Bajaj Auto has posted a marginal increase in net profit at ₹740 crore in the quarter ended June 30, from ₹738 crore in the year-ago period.
The Pune-based motorcycle manufacturer’s net sales rose to ₹5,133.37 crore during the quarter, compared with ₹4,808.73 crore recorded a year earlier, it said in a release. This translates into a rise of 6.7 per cent.
During the first quarter, revenue from exports rose to ₹2,251 crore (₹1,876 crore), up 20 per cent, while sales volume grew marginally to 9.88 lakh units against 9.79 lakh units in the first quarter of last fiscal.
The company’s cash and cash equivalents stood at ₹9,255 crore as of June 30, compared with ₹7,759 crore as on April 1, 2014.
Exports now contribute about 44 per cent of Bajaj Auto’s net sales, with the company exporting more than 3.84 lakh motorcycles and nearly 58,000 three-wheelers.
With exports to Egypt resuming in July, and relative normalcy across major markets, the outlook for the coming quarters is encouraging, the company said.
The below-market-estimates results caused the stock to correct on the BSE. It hit an intra-day low of ₹2,072 before recovering to close 2.27 per cent lower at ₹2,091.70.
Strategy for Indian market Hurt by its falling market share in India, Bajaj Auto’s Managing Director Rajiv Bajaj made a strong bid to silence detractors, maintaining that making India the motorcycle capital of the world is what most important to him and his team.
“Like people say the best cars are from Germany, electronics from Japan and chocolates from Belgium, one day people should say motorcycles are from India,” he told shareholders at the demerged company’s 7th Annual General Meeting in Pune on Thursday.
Hence, the strategy was quite different from that of most players in the Indian market, he said. “They have an India focus and (need to) be present in multiple categories; ours is a global focus, and we focus on many markets and one category.”
The current fiscal has seen Bajaj Auto’s share in the Indian market drop to 20 per cent, a decline of 4 per cent over the last fiscal.
Its exports, however, have grown steadily. Last year, the company exported 1.3 million bikes, nearly 40 per cent of all its bike sales, making it the largest motorcycle exporter in the country.
In a departure from his stand in the past where he argued that it was profit, not sales numbers that really mattered, Bajaj said: “This is not a company that is dogmatic in any way about EBITDA. I am not wedded or obsessive about it, but I will not sell at lower price to gain market share because it is not sustainable.” The price game ended in destroying the company, he said. Bajaj Auto’s gross margins have ranged from over 19 to nearly 21 per cent, or over double the Indian auto industry average.
New Discover 150 Bajaj, however, did acknowledge that a company needed to be strong in the home market.
In the June quarter, while the Pulsar and Platina gained share over last year, the value segment represented by the Discover saw the market share slip further from 14 per cent to 9 per cent.
Bajaj Auto is counting on the all-new Discover 150, due to come into the market at the end of August, to rejuvenate the brand. “We may not sell hundreds of thousands of it, or immediately get back market share, but it will help us get mind-share,” he said.
Referring to the quadricycle, Bajaj said as per the government notification, sales of the RE 60 can begin on October 1.
At present, the company has permission to launch it as a commercial vehicle.