Bajaj Auto sales drops 10%, profit at Rs 756 cr

High interest rates on loans, coupled with banks getting more selective in loan disbursement continue to take its toll on the Indian two-wheeler industry. India’s second largest two-wheeler manufacturer, Bajaj Auto Limited, on Thursday said that its net profit for the fiscal ended March 2008 stood at Rs 755.9 crore. This figure could not be compared with that of the previous fiscal since the erstwhile Bajaj Auto Ltd has now been demerged into three companies — the new Bajaj Auto Ltd (BAL), Bajaj Finserve Ltd and Bajaj Holdings & Investment Ltd, operative with retrospective effect from April 1, 2007.

The earlier Bajaj Auto Ltd has now been renamed Bajaj Holdings & Investment Ltd (BHIL) and is listed on the BSE. The new BAL and Bajaj Finserve will be listed on the BSE on May 26. Turnover (net of excise) for BAL stood at Rs 9168.8 crore for the fiscal 2007-08.

However, the company said that total sales for the financial year 2007-08 dropped 10 per cent to 2,451,407 units as against 2,721,824 units in the last fiscal. Explaining that more than interest rate, issues of financing are hitting the market, Rajiv Bajaj, managing director, Bajaj Auto, “I do not see any revival in sales this fiscal. We are prepared for a flat market this fiscal.”

He added that the company does not see any revival in the sales this fiscal due to the “fundamental pullback of finance”. For two-wheelers alone, the company has reported a drop of 10 per cent in sales to 2,161,095 units from 2,399,996 units last year. The company has drawn Rs 100 crore odd capex plan for this fiscal. “Ninety per cent of this will go into R&D,” said Bajaj.