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Bajaj Auto sees exports overtaking local sales

Saturday, 22 October 2011 - 8:00am IST | Place: Mumbai | Agency: dna

Bajaj Auto, the second largest two-wheeler company, is sharpening its focus on exports to outgrow domestic sales.

Bajaj Auto, the second largest two-wheeler company, is sharpening its focus on exports to outgrow domestic sales.
Currently, overseas market contributes over 36% to its total vehicle sales,  including two-wheelers and three-wheelers.

“As compared to other auto companies, our share of exports is much higher. Exports will outstrip domestic sales in the near future for Bajaj Auto,” said Rajiv Bajaj, managing director, Bajaj Auto.

Bajaj Auto currently has its footprint in 50 countries and is looking at newer geographies to increase its export share.
Regions like Africa and Latin America are major contributors to company’s exports.

Latin America contributes 20% of company’s international business, excluding Brazil. “We are devising a business model for entering the Brazilian market. It is a large market where Honda has a strong base. We have to consider entering this market by devising a good strategy, said Rakesh Sharma, president, international business, Bajaj Auto.  

Rajiv Bajaj said, “Market size outside India is four times higher than that of domestic market. We have a global share of around 10%. As far as three-wheelers are concerned, our exports are higher than the domestic. We see a similar trend for motorcycles too.” 

Bajaj Auto is on track to meet the sales target of 4 million vehicles by the end of this fiscal (including exports). The company has sold 2.25 million vehicles in the first half of this year and is positive about achieving 4.5 million units by the year-end. 

The company has recently reported a muted 6 % rise in net income at Rs726 crore for the September quarter on revenue of Rs5,342 crore, which rose 21% as its sales volume grew 16 % to 1,164,137 units. The lower numbers were primarily due to Rs95-crore hit the company had to face on forex on valuation of forward contracts that were charged to the profit and loss account in this quarter.

Meanwhile, Bajaj Auto has kept its expansion plans on hold. It was earlier planning to look at Gujarat for setting up operations. However, looking at the overall industrial slow down, the company is now closely watching the sales trend before deciding on further course of expansion.

Even the issue of non-repayment of value-added tax of `1,100 crore by the Maharashtra government, had prompted the company to look for expansion in other states.

“However, with Maharashtra government responding positively by paying `800 crore now, we have closed the issue,” said Sharma.
 Though two-wheeler segment is growing robust so far, there is a possibility that the industry may exhibit some slowdown. Right now we are not setting up any plant,” said Bajaj.

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