Bajaj Auto says export markets witnessing a turnaround

After posting quarters of single-digit growth, Bajaj Auto is back with double-digit growth. The company saw a 20 percent increase in its sales and month of March was better than last year and the company, said S Ravikumar, President-Business Development, Bajaj Auto. However, the company is still a far cry from the numbers that the company is used to do in its exports segment, he added.The positive areas for the business growth are a bounceback in Nepal, stability in Eygypt, and decent growth in Argentina. The Nigerian currency has stabilised, which has gave the exports a boost, the Bajaj executive added.Internally, models like the new Avenger, V and Platina have received good response from the market. All combined, the growth rate was at about 31 percent over last March. Below is the verbatim transcript of S Ravikumar's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18. Sonia: When we spoke with you last month, you had indicated that the exports sales in the month of March will be as subdued as February. February you did about 98,000 and in March it has picked up a tad bit to 1.01 lakhs. Can you say with any degree of certainty that the worst is over for exports or do you expect this subdued performance to continue? A: The month of March has been slightly better and we expect April also to be slightly better but it is still a far cry from the lakh and 50,000 type of numbers, which we are used to in exports. That sector positive areas are the nice bounce back in Nepal, nice stability in Egypt, Argentina has shown a decent growth and I hope these are fairly sustainable type of situations in those countries. Nigeria has been an issue as you know very well, that is a big market for us. The very positive thing there is that the currency has now stabilised and that is a very big improvement but I think it had a jolt of currency going all the way upto 400 and so, I think it will take some time but that said things are falling in place but we would very much like to see the exports back at about one lakh or so but for that we have to wait. Latha: I wanted to concentrate on that domestic sales number, which is getting to look better and better. Can we say that there is a rural turnaround? A: I will first look at it from internally. Our Avengers are continuing to do very well at about 25,000-26,000 numbers and the recently launched V- The Invincible has got very good reception from the market. We have done about almost 16,500 units in the month of March itself. These types of products and of course the earlier launch of CT and Platina has done well about 72,000 units. All combined, the exit growth rate is something which we are very happy about at about 31 percent over last March when the industry growth on account of our estimate is about 10 percent. So about 88,000 growth numbers at the industry level, we have garnered almost about 50 percent of the entire growth and what is very interesting is this is a sustainable type of position because the brands get well established and then we are unshakeable type of a scenario. So this 31 percent growth in domestic motorcycles is very heartening for us. Sonia: Your domestic motorcycle market share had improved to 17 percent in the quarter gone by. What is the update so far, have you seen a further improvement? A: I think in the wholesale level it would be about 19 percent in the month of March and in the retail level, it will be certainly 20.5 or so and I think I have personally told you many times that the exit will be around 22-23 percent. That is only a couple of months away. Sonia: Can you give me an expectation as far as domestic sales are concerned, what is the expectation for April and May because this time you have clocked in more than 2 lakhs in domestic sales because of the new Avenger etc but in April and May, what is the expectation? A: I am going to divert a bit. This time the commercial vehicles domestic has completely been rocking and we have almost about a 59 percent type of a growth in March 2015 in three-wheelers. That said, every single area like the petrol and alternate fuel that is CNG and LPG we are at 90 percent, there is a substantial growth in the diesel segment to almost about 36 percent from somewhere around 28 or so and from nothing in just about a couple of months in cargo, we have gone to 7 percent and the story there is just about beginning. So I think the domestic three-wheelers have done extremely well on the back of all that that has happened, if you see the yearly numbers, this has been the best year for us in three-wheelers, I didn’t want to take away the credit from that team. So I thought I should talk about it a bit. You have talked about immediately the next couple of months. In the next couple of months again in the month of April, though the exports still we would expect somewhere around 105-110 not more than that, we are looking at a 330,000 units for the month of April all told and if I can give you a nice guidance for the entire year, we have been very practical in taking a very conservative number for exports at about 1.6 million. We have seen that the exit market share in motorcycles is domestic is robust at 31 percent, it is on a solid footing. So we are hoping to reach something like 2.7 million in domestic motorcycles about 300,000 on the basis of strong three-wheeler growth that will be about 300,000 domestic. So 2.7 million domestic motorcycles, 300,000 domestic commercial vehicles and about 1.6 million in exports that is bikes and three-wheelers put together. So, we are looking at something like 4.6 million for the entire year. That is a robust more than 20 percent growth. Now, I have to necessarily get into the profitability. All these brands are good, even in the month of March in domestic, over 60 percent has come from the Discover, V, Pulsar, Avenger, KTM type of a basket while CT Platinum has done well at 72,000 and exports we have seen the currency at about more than 66, costs are quite under control. So I think profitability is quite intact going forward. Latha: So exports fall 10 percent this year? A: Yes, basically that is a very conservative estimate because we are not able to predict things like Nigeria -- how things will bounce back. So there can be an upside there but we would like to be cautious in our guidance.