The Hindu Business Line : Bajaj Auto Q1 net drops 15%

Pune, July 12 Two-wheeler major Bajaj Auto Ltd saw its net profit for the first quarter of the current fiscal drop by 15 per cent to Rs 226.5 crore from Rs 266 crore in the same period last year.

According to the company, rising interest rates, constraints on credit, and tightening of financing norms by banks impacted sales of motorcycles. The industry slowdown witnessed from January continued. Net sales for the quarter ended June 2007 dropped to Rs 2,109.1 crore from Rs 2,202.6 crore.

The total turnover, which includes treasury income, was Rs 2,211.80 crore, marginally down from the earlier Rs 2,297.20 crore. Earnings per share for the period came down to Rs 22.40 (Rs 26.30).

Two-wheeler sales dropped 13 per cent to 4,94,042 units, though exports of 1,49,804 two- and three- wheelers registered a healthy 52 per cent growth.

During the quarter, the company initiated structural changes in distribution which has resulted in reduction of inventory at dealers by around 45,000 motorcycles.

‘Product fatigue’

Speaking at the company’s annual general meeting, Mr Rajiv Bajaj, Managing Director, said ‘product fatigue’ for the 100 cc motorcycle, and not financial issues, was responsible for the drop in motorcycle sales.

“The solution is to launch a fantastic new product,” he told shareholders, adding that Bajaj Auto was launching a new bike that will come into the market in September. “We were to launch it in Q1, but we are late. If it had been in place, the topline and bottomline would have improved by 50 per cent,” he said.

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

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