Bajaj Auto sales dip during first quarter

PUNE, July 26: Bajaj Auto Ltd (BAL) has registered a 6 per cent fall in turnover and a 17 per cent fall in total vehicle production in the ...

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PUNE, July 26: Bajaj Auto Ltd (BAL) has registered a 6 per cent fall in turnover and a 17 per cent fall in total vehicle production in the first quarter, April- June 1997, over the same period last year. Chairman and managing director Rahul Bajaj warned shareholders of a "difficult" year ahead, with the possibility of regaining market share only by 1999-2000.

Speaking at the company’s 52nd annual general meeting here today, Bajaj said the entire two-wheeler market shrank by 1.1 per cent in 1996-97, while BAL lost 6.5 per cent of its two-wheeler market share even as it has increased its three wheeler market share by 2.5 per cent.

Bajaj attributed the loss of market share to the cascading effect of reduced capital expenditure by government which in turn has lead to reduced consumer expenditure. This is the first time BAL has lost market share and production is down. A visibly angry Bajaj warned against complacency, adding that BAL would not be able to recapture the lost market share in the current fiscal.

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Unveiling a range of new products to be launched in the next two years, Bajaj was confident that these would power the two-wheeler giant’s ride to its premier position by 1999-2000. By that time, BAL would have a presence in all segments of the market, from the premium to the lowest.

Madhur Bajaj, president, BAL, said the bad patch began in the second half of 1996-97 and has continued into the first quarter of the current fiscal. He said exports also fell during 1996-97 by 16.5 per cent since the star markets of Bangladesh and Colombia were down. The other South American markets too were affected by the Mexican wave, he added.

The resolution declaring the issue of one bonus share for every two existing shares held through the capitalisation of its free reserves to the extent of Rs. 39.80 crores was passed with a huge majority although it was not unanimous. The bonus issue is expected to bring the paid up share capital of the company more in line with the capital employed in the business.

By a special resolution, 1 per cent of the company’s net profit will be paid to the non-wholetime directors of the company for a period of five years from April 1, 1996. By another special resolution, Sanjiv Bajaj was inducted onto BAL board.The hike in the price of flat steel will affect scooter prices after September 1997, Bajaj said, when it will cost BAL Rs. 15 per scooter. BAL’s third plant, at Chakan, will manufacture three vehicles from among the new products lined up. The capital expenditure for the first phase here is Rs.135 crores while the capital expenditure to create capacities for the manufacture of 2 million vehicles, is Rs. 365 crores, making a total of Rs. 500 cror. Bajaj told shareholders that the State government is not willing to sell its stake in Maharashtra Scooters Ltd.