Bajaj Auto to lift FY11 sales 40% to 4 million units

Bajaj Auto to lift FY11 sales 40% to 4 million units

Mumbai: Bajaj Auto, India’s No.2 motorcycle maker, aims to boost sales by about 40% to 4 million vehicles in the fiscal year beginning April, powered by a 100cc bike it launched last year.

The target was set at a board meeting on Wednesday, the company said in a statement on Thursday, adding it hoped to sell almost 2.9 million vehicles including exports of 900,000 in 2009-10, up 32.4% from a year earlier.

Managing director Rajiv Bajaj later told television channel CNBC TV18 sales in the coming year would be driven by the 100cc Discover that notched up sales of 500,000 units within 225 days of launch, and the more powerful Pulsar.

The two models should contribute more than 2 million units to sales in 2010-11, when total bike sales are expected to reach 3.6 million units, the company said.

The board also approved raising manufacturing capacity to 5 million vehicles annually from 4 million now in anticipation of continued growth in the domestic and world markets in 2011-12.

“The capacity we have now is sufficient for next year’s target. But we need to expand considering future demand," Bajaj told CNBC TV18.

He said there was strong demand from overseas markets such as Sri Lanka, Africa and Latin America. Exports are expected to reach 1 million in 2010-11.

The company, which also makes motorised 3-wheelers, has sold nearly 2.6 million vehicles in the first 11 months of the current fiscal year ending March, including 1.75 million vehicles domestically.

Bajaj said the company hoped to maintain its operating margin at about 22-23% in the current quarter, helped by its pricing power and lower operational expenditure but it could dip in the coming year.

“Next year, maybe we cannot maintain at the 22% level, but we do not expect too much of a dip either, as our sales are also going up," he said.

Shares in Bajaj Auto, valued at nearly $6 billion, ended up 1.6% at Rs1,879.55 in a firm Mumbai market.

The stock had leapt 380% in 2009, outpacing the main index that rose 81%. It has gained 6.7% so far this year compared to a 0.4% dip in the main index.