Geared segment drags down Bajaj Auto's profit

By Our Staff Correspondent

MUMBAI, MAY 7. Bajaj Auto (BAL) has announced a sharp fall in its net profit at Rs. 262.56 crores for the year ended March 2001 against Rs. 613.73 crores in the previous year. The directors have recommended a dividend of 80 per cent.

Total sales and other income were Rs. 3,963.94 crores against Rs. 4,215.55 crores. Of this, sales and income from operations were Rs. 3,690.01 crores against Rs. 3,810.49 crores in the previous year. Wind power generated and captively consumed amounted to Rs. 9.99 crores (nil) and other income was Rs. 263.94 crores (Rs. 405.06 crores).

The gross profit before depreciation and tax was lower at Rs. 546.79 crores against Rs. 970.54 crores. The company provided Rs. 177.29 crores (Rs. 145.31 crores) for depreciation and Rs. 79.94 crores (nil) for extraordinary item of expenditure - compensation under voluntary retirement scheme (VRS). A total of 2,017 employees opted for the VRS and the employee strength as of March 31, 2001 was 13,900 (17,200). The company provided Rs. 27 crores (Rs. 211.50 crores) for tax.

The company has attributed the fall in profits to the overall shrinkage of the geared scooter segment which registered a fall of 38 per cent. The company being the leader in this segment has borne the brunt of this fall. Besides, income from investment of surplus funds was lower by Rs. 141.12 crores at Rs. 263.94 crores (Rs. 405.06 crores) with Rs. 728 crores used for buyback of shares and Rs. 80 crores for VRS.

During the year, the company's total two-wheeler sales, including CKD packs, were 10.53 lakh units (12.40 lakh units) and the company retained its leadership status. It sold 1.55 lakh three- wheelers against 1.71 lakh vehicles. Total sales of two and three-wheelers during the year were 12.09 lakh units (14.12 lakh units).

In geared scooters, the company sold 4.35 lakh units (7.39 lakh units) and has a 73.2 per cent market share. In ungeared scooters, it sold 75,596 units (69,335 units) and has a 18.5 per cent market share. In step-thru's the company sold 1.20 lakh units (1.76 lakh units) and has a 52.8 per cent market share and in motorcycles, it sold 4.22 lakh units (2.55 lakh units) with a 20.8 per cent share.

Production of two and three-wheelers during the year was 12.12 lakh vehicles (14.32 lakh units), including CKD packs. Exports were Rs. 135.10 crores (Rs. 137.80 crores).

The company is to launch the 111 cc Kawasaki Bajaj Acer with a 4- stroke engine this month. Its 150 cc / 180 cc offering - Pulsar developed with Tokyo R&D - is to hit the roads in August this year and will be priced between Rs. 50,000 and Rs. 60,000. Also slated for launch in June is the Caliber Croma.

With the opening of the insurance sector, the company has entered into joint venture agreement with Allianz AG, Germany, to set up two separate companies - Bajaj Allianz General Insurance Company and Allianz Bajaj Life Insurance Company. BAL and Allianz have committed 74 per cent and 26 per cent of the initial share capital respectively. The initial share capital for the general insurance venture would be Rs. 110 crores and for the life insurance venture, it would be Rs. 150 crores. Bajaj Allianz General Insurance Co. has received the registration certificate from the Insurance Regulatory and Development Authority (IRDA) and will shortly commence business. The clearance for the life insurance business is expected soon and the company is hopeful of commencing operations in July.

During the year, all three phases of the wind power project installation of 112 windmills with a capacity of 39.2 MW at Satara were completed. The windmills generated 29.7 million units of electricity valued at around Rs. 9.90 crores. Phase IV of the project with an installed capacity of 20 MW is now in progress at Kovadya Dongar in Ahmednagar district at a total cost of Rs. 97 crores and is expected to be completed in the current financial year. After completion of all phases, 80 per cent of the company's power requirements will be met.

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