Rupee Aids Bajaj Overseas as Honda Grabs Share: Corporate India

Bajaj Auto Ltd., which lost its ranking as India’s second-largest two-wheeler maker to Honda Motor Co. this year, is banking on the rupee’s longest losing streak in 12 years to boost exports as sales drop at home.

Motorcycle deliveries by Pune, India-based Bajaj have fallen 14 percent this year, the most among India’s nine producers of the vehicle, compared with a 30 percent jump in Honda’s local two-wheeler sales, which includes scooters. Bajaj’s exports have grown for four straight months since August, the Society for Indian Automobile Manufacturers said.

Bajaj, India’s biggest exporter of motorcycles, seeks to raise overseas sales of its Pulsar and Boxer vehicles to maintain profitability as rivals in India tap scooter buyers and add dealers in the world’s second-largest two-wheeler market. The company wants increasing demand in Nigeria and Sri Lanka to boost margins, Managing Director Rajiv Bajaj said.

“With every passing year, the market gets more and more competitive and that’s not going to go away,” Bajaj said in an interview with Bloomberg TV India. “Although our sales have been degrowing, we’ve had one of the best years in terms of profitability. I think that is largely due to our strategy to be a global player.”


Bajaj exported 866,726 motorcycles, or more than 37 percent of the 2.3 million it produced in the eight months of the year that began April 1. The company sells motorcycles ranging from the 100 cc Discover to the 220 cc Pulsar. Sales at home dropped to 1.47 million in the eight months to Nov. 30.

While the rupee has rebounded 10.9 percent from a record low of 68.845 per dollar in August, it is still down 11.5 percent this year and is headed for a third annual decline, according to data compiled by Bloomberg. The currency dropped 0.4 percent to 62.105 to a dollar.

The rupee may drop to 63 to a dollar by the second quarter of next year, according to median survey of 45 analysts compiled by Bloomberg.

Rising demand for personal transport in India’s villages and small towns, especially among women, is spurring the 19 percent growth in the nation’s scooter sales. In comparison, motorcycle deliveries rose 3.3 percent in the period. Hero MotoCorp Ltd. and Honda have added new scooter models to tap the demand. Companies including Piaggio & C SpA, Yamaha Motor Co., and Suzuki Motor Corp. also sell similar vehicles in India.

Bajaj stopped making scooters in 2009, about 37 years after it started producing its Chetak brand.

Scooters Missing

Honda Motorcycle & Scooter India Pvt. overtook Bajaj in the year ended March 31 as India’s second-biggest two-wheeler maker. Lack of scooter models is hurting sales growth at Bajaj, according to Kunal Dalal, an analyst at Dolat Capital Market Ltd. in Mumbai.

“Honda and Hero have gained from a growth in scooter demand,” said Dalal “We don’t see any pickup in the motorcycle market for the next five to six months.”

Bajaj shares, which have dropped 8.4 percent this year, fell 1.2 percent to 1,929 rupees at 9:56 a.m. in Mumbai. Hero’s stock has risen 11 percent since January. The S&P BSE Sensex Index has gained 6 percent this year.

Bajaj reported an operating margin of 21.5 percent in the quarter ended Sept. 30, the highest since the three months ended March 2010, according to data compiled by Bloomberg, aided by the rupee’s plunge against the dollar this year.

New Models

“Exports do help in boosting margins as realizations are higher due to currency weakness,” said Yaresh Kothari, an analyst with Angel Broking Pvt. in Mumbai. They have been losing share to Hero and Honda and “while the new Discover models will help them arrest the decline in domestic market share, the competition is getting tougher.”

Bajaj, founded in 1945, introduced a new version of its Discover 100 cc motorcycle in October, called the Discover 100 M, priced from 44,754 rupees ($720) to take on Honda’s 45,164 rupee-Dream Yuga and Hero’s Splendor NXG. Bajaj had a 15 percent market share of the two-wheeler segment as of November, compared to 18 percent a year earlier, SIAM data show.

Tokyo-based Honda is seeking to overtake Hero as the nation’s biggest two-wheeler maker, three years after ending a joint venture with the Indian company. Motorcycle makers are banking on a lack of public transportation in rural areas of the country of 1.2 billion people.


Hero, which aims to double sales to 12 million units by 2020, plans to spend about 1.5 percent of annual revenue on research and development, Anil Dua, the company’s sales chief said last month.

Bajaj seeks to increase Discover sales to as many as 110,000 units a month from about 70,000 units by January, Chief Financial Officer Kevin D’Sa said on a conference call in October. The company will introduce another version of the Discover in February, Bajaj said.

Bajaj is also betting on Africa, which accounted for 47 percent of its exports last year, to boost margins.

“Growth will be driven by Africa,” D’Sa said in the October conference call. The company is looking to grow in countries such as Sudan and Tanzania, apart from Nigeria, its largest African market, he said.

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