive this growth that you have seen?

A: Honestly, we didn’t have to do much at all. We in fact the cost parameters have been quite okay and some of the markets where even the local currency depreciations have been there and these are relatively low priced products. Whenever these local currencies depreciating, we find that our products which are more fuel efficient and mid range in those markets they are able to do very well. We didn’t have to really correct prices too much in the export markets.

Sonia: I just missed out on your new launches that you have planned in the next two quarters. Can you give us a detailed timeline of that?

A: Today, the CT and Platina action is pretty much complete and in the Pulsar segment, Pulsar full fairing that is RS200 is already out in the market. In the Adventure Sport, AS200 and AS150 is already again launched to the dealers but ramp up is happening and that is going to reach full production and national availability in this month and next month. However, that will complete at least the immediate action in the entry segment and the premium segment. About the mid-segment, we are a couple of quarters away so we will be able to talk about that a bit later.

Latha: Just a word on that overall urban green shoots I was asking you about. Are you seeing any that overall the urban demand is better?

A: I would say that market is certainly subdued. Luckily we didn’t commit the sins of overstocking in the fields. People who have done that have had to take some recoil there. However, we don’t see a big uptick from the market but given a sort of a subdued market the individual company strategy is what plays out. For example if the monsoon turns out to be better but of course that is not in the urban side but if things become better than we will be able to even clock better numbers. However, I think not much is happening on the macro front.