Calm and witty as always, Bajaj Auto's Managing Director, Mr Rajiv Bajaj, said achieving higher profitability across models was as important as bagging the pole position in sales volumes.
“Companies which distract themselves (by focussing on just volumes) do not achieve the same results as we do. We must always deliver a result that is superior to competition,” he said.
Mr Bajaj said he prefers to not be a “part of the rat race”, adding that boosting bottom lines has higher priority. There is some truth to that – the Pune-based two- and three-wheeler maker maintains a 20 per cent operating margin across all models, higher than most automakers.
“If you put together the profit before tax of all two- and three-wheeler makers in the country, our share is 58 per cent. Our profit has grown by multiples in the last three years,” he pointed out.
However, this is a crucial time for the company. While it claims to be among the top three bike-makers worldwide, along with Honda and Hero, the former is snapping hard at its heels for the number two spot at home.
Mr Bajaj does not waste an opportunity to take a dig at competitors' lower operating margins.
“The best does not mean just numbers,” he says, citing the example of American automaker General Motors' 2009 bankruptcy proceedings.
Strong numbers
TVS selling half-a-million more mopeds, Honda selling 75,000 bikes, but mostly scooters – these mean nothing to us, Mr Bajaj said while referring to the fact that the company has decided to solely focus on bikes three years ago.
Though a focus on the premium market (Pulsar, Discover and KTM brands) has helped Bajaj maintain strong numbers, it could now have its task cut out in terms of volumes. Bajaj is targeting five million unit sales this year, from 4.3 million sold last year (3.8 million were two-wheelers).
“We have to become a better and bigger motorcycle brand worldwide. We're the leader in markets like the Philippines, Nigeria, Honduras, Bangladesh and Sri Lanka. Exports have tripled in the last three years,” he said.
Withdrawal from scooters
Industry insiders say that the 2009 decision to withdraw from scooters may prove costly, especially at a time where others such as Honda, Hero and Suzuki are witnessing a sharp growth in demand.
Yamaha is also expected to soon launch its own scooter model. Plus, unlike competition, Bajaj has not been pushing itself in the mass 100-110cc segments.
The competition is also fast scaling up capacity.
While on Monday, Yamaha announced a new 1.8-million plant in Chennai, Hero expects to put up its fourth and fifth plant soon. Honda is also setting up its third facility near Bangalore, with two more lined up, while Suzuki announced a new two-wheeler facility at Rohtak last month.