Sri Lanka is one of the major markets for Bajaj Auto and about a third of its 150,000 units of exports annually to the country comprise of the high margin three wheelers.
MUMBAI: Bajaj Auto, one of the major three wheeler player in Sri Lanka, doesn’t see any impact on its earnings or profitability on the island nation’s recent decision to ban import of two-stroke three wheelers from 2008, executive director Sanjiv Bajaj said Thursday.
Mahindra & Mahindra, another Indian three-wheeler manufacturer, doesn’t export to the market.
Sri Lanka is one of the major markets for Bajaj Auto and about a third of its 150,000 units of exports annually to the country comprise of the high margin three wheelers. Of these, over 95% are two stoke, which is being banned on account of their polluting nature.
“We manufacture a number of options for our three wheelers, including four stroke and alternate fuel like LPG, CNG, and diesel. In Sri Lanka, the customer preference was towards two stroke petrol. We don’t foresee any impact on the ban since we have other engine options to supply to that market,” Bajaj told DNA Money. The price difference between two and four stroke engines is about 10%. Bajaj said margin expansion was unlikely on account of the market shift towards four- stroke engines since production cost for four-wheelers was also higher by the same magnitude.
Looking at the increasing level of pollution in the country, Sri Lankan government has put the blame on Bajaj Auto, the market leader. “We became aware that the Bajaj company in India was producing these two-stroke vehicles exclusively for Sri Lanka,” Anura Jayatilake, director, Environment, economics and global affairs, ministry of environment, had said.
Sanjiv Bajaj however refutes this. “It is not true that Bajaj sells its 2-stroke 3-wheelers only to Sri Lanka. Almost 55% of our domestic three wheeler sales in India are 2-stroke 3-wheelers. We also export our 2 stroke three wheelers to Sudan, Nigeria, Peru, Somalia, Tanzania,” he said.
While the existing two -stroke three wheelers would be allowed to run in the island nation even post Jan 1. 2008, import of spare parts would stop from 2011 onwards.
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