Sales turnover was higher at Rs 1,717.32 crore during the first half ended September 1999 against Rs 1,692.40 crore during the corresponding period of the previous fiscal. Net profit, however, rose marginally to Rs 248.48 crore from Rs 243.04 crore during the corresponding period last year. That operating profit was under pressure is evident--it declined to 14.93 per cent from 16.76 per cent. What buoyed the bottomline was `other income' which recorded a hefty rise from Rs 128.54 crore to Rs 168.10 crore. The EPS surged from Rs 40.38 to Rs 45.20 during the period.

"We have been hit hard by the shift from scooters to motorcycles. Scooter sales fell by 14 per cent during the first half and despite a rise in sales of motorcycles and scooterettes, our profitability was adversely affected," Bajaj Auto general manager Sanjeev Bajaj said.

Total expenditure during the first half increased to Rs 1,460.91 crore from Rs 1,408.77 crore last year, although interest charges fell by half to just Rs 1 crore. Provision for depreciation was higher at Rs 70.03 crore as against Rs 64.01 crore in the same period last year, while the tax liability increased from Rs 103 crore to Rs 105 crore.

The company has received tax refund aggregating Rs 23.92 crore in the first half, while expenses relating to earlier years stood at Rs 2.59 crore, as against Rs 1.97 crore last year.

"With the new products well received in the market, we expect the second half to be much better than the first," Bajaj said. Sale of scooterettes, driven by the Spirit, recorded a 36 per cent growth in the second quarter, while sale of Japanese motorcycles were higher by around 25 per cent during the period. Moped sales were, however, lower during the first half of the current financial year.

"The Boxer, which is targeted at the lower end of the market, is doing well and the company has sold 2,500 units last month. Even the Caliber sold around 42,000 units in the second quarter," Bajaj said.

INSIGHT
Margins under pressure

The second quarter marks a slight improvement for Bajaj Auto with revenues improving 4 per cent, compared to a drop in first quarter. However, the 12 per cent bottomline growth in the second quarter is largely due to a 52 per cent jump in `other income'. There is nothing to write home about the first half of the current fiscal. Disappointment is writ large for the two-wheeler major, what with both topline and bottomline growth actually stagnating. The two-wheeler major has posted sales of nearly 6.31 lakh units which marks a 7.64 per cent drop in volume sales over the last quarter. In line with this, sales at Bajaj Auto have increased a mere 1.47 per cent to Rs 1,717.32 crore, thanks largely to higher realisations from its new product launches.

Besides, another area of worry for Bajaj Auto could well be the dwindling margins. In fact, operating margins for the six months ended September have actually dipped from 16.76 per cent to 14.93 per cent. The company sources attribute this to increased material costs, higher adspend and a new wage agreement signed by the company.

-- Percy Dubash