Bajaj Auto will launch Innovative Financing Schemes in March & April: Rakesh Sharma, ED

Rakesh Sharma, Executive Director, Bajaj Auto Ltd talks about February 2021 sales numbers, product pipeline for 2021 and commodity price hike and its impact on the company among others during an interview with Swati Khandelwal, Zee business. Edited Excerpts:  

Q: Summarize the numbers of this month and do you the performance was in the line with your expectations? Do you have a better outlook for the future?

A: The performance was slightly better than our estimates. You will probably feel less in the numbers that are visible to you because you can just see our billing and billing numbers in our retails but the retail that the dealers have done is much more than the bill. And, we have also reduced our stock this month. In domestic motorcycles, it was our strategy to reduce our stocks this month because we have to introduce three to four new entry-level products in the market in March and April. So, there was a need to destock old products. So, the performance at the retail level has been good and at the billing level, we have slightly pulled our hands. I sincerely hope that these new presentations at the entry-level market, which is an effort to keep good propositions with the customers and to upgrade them and these customers, will reward us in the coming months. You would have seen that we followed the same strategy last year in the 125cc – in which we presented the best 125cc and the best 125cc in the market – and it was received well. The performance of these presentations helped Bajaj too perform. As far as domestic three-wheelers’ is concerned, there is a continuous improvement in the numbers but there is a very little improvement. There is a monthly improvement from 13,000 to 14,000 to 15,000 to 16,000 but improvement is happening. Now, it seems that the auto-rickshaw drivers have largely returned on the roads and it is the right time to present some innovative finance scheme. And through it, we will try to bring some movement in the markets in March and April. And the export, which constitutes 50% of our business, is at double-digit growth and will continue to be the same. 

Q: Update us on the product pipeline of Bajaj Auto for 2021 and the segments in which the company will focus? Also, tell us about the response you are getting on Chetak, which was launched on a pilot basis in a few cities? 

A: In the next two-three months, i.e. March, April and May, we will focus on the entry-level because 100cc & 110cc is the plain commuter. It will be our endeavour to move those who are using the kick-start till date to self-start because we think why in today’s world someone is starting a motorcycle by kicking, why self-start facility should not be provided to them. So, we want to move them towards it. Those who are using 100cc should be taken to 110cc fine speed. Those who are using normal braking or drum braking should be upgraded to safer braking systems. We will introduce these small innovations at the entry-level in the new products this month and the next month. July onwards, our focus will shift towards 125cc plus segments, which are premium segments and new products will be introduced in this segment, as well. Hopefully, few good products will be introduced before the Diwali Season. And the process will continue further till December, January and February of the next year. We have the visibility of the entire product line and all of these models are currently under testing. At the time, when the market is tuff for the motorcycles – it is not like the cars – and we are still seeing that overall retail is slightly negative. We understand that the new products will play an important role in bringing the customers back to the showrooms. This is the objective of the product pipeline. As far as electric vehicles are concerned, Chetak has had a tremendous reception in the segment. But the disappointing thing is that we have faced a lot of problems associated with the supply chain. First, we faced the problem due to the COVID, and then we faced problems related to semi-conductor and imports due to which we are not being able to complete the bookings. Our vendors are saying that the supply chain is likely to improve by July-August-September and after that, we will open the bookings. And, if we get the supply chain support than we have plans to take Chetak – between October and March 2021 – to 30 cities and this will be our endeavour. 

Q: Commodity prices are visible and it has gone up too high. What impact it will have on your company and how will you mitigate it? Do you have any plans related to the price hike, if yes, then when and to which extent? Also, what is your outlook on the margins?

A: I estimate that in the next few months there would be a 3-4% cost hike in the products because the demand recovery has not to be established completely. So, we are still studying the level to which the cost hike can be recovered through the price increase. It is always our endeavour to move forward while safeguarding the bottom line and the profitability and it will be our endeavour. Possibly, we will begin to experience the cost increase from April 1, 2021, itself but complete recovery may lag slightly and during the period the cost will be more and the recovery will be less. But how much time the recovery will take will be known only after seeing the competition. We will take the steps in it after studying the demand that is coming from it.