Mumbai: Bajaj Auto Ltd expects new launches to drive double-digit growth in motorcycle sales in 2009-10 after volumes fell 11% in the last fiscal year, managing director Rajiv Bajaj said on Thursday.
After the company reported a lower-than-expected March quarter profit, Bajaj said a line-up of only entry-level and premium bikes had hit sales, but the launch of a mid-tier bike in July should give it a better balance across segments.
“We see a greater growth for two-wheelers from the domestic market this year,” he told reporters and analysts.
“We need to get the product right in the mid-segment. We need one solid success. Hopefully that will happen when the new launch takes place in July.”
Ahead of the launches in the second half of the year, Bajaj said there had been a marginal improvement in sales in May.
Bajaj Auto said net profit for the quarter ended 31 March, its fiscal fourth quarter, rose 7.4% to Rs1.3 billion ($27.4 million). Sales dropped 9% to Rs18.83 billion.
A Reuters poll of brokerage had forecast net profit of Rs1.72 billion on net sales of Rs19.22 billion.
The company said it took a charge of Rs610 million for a voluntary retirement scheme and mark-to-market loss of Rs220 million on foreign exchange hedges.
For 2009-10, which began on 1 April, the company has hedges worth $535 million in the range of 47 to 55 rupees per dollar. The rupee ended at 47.4 on Thursday, near its high for 2009.
The company got some benefit from easing steel prices in the March, and said the the full benefit of reductions in steel and aluminium prices was expected in the current quarter.
Bajaj expected to launch in 2011 a small car being jointly developed with France’s Renault and Japan’s Nissan Motor Co, although there was no formal memorandum of understanding yet as negotiations were still on over branding.
“We continue to work with Renault and Nissan to develop this car,” Bajaj said, adding since his company was a new entrant to the car market, it had to develop a unique vehicle.
“Bajaj is looking to establish a clear brand identity.”
Shares in Bajaj, which has a market value of $2.7 billion, rose 5.6% to Rs934.2 in a Mumbai market fell 2.3%. The stock has risen 139% so far this year.