Bajaj Auto profits plunge 57 per cent to Rs 263 crore

Our Corporate Bureau

Mumbai, May 7: BAJAJ Auto Ltd (BAL) has registered a 57.2 per cent slump in net profit for the 2000-01 fiscal at Rs 262.56 crore as against Rs 613.73 crore for the last fiscal. Sales and income from operations dropped by 3.2 per cent to Rs 3,690.01 crore as against Rs 3,810.49 crore for the last fiscal.

Other income also reported a drop of 34.8 per cent at Rs 263.94 crore as against Rs 405.06 crore for the last fiscal.

The board of directors of the company has recommended a dividend of Rs 8 per share. The total amount of dividend and tax thereon aggregated to Rs 89.20 crore.

Bajaj Auto has incurred an one time expenditure of Rs 79.94 crore on account of the voluntary retirement scheme which has resulted in reduction of workforce by 2017 to the current levels of 13900.

The reduction in surplus investible funds due to the buyback of shares was to the tune of Rs 728 crore.
According to BAL president Rajiv Bajaj: “The fall in profits during the year is mainly attributable to the overall shrinkage of the geared scooter segment which registered a fall of 38 per cent (from 9.79 lakh units in 1999-2000 to 6.04 lakh units in 2000-01).”

Sales in the geared scooter segment for BAL stood at 4,35,699 units as against 7,39,916 units in the last fiscal — a drop of 41 per cent.

Mr Bajaj outlined a three-pronged strategy for the company. The first was to strengthen the focus in motorcycles by strengthening the supplier-dealership network.

He added that BAL would strengthen the joint venture with Kawasaki and that the India operations contributed 40 per cent to Kawasaki’s worldwide sales.

Secondly, the emphasis would be on product development. He said that ‘Pulsar’ would be the first motorcycle from Bajaj Auto’s stable, independent of the venture with Kawasaki.

Thirdly, the company would be working on cost reduction through value engineering. “We have achieved an average cost reduction of around Rs 4,000 per motorcycle,” according to Mr Bajaj. He added that BAL had an ambitious growth target of 50 per cent in motorcycles and was planning to sell 6 lakh units in the current fiscal.
BAL will be launching four new models in 2001-02 — Acer, Caliber Croma in June, Legend NXT in the scooter segment and Pulsar in August.

Mr Bajaj said that exports, which currently stood at around 30,000 vehicles, was likely to be around 51,000 by the end of the current fiscal.

However, he denied that BAL was planning to hive-off the motorcycle unit into a separate company. BAL was also talking to suppliers in China for low cost components. Mr Bajaj, however added that quality would be a major criteria and the company would not dump local suppliers just on account of lower costs.