Rajiv Bajaj, managing director of Bajaj AutoNSE -0.36 %, discusses the significance of his company increasing market share by 8% in the motorcycle segment at a time when growth appears to be difficult to come by.
“Nobody knows when the growth is going to come back. Neither do we…,” says Bajaj, who believes he’s within sniffing distance of catching up with Hero MotoCorp in the leadership race for motorcycles. Very high inventory levels at other companies, ..
When do you expect growth to revive?
When will the growth come back, frankly nobody knows. There are three factors to which people are attributing the downturn after Diwali.
These are related to insurance costs, liquidity crunch, and fuel prices. All these factors played out between August and September. And despite that, whenever media asked any CEO of any auto company about how the festive season will be, they all said it was going to be wonderful. We were the only one conservative about it.
So, if you ask the same people when growth is going to come back, you are asking in the wrong place. Nobody knows when the growth is going to come back. Nor do we.
The only difference in Bajaj Auto’s view is that we don’t care too much as compared to the competition because anyway half of our production is exported. Unlike our competitors, we are a company that is exporting around the world, dealing in almost 80-90 markets. We are less vulnerable to what happens in India. If tomorrow th ..
The most worrying aspect of the industry is the rising inventory with dealers. How serious is this for Bajaj Auto?
We hadn’t increased our production during Diwali and we had kept strong promotions to keep our retail sales growing. While I know that for people like Hero... and HMSI (Honda Motorcycle and Scooter India), the inventory is at 100 days or more, for us it is only 55 days. The norm is 45 days.
We have 10 days of excess inventory, but that’s okay. We are not going to cut back on production to reduce that because now from April until the middle of June will be the marriage season, and then the retail sales will be higher than during January to March. So, since the retail sales will go up, the inventory will automatically correct itself form 55 days to 50 or 45 days.
In fact, we are actually increasing our production because we don't have an inventory problem. Last year, we sold ..
In the December quarter, margins were the lowest in nine years. Will the company continue its aggressive pricing strategy despite the mounting pressure on margins?
A lot of people made a hue and cry about what will happen to margins after, according to them, we went into a price war last year. And I've tried to explain several times that no price-war is going on. Everything we are selling is on a par with the competition in terms of pricing. We had only one product that ..
Now, I can point to the fact that looking at our results for the last three-quarters, you'll see that our EBIDT ..
I had supported the reduction in GST but where I disagreed with him was that he wanted GST to be reduced to stimulate demand and I was not in agreement with that.
What I was in favour of was that when the emission norms come in next year and costs go up again across the industry, at that time if the reduction in GST is done, it will save the industry from further disruption.
Can you talk about Bajaj Auto’s three new launches in June?
In June we are goi ..
“Nobody knows when the growth is going to come back. Neither do we…,” says Bajaj, who believes he’s within sniffing distance of catching up with Hero MotoCorp in the leadership race for motorcycles. Very high inventory levels at other companies, ..
When do you expect growth to revive?
When will the growth come back, frankly nobody knows. There are three factors to which people are attributing the downturn after Diwali.
These are related to insurance costs, liquidity crunch, and fuel prices. All these factors played out between August and September. And despite that, whenever media asked any CEO of any auto company about how the festive season will be, they all said it was going to be wonderful. We were the only one conservative about it.
So, if you ask the same people when growth is going to come back, you are asking in the wrong place. Nobody knows when the growth is going to come back. Nor do we.
The only difference in Bajaj Auto’s view is that we don’t care too much as compared to the competition because anyway half of our production is exported. Unlike our competitors, we are a company that is exporting around the world, dealing in almost 80-90 markets. We are less vulnerable to what happens in India. If tomorrow th ..
The most worrying aspect of the industry is the rising inventory with dealers. How serious is this for Bajaj Auto?
We hadn’t increased our production during Diwali and we had kept strong promotions to keep our retail sales growing. While I know that for people like Hero... and HMSI (Honda Motorcycle and Scooter India), the inventory is at 100 days or more, for us it is only 55 days. The norm is 45 days.
We have 10 days of excess inventory, but that’s okay. We are not going to cut back on production to reduce that because now from April until the middle of June will be the marriage season, and then the retail sales will be higher than during January to March. So, since the retail sales will go up, the inventory will automatically correct itself form 55 days to 50 or 45 days.
In fact, we are actually increasing our production because we don't have an inventory problem. Last year, we sold ..
In the December quarter, margins were the lowest in nine years. Will the company continue its aggressive pricing strategy despite the mounting pressure on margins?
A lot of people made a hue and cry about what will happen to margins after, according to them, we went into a price war last year. And I've tried to explain several times that no price-war is going on. Everything we are selling is on a par with the competition in terms of pricing. We had only one product that ..
Now, I can point to the fact that looking at our results for the last three-quarters, you'll see that our EBIDT ..
I had supported the reduction in GST but where I disagreed with him was that he wanted GST to be reduced to stimulate demand and I was not in agreement with that.
What I was in favour of was that when the emission norms come in next year and costs go up again across the industry, at that time if the reduction in GST is done, it will save the industry from further disruption.
Can you talk about Bajaj Auto’s three new launches in June?
In June we are goi ..
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