Bajaj Auto Q1 net profit drops 61% on coronanvirus woes: Revenues down to Rs 3,079 crore

Going by the numbers till July 21, Bajaj Auto is seeing a faster recovery in the motorcycle segment and the three-wheeler segment will come back later, said Soumen Ray, CFO, Bajaj Auto.

By:July 23, 2020 10:11 AM

Bajaj Auto on Wednesday reported a 53% year-on-year fall in net profit to Rs 528 crore for the June quarter. The company’s revenues fell 60% to Rs 3,079 crore. The company reported a 64% drop in sales volumes to 4,34,103 units with domestic sales falling by 72.56% at 1.91 lakh units and exports slipping by 54.21% at 2.51 lakh units due to the Covid-19 pandemic and the subsequent lockdown that disrupted supply lines as well as demand. In value terms, exports were to the tune of $217 million (Rs 1,651 crore) during the quarter. The Ebitda for the quarter was at 14.3%. Last year, the company had achieved Ebitda levels in the range of 18% to 19%. “We managed a decent performance in a desperate quarter,” said Rajiv Bajaj, MD and CEO of Bajaj Auto. Despite operating at 65% capacity they were able to achieve a break-even of 19.8% in June 2020 because of their frugality and lean manufacturing, he said. Bajaj said they were returning back to the normal volumes in August 2020 and by September and October 2020 they will see their best ever performance if not better than that. Bajaj Auto did not have any salary cuts or lay offs including contract workforce, Bajaj pointed out. The company was looking at building immunity in its business model and becoming more anti-fragile, Bajaj said.

Going by the numbers till July 21, the company is seeing a faster recovery in the motorcycle segment and the three-wheeler segment will come back later, said Soumen Ray, CFO, Bajaj Auto. “Major decline period is over. There is a demand which is coming back and there is a sequential improvement, Ray said. The company has seen a 85% recovery in both domestic and export markets in the motorcycle segment in July 2020 and in the last ten days it had gone to 90% levels of what it had in July 2019.” Bajaj Auto’s CFO said the company had cut down overhead costs by 40% and were able to deliver 14.3% Ebitda margins when sales were down. Shifting to BS VI resulted in additional costs which impacted margins, Ray said. There were forex gains during the quarter as realisation per US dollar was Rs 75.6 in the Q1FY21 compared to Rs 72.1 in Q4FY20.

Rakesh Sharma, ED, Bajaj Auto, said market recovery was round the corner and they see strong indicators that demand is swiftly coming back. As they see market restore they would loosen the purse strings on marketing and advertising, Sharma said.  The company said production had been restored at all the three plants at it had reached 65% to 70% levels but sporadic lockdowns was still disrupting supply chains.

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