Target 20% mkt share post festive season: Bajaj Auto

Latha: In a sense you stand out, your month-on-month (M-o-M) sales have improved. Take us through what the dealers are telling you. Is this what you call festive season stocking or are you going to see even better numbers for October?

A: As you mentioned the month has been very good and the quarter has been great for us. However, that said, let's concentrate on the month and the mood right now. Our products overall, each one of them, the CT and Platina, the Discover 125 and the new Pulsars have all done extremely well and that is what is standing us in good stead at this point in time.

If I can give you some granular details of the domestic numbers -- out of the 1,88,000 motorcycles that you have seen there we have almost 91,000 units coming from the CT and Platina - that is very gratifying. So I have foreclosed a question from Sonia Shenoy and the Pulsars and KTMs have done almost 75,000 units, the new Discover has done about 17,000. So it is all going quite as per the plan as far as domestic is concerned.

That said, the mood in the market from industry as a whole is okay but not great, so we will see a good Diwali but no great fireworks – that is the mood but in Bajaj they will be better than good and going towards the fireworks type of a story.

Sonia: So, what does that mean in terms of numbers? I mean you numbers are still better that what the street was expecting but it is still a drop of 3.7 percent year-on-year (Y-o-Y). So, for the next couple of months, what could the growth be, if at all?

A: I should say that the wholesale numbers that you see, again, we have to look at what was the festive season calendar last year versus this year. You should, if at all, compare this October to the last September. So, if I can just relate to the total numbers, 3,80,000 odd was our plan for the month of September. We are dot on plan. We are going to plan a good 400 plus in total, that is two-wheelers, three-wheelers, domestic-exports put together, a good 4,00,000-4,25,000 type of a number for the month of October.I think we will pretty much be there, but more important is the retail sense – all this should wash out in the season. Of course, there is a bit of a build up for the festival. But, you can see the buoyancy in the dealerships in Bajaj basically because of the products and as I will allude to the Avenger story in a bit from now. However, the three-wheelers are doing great in domestic, again, the commercial vehicles (CV) whether it is the petrol alternate, CNG story or diesel story – in diesel, we have notched up almost about 300-400 basis points (bps) market share improvement. So, that is going quite good for us and the dealerships are quite buoyant.

Sonia: So, how much has your domestic market share improved to?

A: This month we should be somewhere around 19 percent and festive, we should exit about 20 or so.

Now that you have touched on the market share, I should talk about the Avengers now. The new Avengers, there are going to be three of them and two of them -- one has already gone into production, one is going into production this week and the third one will go into production within this month.So, I think there is a very nice differentiated customer there, a ‘hatke’ type of a category. Royal Enfield has done great in that space. We have a very good chance and Avenger should, why not Avengers become the next Pulsars for Bajaj Auto. There is a lot of buoyancy there. We are selling about 4,000 units per month in the domestic. It can settle anywhere between 10, 15, 20, God knows where it will go and settle.

Latha: I want to talk about exports. You have at least managed the same number that you did a year ago. In fact, you exports have been the positive story, but we are getting very negative cues from all other industries and all other units, even other units in the auto space because of shrinking world trade. Can you maintain this run rate? Can you even better it?

A: Bajaj Auto has been a complete standout in the current export scenario. The quarter has been the highest ever at 5,20,000 units. Even if you look at the month, last September we had a Sri Lanka Government order of about 13,000 units sitting in September 2014. If we strip that out, we have grown by about eight percent and that said, certainly, Bajaj has been doing exceptionally well when everything has been not so good at all.I should say going forward if you look at Q3 itself for entire Q3, we should return half a million plus type of a number. We are bang on target for the first half year, just 3,000 shy of the one million target and for the full-year, we are well on course for the two million plus type of a guidance.

More than that, we should see also the Pulsars and Avengers doing well in the export market. That should be again good for dollar realisations. The rupee conversion is happening throughout the entire 90-day period. The currency has been a very good positive for us and that should flow down into the bottom-line as well.

Latha: That is what I was going to ask you. The rupee has actually gotten a little stronger in the past couple of weeks. Now the dollar costs only 65 per USD and some paise until sometime back, it used to be more than 66 to the dollar. Will that hurt really?

A: I should say not really. These are all very small blips and our strategy has been sort of a range type of a booking. We do not bet on a pin-pointed single rate. So, that strategy also will be helping us. So, we are quite okay as far as the booking itself is concerned and the dollar rates are concerned.

Sonia: You did mention 4,00,000-4,25,000 for the month of October. Can you break that up for us between exports and domestic?

A: That is what I was about to tell you. For exports, though we will be closing for the full quarter at about 5,00,000, domestic will be given precedence and priority in the festive months obviously. So, exports this time may be about 1,50,000-1,55,000 there for the month of October.

Sonia: But that will be lower than the run rate of 1,75,000 that you have been doing for the last many months. I am just trying to understand whether there is any export pocket that is now seeing a bit of a slowdown.

A: Honestly, apart from Nepal which is a very clear political scenario and which we think that will certainly sort itself out before the festive. However, for that, not much of a great concern anywhere so far. So for the quarter, we should be at half a million plus as far as export run rate is concerned.

Latha: Do interest rate cuts make a difference at all for you or the industry?

A: I think ours is certainly a small ticket item when it comes to these things, but to the extent that the general mood can be buoyant, that will be certainly good. However, like you have been harping on so many shows, I will be looking at credit growth, the way the money is getting deployed.If people get money and they use it only for arbitrage and the money keeps flowing from one pocket to the other between banks and the government and the RBI, it is not devolving down to the economic activity on the ground, monsoons plus credit growth is what we will be looking at.That said, all these things are positive. That is certainly in the right direction, but we do not know how much good it will be.