MUMBAI, May 22 - Bajaj Auto Ltd , India's No. 2 motorcycle maker, said on Thursday it expected sales to stay flat in fiscal year 2008/09 because of tighter credit, but hoped to protect margins with sales of more premium bikes and cost cuts.ADVERTISEMENT
Higher prices of steel, rubber, oil and other raw materials have hit margins of vehicle makers, while firmer interest rates, aimed at checking rising inflation, have bumped up vehicle loan rates by 200-300 basis points and depressed demand. "We don't see any revival in sales," Managing Director Rajiv Bajaj said at a news conference. Bajaj Auto's vehicle sales, which had fallen every month in the year ended March, rose in April, but that was an "exception", he said. "There is a fundamental pullback in sales, and it's wishful thinking to imagine the situation will change. We're prepared for a flat market, and when sales are flat, any increase in raw material costs will certainly hurt margins," he said.
Pune-based Bajaj Auto is moving away from lower-margin 100cc bikes, and is also focusing on exports to offset softer demand in India, the world's biggest market for motorbikes after China. Bajaj Auto will make a $2,500 car from 2011 in a venture with Renault and Nissan Motor , to take on Tata Motors' similarly priced Nano, which is scheduled to go on sale later this year. Bajaj Auto said net profit in the fiscal fourth-quarter ended March 31 was 1.21 billion rupees on net sales of 20.74 billion. Rival Hero Honda Motors Ltd in April reported a better-than-expected 53 percent rise in net profit to 2.99 billion rupees, helped by sales of its more premium bikes.
NEW LISTINGS
Bajaj Auto was recently restructured and its manufacturing and finance operations were spun off as separate businesses. Bajaj Holdings & Investment Ltd, which owns 30 percent in Bajaj Auto, earlier on Thursday reported a quarterly net profit of 793.2 million rupees on net sales of 626.3 million. Bajaj Auto and Bajaj Finserv, which comprises bike insurance and auto finance businesses, are expected to list on Monday. Bajaj Auto, which also makes scooters and three-wheeled motorised rickshaws, plans to foray into light trucks, and make premium bikes with European partner KTM and with Japan's Kawasaki , a technology partner.
Bajaj, which holds 24.5 percent in KTM, may raise its stake to 30 percent if "the price is reasonable", Bajaj said. Indian bike makers rolled out 7.2 million bikes and scooters in 2007/08, down nearly 8 percent from the previous year. Bajaj sold 552,101 vehicles in the March quarter, down 12 percent despite an excise duty cut to 16 percent from 24 percent at the end of February on bikes, scooters and three-wheelers. It plans to launch two three-wheelers and four new 125cc motorbikes in 2008/09, a segment Bajaj estimates accounts for 36 percent of the market.
Its share of the motorbike market fell to 32.7 percent from 33.5 percent in 2007/08, Bajaj said, because of its declining share of the 100cc segment, which offset growth in 125cc. Shares in Bajaj Holdings ended up 3.1 percent at 672.05 rupees in a 1.95 percent weaker Mumbai market .
news source : http://malaysia.news.yahoo.com/
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