Thread: Bajaj targets sales of 5 million in fy 12-13 - Rajiv Bajaj

Source : Bajaj Auto March sales up 9%, targets 50 lakh sales in FY13 - CNBC-TV18 -

Below is the edited transcript of Rajiv Bajaj's interview with CNBC-TV18.
Q: Would you say that the sales momentum has picked up after seeming a bit tired in prior months?
A: No, I don't think so, I would not say that. Through the year we have seen growth taper quarter on quarter actually, but yes, on the whole when one steps back and looks at the year as a whole, we are satisfied. We have had our best year ever with the sale of 4.35 million motorcycles and three-wheelers, but there is no doubt that the market has been softening and Q4 has been the softest of them all.
Q: While domestic sales have been sluggish, it's your exports, which continue to go at a very fast clip, but very recently it was the Sri Lankan news about raising the import duty, which has raised fears in the markets that your export, in which Sri Lanka is such a large market is likely to get hit. Could you walk us through the plan? Are you all planning to pass on the entire duty directly or will it be too steep and your volume expectations from Sri Lanka then?
A: Sri Lanka accounts for about 20% of our exports. We export roughly 300,000 vehicles a year out of 1.55 million, so that's very significant for us. The number that we export of a little more than 300,000 is split equally between motorcycles and three-wheelers, so it's important for both our verticals. Certainly, when duties go up, it has to be and it will be passed on. I can definitely say that there is nothing we are doing at Bajaj Auto to absorb that because the increase is so much that there is no possibility of absorbing that.
Whether the distributor will adjust his pricing mathematically or he may make some adjustment, I am not entirely sure. But, I expect them to pass it on. If you look at the last 12 months, it's not that exports have not been challenged by these kinds of disruptions from time to time, for example when there was trouble in Egypt, exports were disrupted.
When this controversy about the DEPB rollback took place for over six months, exports were influenced by that. More recently in the beginning of this quarter for 2 months there was a lot of trouble in some of the African markets especially Nigeria to do with price hike and other issue. However, undesirable they are at the same time they are not new, something or the other keeps happening in some part of the world or other. I don't think that for the year as a whole there is any need for us to review our Sri Lankan plans in any way.
Q: Have you all made any analysis of what's holding back sales? We are actually coming out of a record Kharif and Rabi season. It's supposed to be the best in terms of agricultural output. If you have seen flagging sales what is your anticipation of the coming months? Do you think even 10% year on year for FY13 looks tough?
A: No, I would not say so. We are all still hopeful of double digit growth not only because we wish it to be so, but because we are still seeing close to double digit growth in the market place. So, there is no reason to anticipate a flat season. Having said that, although I am not an economist and I would not like to try and reason as to why growth has slackened off, the reality is that it has. All we can do as a manufacturer is to buck the trend with new products and that's what we are hoping to do because we are starting the year with several new launches.
Q: With respect to the slowdown, last time you indicated that the slowdown is likely to last till May. Do you still hold on to that expectation or has anything changed in the environment which makes you believe that the slowdown could extend itself beyond May? When you speak about a double digit growth for FY13 volumes what could it be like?
A: As far as the slowdown or the current rate of sales is concerned, I don't see anything right now that would motivate me to say that I see signs of a change for the better. So, it's something you watch every month and you discover as you go along. In terms of our own plans, we have done 4.35 million vehicles totally including exports of all vehicles.
Certainly, as a company we would like to exceed a total sales volume of 5 million vehicles and hopefully little more than that, but at least 5 million vehicles. This tells you that we are looking at growth rate of about 15% or a little higher than that.
Q: Your exports are growing at a faster clip. Already, they are over 1/4th of all the bikes you produce are being exported. So, does this increase even further because that market seems to be hungry?
A: You are right. In fact almost a third of our motorcycles are exported and about 60% of our three-wheelers are being exported. A 35% of our total sales came from export last year. This year on the back of the new initiatives we have in various motorcycles segments, I am hopeful of a very strong growth in the domestic motorcycle market. I would like to believe that for once domestic growth will match export growth this year.
Q: Competition is really heating up; HMSI is going very strong in their capacity expansion plans. What would your current market shares stand at and your expectations on that and will 20% margins hold?
A: Yes, 20% margin must always hold. We hope to finish on that basis the last year and we would like to be in that space as we go forward. It's always difficult when competition gets more and more hyper, but we would like to do that. In terms of HMSI, they have done very well. It's true that the last two months, we are neck to neck, but the similarity ends there because we are very clear that as things stand today, HMSI is a scooter company, we are a motorcycle company.
Q: Have you lost market share in this quarter?
A: For the year as a whole in terms of what we have built to our dealers, we have 1% less share than we did when we started the year. In retail terms, we have an almost identical market share, which to us means that we have build exactly what we have retailed. We have held the share at the level of the secondary sales of the retail, which means unlike others our stocks are more in control and we are in a better position as we start the New Year.

