Bajaj Auto Feb sales fall 3%; FY14 targets hazy says co

Moneycontrol Bureau

Bajaj Auto 's total sales in February slipped 3 percent year-on-year on the back of sluggish motorcycle sales, and the company said targets for next quarter and next financial year remain hazy, sending its shares down more than 2 percent on Monday morning.

The country's second largest two-wheeler maker sold 3.32 lakh units last month, compared with 3.44 lakh units sold a year ago.

While exports rose 10 percent from a year ago to 1.35 lakh units, domestic motorcycle sales declined 4 percent to 2.91 lakh units. Three-wheeler commercial vehicle sales were also sluggish (down 2 percent) at 41,090 units.

So far this financial year (Apr-Feb), the Pune-based company has sold 39.36 lakh units, down 2 percent year-on-year.

Also Read: Hero MotoCorp reports 4% fall in Feb sales

"The industry trend remains sluggish...For the next two-three months, I don't see any triggers to drive growth," Kevin D'sa, President (Finance), told CNBC-TV18.

The targets for next quarter and the next year are also very hazy, given the sluggish domestic growth and also lot of uncertainties in the export market, he further said.

Although the three-wheeler sales were also slow last month, D'sa feels that selling around 45,000 CV units per month is "doable" given the opening up of permits in several states in India and the opportunities in the export market, especially Africa.

Bajaj Auto's domestic market share slipped to 22 percent in Feb, but here too he is "quite confident" the company can get to 27-30 percent, as sales of the products it launched in the recent past spread out across the country over time.

At 10:00 hrs, Bajaj Auto shares were down 2.7 percent at 1,973.15 on NSE.

Below is the verbatim transcript of Kevin D'sa's interview on CNBC-TV18

Q: Auto sales numbers looks a bit disappointing, what is the trend on the motorcycle sales and how are things across different categories?

A: Motorcycle numbers are just a reflection of what the industry is seeing. In the current month, the motorcycle industry per se has declined by 4.5 percent and for domestic motorcycles, we have done a 178,000 number, exports have made up by 112,000 numbers. If you look at it on a growth basis motorcycles, the domestic part has declined by 12 percent but exports have made up to some 15 percent. So net-net we are down about 4 percent.
The trend in the industry is sluggish. Going forward, at least in the next two-three months I do not see any significant triggers to drive growth.

Q: By how much will you miss your FY13 target in terms of number of vehicles and would you be very cautious about laying out targets for FY14 now?

A: For the next quarter and for the next year the target is very hazy, it is too early to even predict figures. Right now there are not much triggers insight for growth. The earliest one could be a good monsoon and even on export side we are seeing a lot of uncertainty. I am a little concerned about the Sri Lanka story where the relationship between the two countries is not the best what it could have possibly been. So, at this stage predicting a figure for the next year is really tough.

Q: What are you seeing in the three-wheeler market, there too the numbers look quite flattish? Going forward, can those numbers be at risk?

A: The domestic numbers for three-wheelers this quarter have been a positive 9 percent, exports were flat so net-net we are just flat over there. As far as three-wheelers is concerned I am fairly bullish going forward, because that is not very much dependent on other things as interest. When I see export potential coming in primarily from Africa, I am fairly confident for the three-wheeler numbers. So, predicting a run rate of about 45000 units per month is definitely doable.

Q: Market share has slipped all the way to 22 percent and the observation from the market seems to be that Bajaj is having the toughest time dealing with competition. What is it that you hope to hold on to in terms of market share? Is the market getting tougher for you?

A: Looking at February per se, the market share is down to 22 percent but in terms of the cumulative period my market share is off by 1 percent. Ideally, my market share would have been at 27 percent. Going forward, the new product launch will take a little more time to spread out. A market share of 27-30 percent is doable. If you look at the market share on a total basis that is domestic and exports, my market share remains at about 31 percent down 0.75 percent as compared to last year.