Mumbai: India’s second largest two- wheeler firm Bajaj Auto Ltd reported a net profit of Rs137.7 crore for quarter ended March 2008 on revenues of Rs2,081 crore, even as motorcycle sales fell 12% in the quarter. The company didn’t provide figures for the year-earlier period since these are not comparable owing to a demerger that split operations into three separate businesses.
Managing director Rajiv Bajaj said he isn’t expecting a revival of sales this year.
Bajaj Auto’s parent, previously called Bajaj Auto Ltd, was split into the new manufacturing company and a finance company Bajaj Finserv Ltd. It then changed its name to Bajaj Holdings and Investment Ltd.
The auto business had an operating profit of Rs179 crore which is a 34% decline to the Rs272.3 crore profit the company reported for the same business a year ago.
The quarterly revenues of the auto business too declined 10% compared with the Rs2,325.57 crore segment revenue reported by the company for this business a year ago, as it sold fewer vehicles with financiers staying away from the market citing higher default rates. Nearly half of all two-wheelers in India are bought on credit.
Last month, Bajaj Auto’s rival Hero Honda Motors Ltd beat analyst expectations with a 53% rise in net profit to Rs299 crore buoyed by sales of premium bikes.
“It is wishful thinking on part of companies that things will change,” said Bajaj. “We are prepared for flat growth.”
Bajaj Auto also reported a mark-to-market loss of Rs16 crore on foreign exchange losses in the quarter. For the full fiscal year, the company reported a net profit of Rs749.5 crore on revenues of Rs9,164 crore.
“The results are in line with expectations,” said S. Ramnath, vice-president of IDFC-SSKI Securities Ltd. “Going forward exports should drive volumes.” Bajaj Auto has operations in Indonesia and exports both two- and three-wheelers to South-East Asia and Latin America.
Bajaj Holdings and Investment Ltd holds a 30% stake in the new unlisted Bajaj Auto Ltd and Bajaj Finserve Ltd. 2007-08 is the first year of the three companies operating as separate entities. The two new companies will list on 26 May.
The parent company Bajaj Holding and Investment Ltd reported a profit of Rs79.3 crore on revenues of Rs62.6 crore for the quarter ended March. The stock rose by 3.11% to close the day at Rs672.05 in a weak Mumbai market. Bajaj Finserv said it posted a loss of Rs 32.7 crore in the year ended March.
Bajaj Auto has also formed a joint venture with Renault SA and Nissan Motor Co. to develop an ultra-low cost car for $2,500 (Rs1 lakh) in India. The new car will go on sale in 2011 and be manufactured at a 400,000-unit new greenfield facility in Chakan, Maharashtra.
Bloomberg contributed to this story.