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I think 5million would be difficult to achieve since the doubling of import duties on 3-wheelers in Sri Lanka where Bajaj dominates would effect the sales. Also the launch of a new commuter bike (new Discover) seems to be delayed till the end of this year which would either make the buyers postpone their decisions or go for alternate product. The P200NS launch could be a very suitable launch for them and a nightmare for the competition but at 1L+ and a 23.2HP motor this bike is not meant for being a volume cruncher although it would rule its segment for sure. 2-wheelers sales will increase for Bajaj. 2-wheeler exports will surely increase. What remains to be doubted is the 3-wheeler exports after Sri-Lanka duty hike.

yes, it will be difficult to achieve, since none of the upcoming vehicles are available for sale now. and entire range of pulsars and discovers will take an year to get launched. maybe next year they can hope good growth.

other factors like increase in taxes will have negative impact, though we don't know much about how much hike it is, if it increases the prices by 1000-2000 rupees, it wont affect much. why don't they set up plant in srilanka?

anyway best of luck.

The very Rahul Bajaj projected 7-8 million bikes one year back for FY12!

Bajaj Auto to double volumes in FY12, says MD

And after one year he is projecting 5 million for FY13 !!

HMSI is a scooter company, we are a motorcycle company
lol nice..

Originally Posted by vipin_s

The very Rahul Bajaj projected 7-8 million bikes one year back for FY12!

Bajaj Auto to double volumes in FY12, says MD

And after one year he is projecting 5 million for FY13 !!

As long as Bajaj is the most profitable motorbike company(staggering 44%) i do not he would worry so much about the numbers

Originally Posted by vipin_s

The very Rahul Bajaj projected 7-8 million bikes one year back for FY12!

Bajaj Auto to double volumes in FY12, says MD

And after one year he is projecting 5 million for FY13 !!

In the business world, setting a time bound target is a very complicated and carefully executed process.
Set a target too high and the workforce will be under pressure, dissatisfied or demotivated. A low target will usually result in lesser overall performance.

In fact, I assert that targets affect the workers' motivation and ultimately, actual performance too. To add to this, I'm sure Mr. Bajaj is wise enough to choose a suitable target, taking cues from the yester-years.

BTW There is nothing strange about different targets for different or same times. Garware earlier targeted 2000 units/ year, then seeing the market they changed it (mid year itself) to 1200 units/ year and finally they achieved 620 something units/ year.

Originally Posted by Samarth 619

In the business world, setting a time bound target is a very complicated and carefully executed process.
Set a target too high and the workforce will be under pressure, dissatisfied or demotivated. A low target will usually result in lesser overall performance.
In fact, I assert that targets affect the workers' motivation and ultimately, actual performance too. To add to this, I'm sure Mr. Bajaj is wise enough to choose a suitable target, taking cues from the yester-years.
BTW There is nothing strange about different targets for different or same times. Garware earlier targeted 2000 units/ year, then seeing the market they changed it (mid year itself) to 1200 units/ year and finally they achieved 620 something units/ year.

If there's a war, factory shut down or some unforeseen events then the actual figures may differ with projected figure....otherwise a good company/CEO will project conservative figures that can be achieved easily by the company and keep stakeholders in confidence mode.

If a CEO feels that forecasting is rocket science / complicated.... then it's better not to forecast in first place ! BTW, there is always a ballpark figures from various agencies, a company can say whether they will be in line ball park figures or not

For FY12, Bajaj projected "7-8 million" (statement itself has 1 million difference - 10,00,000 bikes !!), that's a joke for any stakeholder...

Originally Posted by vipin_s

For FY12, Bajaj projected "7-8 million" (statement itself has 1 million difference - 10,00,000 bikes !!), that's a joke for any stakeholder...

And your source for the figure in bold is?

Because from the Article link you have provided, allow me to quote the relevant line.

Originally Posted by Financial Express, April 02, 2011

Rajiv Bajaj, managing director, said the company could hit volumes of 7-8 million on the back of next generation models — Pulsar and Discover.

Are the 'Next Generation' of Pulsar and Discover here? That statement hasn't given a time frame for this happening. So now that you have no basis to your other statements, I would suggest you to do the needful. If you have another source which does clearly quote Rajiv Bajaj saying what you wrote, please feel free to share. It is definitely not Rajiv Bajaj's fault that Financial Express got their headline wrong.