Speaking to CNBC-TV18, S Ravikumar of Bajaj Auto said while the industry grew 7 percent in the motorcycle segment, the company's grew 9 percent.He is hopeful that new launches like the V15 and the Avenger portfolio will clock better sales figures once the monsoon is over.
In August, he expects sales for the company to be in the range of 3.5 lakh in August. In July, he predicts domestic sales and exports put together will be around 3.25 lakh units.Nigeria had recently said that it would let its currency naira float and weaken next week.
Ravikumar believes that the Nigerian government's move is the right thing to do, adding that the company will wait it out. In the worst months, exports were below 100,000. Now, it is around 125,000, and going forward in July, it will around the same figure, he said.
In the motorcycle space in the domestic space, V brand is doing around 265000 units for last month, and CT100 and Platina have together done 70,000.Currently, Bajaj Auto has a market share of 35 percent in the entry segment and the overall share is about 20 percent.Below is the verbatim transcript of S Ravikumar's interview to Sonia Shenoy & Anuj Singhal on CNBC-TV18.
Sonia: The export piece has been slowing down and that is something the market is aware of but it is the domestic trend slowdown that the street is a bit disappointed with. 1.93 lakh in the month of June versus 2 lakh for the last three months, do you expect this trend to continue?
A: This is more to do with post marriage and monsoon season which is this type of seasonal movement is expected. I can candidly tell you that industry according to our estimates for the month of June has shown 7 percent growth in motorcycle segment. We have done 9 percent growth and we have not put more into the channel than what was retailed, so that has been a prudent policy that has been nicely followed. This is to be expected in the month of June. However, recent launches like V and Avenger portfolio are continuing to do well, so things will turn once the monsoon is off and we get into July-August and things like that.
Anuj: Would you say that from July onwards you will get back to 3.3-3.4 lakh range?
A: From August certainly yes, but July will be a month similar to June. We are looking at total number of about 325,000 units in July that is domestic and export together because that is the way the months play out normally.
Sonia: Tell us a bit about the export situation because the currency worries continue in markets like Nigeria, in fact Nigeria has now abandoned that dollar peg to allow naira to trade freely. How much has this dollar availability issues hit your sales in this month itself?
A: In a theoretical level and the actions taken by the Nigerian authorities is the right thing to do. Let the market decide and things will adjust themselves to that scenario. Artificially trying to hold on something has never worked and it will never work in these market economies anyway. However, that said, for a huge country which has lived in a particular methodology for it to change and adjust to new methodology, will take some time and that transition is what is happening there. But everybody, whoever we have talked to are saying that now things will fall in place, in fact there is a right thing and it will attract foreign direct investment (FDI) and people will be more comfortable putting money back into the country etc. So that is what we expect over a period of time. We are sure that this is the right direction for the government in Nigeria to take and we will wait out the period.
However, coming to the exports, in the worst months it has been 100,000, sub-100,000 in one-off month but now steadily it is around 125,000-130,000 type of level and even in July it maybe that type of a story and for example, in Nigeria, the retail has been almost about 23,000 units of three-wheelers. So from nothing it has come to halfway mark or slightly above halfway mark and things will keep improving from there.Anuj: Can this be a trend of exports being around 125-130 because that would be a big trigger or do you think it is too tough to predict right now given the currency volatility?
A: Yes, it is too tough to predict and that is why we do not want to go into the future, we do not want to plot any trendline based on what is happening today. We would like to live month-to-month and let's see how things pan out.
Sonia: But the current official rate of naira is around 199 and you are doing retail at a much higher rate. What is the rate currently at which your retail is happening?
A: After the peg was removed, after the market started trading based on free currency type of a formula, it went 240-247, somewhere it went more than 300, so it's a dynamic situation so more than anything else availability is the story. Availability is improving because of new system, we have to watch out and what rate we get - they have varied and it is bound to be like that when things move from one system to the other.
Sonia: Even it is between 250 and 300; it is much higher than the official rate. Have you guys passed on these higher rates by hiking price?
A: Yes, official rate was not the relevant thing anyway even in the past because very few dollars were available at the official rate and market was going on the basis of, what I use to call as blue dollar, so market and our pricing was already adjusted to that.
Sonia: My question is have you passed on the higher rates by hiking prices and has that impacted demand in any way in Nigeria?
A: The retail prices have been adjusted from time to time and if the currency is going to be available, today for example if dollar is available in India only at 100/USD then the market will have to adjust to that reality and that is the fact.
Sonia: Going forward in the motorcycle space in the domestic market, how are things shaping up, how is V doing and what about the other products like CT100 and Platina?
A: V has done 26,500 units in this month and it is continuing to do well and CT and Platina together have done 70,000 even post marriage season; this time marriage season ended in April, so in June 70,000 and we are at 35 percent market share in the entry segment and that is going quite okay. V is doing well and Avenger is doing quite okay.
Sonia: What about overall domestic market share? Is it still around 20 percent?
A: It should be around 20 percent. It's yet to be calculated but it should be around 20 percent.
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