Bajaj Auto?s profits zoomed 163% to R1,400 crore in Q4 of FY11 from R532 crore in Q4 FY10. A sales tax deferral loan/incentive of R1,195 crore was prepaid at a discounted value of R368 crore resulting in a surplus of R827 crore and this sum has reflected as an exceptional item in the P&L account and helped the company post its highest ever profit after tax. Sales turnover in Q4 FY 11 went up 25% to R4,301 crore with the company selling 9.48 lakh units. Profit from operations was up 12% to R831 crore while profit before exceptional item was at R932 crore, which was a 19% growth over same time last year. The company’s operating EBITDA margins was at 20.5%.
Rajiv Bajaj, MD of Bajaj Auto said despite all cost pressures from commodities it had managed to be in the 20% EBIDTA zone. The interest rate hikes, petrol price increase and inflation of any kind has a dampening effect and works adversely, Bajaj said. But having witness all this in FY 11, Bajaj believed the would continue to grow in FY 12 in the double digit region. He said the April and May numbers of the current year were higher and the momentum on exports too continued. For FY12 it was Vision 2020, Bajaj said. He has set a target of growing sales at 20% with margins in the region of 20%. ?Going forward it would be very hard to maintain a margin in excess of 20% but we will not stray from there,: Bajaj said at a news conference in Pune on Wednesday.
The company has no plans to make any capex to expand capacity considering the market conditions. The company is operating close to its capacity currently with motorcycle capacity at 3,50,000 units a month and commercial vehicles at 45,000 units a month. ?We like capacity to lag demand. We will not be pushing up capacity till mid of this financial year and then we will decided on capacity expansion if growth was sustainable and would be maintained,? Bajaj said. The company ended FY 11 with a 41% growth in sales turnover toR16,975 crore.
Plans to enter Brazil mkt; small car by mid next year
Bajaj Auto is all set to enter the Brazilian market. This will be an entry first through KTM Power Sports AG, Austria where Bajaj Auto has a 40% stake and this be followed by entry of Bajaj’s own brand, Pulsar and Discover. ?We will use KTM as an entry strategy,? Rajiv Bajaj, MD of Bajaj Auto said. Bajaj said KTM had entered Brazil, the third largest market with the 125 cc Duke brand of motorcycle developed with Bajaj Auto. Duke is being manufactured at Bajaj Auto?s Chakan plant in Pune. ?Exports have started to Europe and they will export it to Brazil by end of the year,? he said at a news conference in Pune on Wednesday.
?KTM had advised us to manufacture 11,000 KTM Dukes for this financial year at around 1,000 units a month. But we have already exported 1,700 to 1,800 units in the first two months and as we get closer to the KTM launch, it has asked us to increase supply. We will try to do 2,000 units a month, Bajaj said. The company would be using its surplus cash for expanding into Brazil. As on March 31, 2011, the company had surplus cash and cash equivalent of R 4,239 crore. For entering Brazil market, we would need a lot if investments in setting up distribution network. and marketing. After Brazil, the would consider going to other large markets such as Thailand and Malaysia.
Bajaj also said the four-wheeler project with Renault-Nissan is on track and going as per schedule and as agreed between him and Carlos Ghosn, chief executive officer of Renault, and it will be launched in the middle of next year. The deal between the partners is clear with Bajaj developing the model and Renault-Nissan would market it and we stand by that and have been sharing milestones with our partner, Bajaj said. ?If they don’t like what they see, they can walk away from it,? Bajaj said. ?It is not an exclusive work or Renault-Nissan. It is not a product but a platform on which we will make our own three and four wheeler and launch a product middle of next year,? he said.
