Bajaj Auto's export is expected to be over 20% in FY23: Rakesh Sharma, ED

Rakesh Sharma, Executive Director, Bajaj Auto Ltd, talks about Q3FY22 numbers, export market, and plans related to the electric vehicle space among others during an interview with Swati Khandelwal, Zee business. Edited Excerpts:

Q: Numbers have disappointed a bit this time and there has been pressure on profitability and margins. How will you summarize it? Also, going forward, what are your expectations?

A: If you will compare this quarter’s performance with the corresponding quarter of the previous year then there is a fall. But in the third quarter of last year was a great quarter because two to three things happened at that point in time:

(i) There was a pent-up demand as the first and second quarters were impacted due to the COVID.

(ii) Cost-increases in the raw materials started coming after the third quarter. There was a

(iii) tremendous cost increase in the fourth quarter of that year and first, second and third quarters of this year. So, the demand environment was so soft that we could not recover the entire cost increase through pricing. The recovery has started now. We, at least, at our company are comparing this quarter’s performance with the previous quarter. So, we tried to keep our third quarter’s performance better than the second quarter.

Now, the demand environment for motorcycles is still soft. In October-November, which was the festive period, industry’s ratings declined by 4% and in December Industry’s weightage – these are vehicle details – declined by almost 20%. So, the two-wheeler industry declined by around 11% in the third quarter. But our effort was that even in this environment if we can somehow improve the profitability and market share a little bit, these were our objectives. So, our market share has improved by 1%-1.50% and profitability compared to the second quarter has improved slightly by 0.6%.

Q: For the calendar year 2021, exports, by volume exceeded 2.5 million units, which is your highest ever. What’s the target for 2022 and are you looking at new geographies or you will increase market share in existing geographies only?

A: In fiscal 2021-22, it seems that we will cross 2.5 million. The other reason behind it is that the retails we have done in the third quarter – this 2.5 million is shipment, then it goes to the distributors, then to the dealers – also record-breaking. We haven’t had such huge retail in any quarter before this. The second thing is that there has been tremendous growth in Pulsar and Dominar segments. Overall, it is less than 20% but due to these brands, Bajaj has a statured improvement on its customers and dealers. As they are high-tech, have better styling and design, higher-priced, they create a division. So that too has been a great development. This year, we will close the scores at around USD2.3 billion (i.e., Rs 16,000-17,000 crore) and this is the highest ever for us. Our only endeavour will be increasing this tempo. This year, our growth will be around 23% and it will be our endeavour that even in FY2022-23 – may we not do it 23% – to take it forward and set another new record in FY2022-23. So, an improvement over FY2021-22.

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Q: Electric Vehicle (EV) space is buzzing a lot and we are seeing a lot of interest on the EV front in the two-wheeler segment from your competitors. You too have announced plans to invest big in manufacturing EVs in the Aurangabad plant. What’s the quantum CAPEX across facilities and by when can we start new EVs to roll out?

A: The announced investment of Rs 300 crore is for a two-wheeler plant in Pune. The first vehicle from the plant will be rolled out from June onwards, these will be the two-wheelers of the Chetak portfolio. The plant you talked about, the second plant, then we have filed our plan under the PLI application that when three-wheelers will be electrified it will be carried out in the existing plant at Waluj, Aurangabad. As the demand will increase and if we have to invest in three-wheeler electrification then it will be done in the Aurangabad unit. So, three-wheelers will be developed at Aurangabad and two-wheelers at Pune.

Q: By when we will get a chance to see EV in motorcycles?

A: It’s up to the customers. Converting motorcycles into EVs is a bit tricky task. Because space is slightly less for the engineers and designers in the motorcycles due to which battery should be kept compact. Due to the compactness of the battery, its cost increase and when it is charged or discharged, heat is generated in it, so there are some technical difficulties due to which electric application turns a bit more technically difficult in normal motorcycles. But in the case of sports motorcycles, especially the high-end sports, like off-roaders, motocross, electric motors have an important contribution to the performance of the bike. So, it will come first in those. Space is more in scooter form due to which electric penetration will happen first in scooters.