Strong domestic growth pushed sales higher for the third consecutive month for Bajaj Auto . The company reported 1 percent uptick in sales to 3.47 lakh units year-on-year. Domestic sales including two wheelers and three wheelers both improved while exports fell 10 percent, lower than last few months, says S Ravikumar, President – Business Development, Bajaj Auto. The new Bajaj V sold 32,000 units last month in domestic market. The export number stood at 1,43,00 units for May. For June, Ravikumar said he anticipates domestic sales of 1,80,000 units and exports of 1,35,000 units. The market share of company will be maintained at 20 percent levels, he added. Ravikumar said June and July, which are softer months, will see lower sales both in domestic market and exports. Below is the verbatim transcript of S Ravikumar’s interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18. Sonia: Every month we discuss the same issue, weakness in export sales and upmove in domestic sales. Tell us something different this time, any improvement that you have seen in some of the newer models or has it stagnated this month? A: The story of this month has been strong, domestic, both two-wheelers and three-wheelers together clocked 9 percent growth. Exports, we saw much greater fall in the previous months. This month, as I indicated, we delivered about 143,000 units which in a given circumstances is a good uptick there. So we fell by a mild 10 percent this time. So domestic plus 9 percent and exports minus 10 percent, so we are slightly above the water. However, you asked about specific models, Bajaj V has done 32,000 units in domestic. We are very happy for that result because it’s a differentiated product. The displacement at 150cc in a commuter is a strong differentiator. The robust masculine styling combined with modernity, so that is a nice differentiator. The market is appreciating that. The pool there is almost about 500,000 customers sitting in the mid segment. The yearly adopters from that segment are getting in now, so there is a long way to go and there is a lot of headroom there – that’s as far as star performer model in this month is concerned. Latha: The heartening thing is that your domestic sales are on a steady incline. There is no taking away from that. What kind of an average do you expect for this year? Can you tell us something about your market share? Has that improved? A: The market share at the wholesale level in the current month is around 20 percent but we are waiting for the retail numbers, at least it should be about 100 bps better in terms of market share at retail level and that is basically because we hear that some of the two-wheeler majors have build more than they retailed but those numbers got to still firm up. I will be able to talk about that maybe in the next month. However, when you talk about the whole year — I can show our own performance, last year from 15 percent market share to 20 percent market share. If I break down, there is a lot of cautious optimism about the guidance that we gave last time for the full year, everybody said that it’s aggressive etc but the main thing is the domestic motorcycles in that. Now we are shooting for something like 800,000 units more this fiscal compared to last fiscal in domestic motorcycles. Let us analyse this a bit more, the Avenger was there only for six months in the last fiscal; it is going to be there this time for the full fiscal. It will give me at least a delta of about 20,000 units a month and for six months that is going to be 120,000 units. V came in the month of March. We are sitting at 30,000 and the area is very vast there. So even if I take the current run rate of 30,000 a month, it is another 360,000 units. Even these two things put together, it is about 4.5 lakh units, about 60 percent of the delta volume that we are talking about and the current year’s product plan and its impact are yet to pan out. It is always interesting to climb Himalaya and the Everest, so we are shooting for that and we are quite hopeful. Sonia: Your hopes are high and you are optimistic but you haven’t been meeting your own guidance. The stock is down almost 2 percent today because last month when we spoke to you, you said in the month of May the sales will be 3.7 lakh units. You haven’t been able to meet that guidance. It has come in at 3.47 lakh units and that is the reason the street is finding it a bit tough to believe the aggressive guidance that the company is laying out. Can you give us a more realistic guidance of what the next couple of months could look like in terms of an average run rate both for domestic as well as for exports and overall? A: In terms of exports, the first two months, we delivered whatever I said. However, for the month of June we are looking at 135,000 units. However, putting more colour on exports, in the Nigerian market because that is an area of concern, we did about 21,000 units of two-wheelers in the month of April. In May that was around 27,000, so things have picked up mildly. It is not back at 40,000 type of a number yet and same way three-wheelers from 1,300-1,400 has gone to about 1,900-2,000 levels, so Nigeria is trending again, the incline is upwards. Egypt has been okay and other markets by and large have been okay. Domestic, June-July are typically softer markets. We finish the marriage season and come into the monsoon season and for a player like Bajaj, which is in high-end like Pulsar and all those things are strong. Those get better in the months of July and August. So we should be about 180,000 units or so in the month of June, so 180,000 units of two-wheeler motorcycles in domestic and another 25,000 units of three-wheelers in domestic. Sonia: So June will be lower than the month of May. In May you did 3.47 and in June you will be 3.40? A: That’s how the month pans out but the market share will be certainly maintained at 20 percent northwards and it will keep improving. Latha: Pricing remains steady? A: Pricing and cost structure is quite okay. Latha: Will you still have scope to improve margins. Are your raw material prices still getting softer or are you pushing up prices a bit? Will margin remain what they were in the last few months? A: Let’s leave at 20 percent plus EBITDA guidance and what we delivered; we maintain that throughout the year. However, we delivered 22 percent EBITDA last year. So let’s see how this year pans out but raw materials, for example steel was hardening mildly in the beginning of the quarter but that is toying a bit in May.
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