Pune-based Bajaj Auto, India’s largest exporter of two and three-wheelers, saw a steep decline in exports in the recently concluded quarter but the company is optimistic of meeting its targets.
The third-largest maker of two-wheelers reported a fall of 22 per cent during the quarter ended June 30 with a demand slide in Nigeria and Egypt, two of Bajaj’s biggest export markets. Total export revenue for the quarter fell to Rs 2,057 crore as against Rs 2,634 crore, down 22 per cent. Exports generate 45 per cent of the business for Bajaj Auto making it the largest exporter of two and three wheeler from India. The company however is confident of achieving its export target given the expectations of Nigeria and Egypt both coming on track later in the year and addition of new markets in the current quarter.
Kevin D’Sa, president (finance), Bajaj Auto said, “Our guidance for the year was for 4.6 million vehicles in total. The second was 1.6 million for vehicle export. I believe we should be able to cross the targeted rate of 133,000 exports per month.”
The Nigerian market has weakened due to an economic turmoil that led to devaluation of its currency and its unavailability of dollar. This led Bajaj to cut prices to stay competitive in that market. The African nation used to contribute 40,000-45,000 units per month which has come down to around 20,000 units. About 20 per cent of three-wheeler and three per cent of motorcycles of total exports goes to Egypt. That country too saw devaluation earlier this year impacting Bajaj Auto.
“I don’t see myself going below the 133,000 numbers per month mark, I expect it to go higher. And hopefully in the third quarter or fourth quarter things should improve. But right now the vision for the next two months is at the same 132,000-135,000 run rate,” added D’Sa.
Meanwhile on the domestic front Bajaj Auto is running slightly behind its target of 220,000 per month. In the recently concluded quarter the company reported an average of 183,000 units per month.
This is despite a 13 per cent increase in volumes seen during the quarter led by volumes from new launches such a V15 and the Avenger series. The company is targeting sales of 2.6 million motorcycles this financial year in the domestic market.
However, given the favourable monsoon, which is expected to give the rural markets a boost, new product launches, implementation of the seventh pay commission and ‘one rank one pension’, two-wheeler consumption is expected to rise in the coming months.
“I believe the second half will outperform given the fact that the monsoon have set in and its pretty okay. Given the fact that there is hike in the salaries of government employees. In value terms the industry will grow significantly higher because people will upgrade with the extra income”, added D’Sa.
On the product front, the company has lined up new launches in the Pulsar category, including refreshes after the festive season and the launch of Pulsar 400 next in August. The Pulsar 400 is being targeted at buyers looking for Rs 1.5-2 lakh motorcycle, according to D’Sa. Further, some more derivatives of the V will be seen including one with a more powerful engine.
Bajaj Auto will spend Rs 300 crore as capital expenditure this year which could be spend on increasing capacity for three-wheelers. Last quarter it saw a 48 per cent jump in volumes of three-wheelers led by new launches.