Bajaj Auto sees India mkt pickup in H2; export target cut
Bajaj Auto is launching 6 new variants of the Discover motorcycle and that coupled with a pickup in rural demand post good monsoon rains should boost domestic demand in the second half.
July 23, 2013 / 10:13 IST
Moneycontrol Bureau
Bajaj Auto expects domestic motorcycle market to recover in the second half of the current financial year, helped by a good monsoon rains, which should boost rural demand, and new product launches around the festive season.However, the motorcycle export growth target has been reduced to 5 percent from 10 percent for FY14, Kevin D'Sa, CFO, said in a post earnings conference call on Monday.Demand, particularly, in Nigeria, one of the key markets in Africa, has slowed since some provinces banned use of motorcycles as taxis. In Egypt, another big market, demand is huge, but sales have been affected due to the political crisis. D'Sa says the slowdown in markets like Nigeria has been offset by strong growth in markets like Kenya. However, the overall growth in Africa will be "flat" this year, he said.Bajaj Auto is tapping new markets, like Ivory Coast, Uganda and Tanzania in Africa, which it feels will be the new growth markets.Also D'Sa said, the company may look at 1-2 markets, where it feels it can expand more by reducing prices.However, it doesn't intend nor is it under any pressure to entirely pass on the Rupee depreciation benefits to all its export markets, he added.Also Read: Bajaj Auto meets forecast, Q1 net rises 2.8% to Rs 738cr In the domestic market, customers are still focussed on fuel effecient 100 cc motorcycles, D'Sa said.Bajaj Auto will be launching 6 new Discover motorcycles in the coming months, which will be a mix of fuel effecient commuter motorcycles as well sportier bikes. In the annual shareholders meeting held last week, Rajiv Bajaj, MD, had said that the company had plans to launch two new sports bikes under the Pulsar brand this financial year.While the overall domestic motorcycle industry continues to see sluggish growth, D'Sa says its three-wheeler commercial vehicle market is on a "solid wicket".For instance, 20,000 new auto rickshaw permits have been opened in Hyderabad and 35,000 permits are around the corner in Maharashtra. Bajaj Auto has over 80 percent market share in these markets. The new permits, coupled with the upgraded three-wheelers it is launching this year, should keep strong sales going, he said.D'Sa expect Bajaj Auto to clock 45,000 per month sales growth in three-wheelers in the next three quarters.Overall, Bajaj Auto has a capital expenditure plan of Rs 400 crore for the current financial year. The company will spend Rs 100 crore on research and development and the balance will be used for capacity expansion and on the RE60. The company is awaiting final government approval for quadricycles to launch the RE60. Bajaj is the only company in India, which has a product ready in this category.Also Read: Won't resort to huge discounts to boost sales, says Bajaj AutoCHAKAN PLANT STRIKE UPDATEBajaj Auto lost production of 15,000 Pulsar motorcycles in the first quarter due to the strike by its workers at its Chakan plant near Pune, D'Sa said. However, that didn't affect retail sales since there was enough inventory at the dealers end, he added.Also, he said that the company is now producing "desired" number of Pulsar motorcycles, with the output divided between Chakan and its Waluj plant near Aurangabad.Workers at the Chakan plant have been on a strike since June 25, demanding wage negotiations and 500 equity shares at Rs 1 each.The company has since shifted some production of the Pulsar to Waluj and has turned down the workers demand of stock options.Bajaj Auto shares closed at Rs 1,985.35 on NSE, up 1 percent on Monday. Nachiket Kelkar
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