Bajaj Auto undergoes expansion


With an aim to increase its profit margins and optimise the tax benefits available under the concessional industrial package (CIP) 2003 for Uttarakhand, Bajaj Auto has undergone yet another expansion in its Pantnagar manufacturing facility.

Through this expansion, the capacity of the plant is being raised to produce 150,000 units per month, company sources said. An initial investment of Rs 75 crore has already been made. “We have augmented the capacity of our Pantnagar plant to meet future demand as well as optimise the tax,” said a company official. Production at the Pantnagar plant is considered to be the highest among all the other plants of the company.



Significantly, Bajaj’s move came after the Central Board of Excise and Customs (CBEC) recently decided that the industries in Uttarakhand and Himachal Pradesh, which were provided full excise exemption under the hill based incentives, are entitled to expand and introduce new products.

The production at Bajaj’s Pantnagar unit is being increased up to 1.8 million units from 1.2 million units per year in view of the good demand in the auto market. “We have carried out the expansion according to the market needs,” said the official.

Last year also, the company had carried out a sizeable expansion scaling up the production from 6 lakh units to 12 lakh units per year at its 66 acre facility. Although, there is a strong possibility that the company may introduce new models, but the officials refused to comment on that.

The company is currently producing two variants in each of its top models – Platina and Discover from Pantnagar plant which produced over 914000 bikes in FY 2011 versus 578000 during FY 2010.

Like Hero Honda and other auto companies, which are taking considerable benefits from the CIP, Bajaj Auto began production in 2007 in order to take the advantage of the tax sops which include 10 year long cent per cent excise rebate. The company had initially invested Rs 230 crore at Pantnagar. With the auto boom in the market, Bajaj Auto has improved its market share from 27 per cent in H1/2009-10 to 34 per cent in H1/2010-11.