The Hindu Business Line : Bajaj Auto Q3 net profit rises 23 pc

Riding on the successes of three of its new generation bikes, Bajaj Auto has posted record sales and profit for the third quarter of the current fiscal. Registering the highest sales ever for its two-wheelers, the company's performance during the quarter adds credence to the claim that it is fast catching up on industry leader — Hero Honda.

Further, on the back of a historic high in the sales of its auto rickshaws too, Bajaj Auto (BAL), which is the country's largest three-wheeler manufacturer, has recorded a turnover of Rs 2,729 crore for the third quarter of the current fiscal as against Rs 2,107 crore for the corresponding period last year, representing a growth of about 30 per cent.

Announcing the results after the board meeting held here, Mr Sanjiv Bajaj, Executive Director, BAL, said the company recorded a 13 per cent jump in gross profit at Rs 524 crore for the third quarter of the current fiscal as against Rs 464 crore reported for the third quarter of the previous fiscal. Net profit for the third quarter stood at Rs 345 crore (Rs 280 crore), an increase of 23 per cent. The EPS for the quarter under review works out to Rs 34.1.

A press release also mentioned that on a sequential basis, operating EBITDA margin stood at 14.2 per cent in the third quarter of 2006-07 as compared to 15.1 per cent during the previous quarter. This is attributable to the sales promotion expenses incurred during the festive season. The sales promotion activities have enabled the company to improve the market share and have ensured a healthy top-line growth of 30 per cent, the statement said. Beating the industry average in the motorcycle segment, BAL has registered sales of 6,52,406 units for the third quarter as compared to 5,11,106 units recorded during the same period last year, an increase of 28 per cent, compared to the industry average of 13 per cent.

Mr Bajaj pointed out that during the quarter BAL had garnered 65 per cent of the incremental industry growth.

Commenting on the Bajaj Platina, the company statement said it had recorded sales of over five lakh units since the entry-level bike's launch in April 2006. Meanwhile, the Bajaj Discover variants have crossed cumulative sales of one million units till November 2006. The company's share in the `value' segment has increased from 16 per cent in 2005-06 to 21 per cent as of December 2006.

As for the premium segment bikes, Mr Bajaj said that the new upgrades of the Pulsar DTS-i twins were introduced in December 2006 and have been well received in the premium segment. BAL would be shortly launching the Pulsar 220 DTS-Fi, with fuel injection technology. He stressed that the company would continue its focus on higher-end motorcycles and to spearhead the initiative, three new motorcycles will be launched in the next few months. The company release also mentions that motorcycle-manufacturing capacity is being expanded to three lakh units per month from April 2007 in anticipation of the growing demand.

Mr Bajaj also said that in the passenger three-wheeler segment, BAL has recorded a growth of 53 per cent during the third quarter. The company is a clear market leader in this segment with a current market share of 78 per cent. In the cargo segment, it has recorded a market share of 28 per cent during the nine months of the current fiscal. To further consolidate its position in the segment, Bajaj recently launched an upgrade of the GC 1000 cargo model.

Export market

In the export segment, over 55 per cent of its three-wheeler passenger carriers have been exported.

Unit exports constituted 17 per cent of the company's total sales, as compared to just three per cent, five years ago. Mr Sanjiv Bajaj said that the third quarter of the current fiscal has seen new export initiatives, including PT Bajaj Auto Indonesia, a majority owned subsidiary of BAL, which commenced operations during the quarter under review.

The Pulsar 180 DTS - i was launched in Indonesia in November 2006 at the Jakarta Motor Show. Bajaj is currently focusing on network development, sales and after-sales services and brand building in that market. Bajaj has also said that despatches to Iran have started while pointing out that as sales at the Nigerian dealerships grow, it would expand its sales and service network in that country too. He added that these new markets should generate significant volumes during the next year.

More Stories on : Financial Performance | Two/Three Wheelers | Outlook | Bajaj Auto Ltd

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