The rupee’s depreciation helped Bajaj Auto boost its bottomline in the first quarter of the current financial year despite recording a 9 per cent decline in the number of units sold and marginal growth in income.
The motorcycle major reported a Q1 profit of Rs 738 crore against Rs 718 crore in the corresponding quarter last fiscal, a rise of less than three per cent year on year. But operating EBITDA margins stood at a robust 21.6 per cent (18.9 per cent). Total income from the auto business was Rs 4,964 crore (Rs 4,955 crore).
During the quarter under review, the company sold 9.79 lakh units, including 8.6 lakh motorcyles. In comparison to a total of 10.8 lakh units (9.8 lakh bikes) sold in the same period last year, this is a decline of nine per cent.
Motorcycle sales in the domestic market dipped eight per cent while those in the export market were 21 per cent lower year on year. On the three-wheeler front, domestic sales were up three per cent, while those in overseas markets rose 44 per cent to 74,000 units, buoyed by sales in Bangladesh and the restoration of normal sales in Sri Lanka.
Export income
At $327 million (E337 million), income from exports was three per cent lower. However, in rupee terms, this amounted to a growth of 10 per cent year on year, to 1,876 crore.
According to Bajaj Auto, its strategy to focus on international markets in the last several years has paid dividends. A prudent and well thought out strategy to hedge future earnings from exports has ensured the company leveraged the depreciation in the rupee vis-a-vis the dollar to its advantage , it said.
Injunction Obtained
On the ongoing strike at Chakan, Bajaj Auto says it has obtained an injunction from the Industrial Court, Pune, against the coercive activities of the union. The injunction is in force.
The Management has also filed a case before the Industrial Court, Pune, seeking that the termination of settlement be declared illegal, under the MRTU & PULP Act, 1971. The hearing of the case has been fixed for August 5, 2013.
As of now, around 700 employees including unionised workmen, trainees, apprentices, staff, etc. are reporting to work. Production at the Chakan plant is around 1,700 motorcycles a day. The plant at Waluj has commenced production of Pulsar motorcycles and is currently producing around 1,250 motorcycles per day, it said.
CAPEX plan
Addressing shareholders at the AGM here, Rajiv Bajaj, Managing Director, said the company was focusing on the commuter bike segment. “The Discover will be the star of FY14. We are creating two new platforms and six new products in the next six months,” he said, adding that this would make a big change in the volumes and profitability of the commuter bike segment.
Bajaj Auto plans to invest Rs 400 crore this fiscal, of which Rs 100 crore will be spent on R&D and the rest on production of the RE 60 and capacity augmentation.
KTM TURNAROUND
Earlier, in his address, Chairman Rahul Bajaj said that Austrian motorcycle company KTM had turned around this year, and given Bajaj Auto, which owns nearly 48 per cent of the company, its first dividend. “Our Netherlands subsidiary, which holds our shares in KTM, has received Rs 27 crore as dividend,” he said, adding that the investment of Rs 1, 250 crore had appreciated by Rs 800 crore.
Bajaj Auto also plans to get rid of its loss-making Indonesian subsidiary over a period of time. “We lost some money (on it),” he said, adding that exports to Indonesia through its Kawasaki partnership will begin this month, rendering the subsidiary redundant.
On the issue of the Chakan plant workers’ strike, Rahul Bajaj said: “Every employee is close to our heart, and we will be fair and pay them well. We don’t have ESOPs in this company, right or wrong,” he said, and added that any statement that workers were not being treated well was not correct.