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00:00We've got Rakesh Sharma, EDO Bajaj Auto now joining in to talk to us about how business
00:05is looking and looking ahead what can we expect and of course they've also launched or talked
00:09about their launch, the CNG bike, the first ever in the country.
00:12Afternoon Mr. Sharma, thanks a ton for joining in.
00:15So Sharma, we've seen numbers for June but let's look ahead now, going into the next
00:19few months, July and August, how is business panning out or what are you expecting, exports
00:26also not looking too promising and this is not just you, I believe industry-wide there's
00:31a little bit of a downtick that industry majors are anticipating, where do you see growth
00:38over the next few months?
00:40Good afternoon, well you see this quarter at least for two wheelers and three wheelers
00:48is a small quarter because July and December usually are the lowest months and which offer
00:57very little flexibility and then you have the monsoons in most of the parts of the country
01:03in August.
01:04September slightly starts to build up in anticipation of the festive season, whereas this year entirely
01:11lies in October.
01:14So to begin with, July to September quarter will be a low quarter but having said that,
01:20if we do a like-for-like comparison with last year, I think we should be looking at six
01:26to eight percent growth for the industry in this quarter.
01:31That is what the trend from quarter one is suggesting and I would also say that trend
01:36which really got started in February-March, those trends are suggesting that at least
01:45the motorcycle industry should grow at six to eight percent, which I think is a very
01:49good performance for an industry as large as this and coming on the back of underperformance
01:54for a few years, six to eight percent is a good growth if it happens.
02:00We hope to outpace this growth because this growth is weighted in favor of the top half
02:06of the industry where we have got a lot of play and we have been over many quarters,
02:12previous quarters, been outpacing the industry and getting market share.
02:16So a small quarter but we'll continue on a growth trajectory and I think we should be
02:22able to outpace the industry largely due to our play in the top half.
02:27When it comes to export, I don't think it is a decimal view as you seem to suggest.
02:34In fact, I think there is an improvement in exports month on month over the last few
02:41months, albeit a marginal improvement, but at least the direction wise, the graph is
02:50now pointing upwards but it's going to be very slow and steady.
02:55Latin America is almost, at least for us, I mean, the industry is in double digit growth.
03:04ASEAN is doing well, particularly Philippines, that is in double digit growth.
03:09South Asia, still an issue, places like Bangladesh, et cetera, but Sri Lanka, Nepal are recovering
03:16well.
03:17Africa is an issue and particularly Nigeria and a few other countries like Kenya, Congo,
03:25et cetera.
03:26This is where we are still in decline, though I would say that if you compare June to April,
03:35even a country like Nigeria has improved.
03:38So I would say that overall exports is showing growth sequentially, but at a very steady
03:46pace, a very small pace.
03:49Thank you for that, Mr. Sharma.
03:52It's a good looking picture and a 6% to 8% growth is what the industry is going to, you're
03:58expecting from the industry and of course, like you said, an outpacing by yourself is
04:02likely.
04:04You own a significant chunk of the market share.
04:07I think 18% is what I remember in terms of the last financial year.
04:12Looking ahead, how is market share gains looking?
04:16Have you managed to expand your base and where do you see that at the end of this financial
04:20year?
04:21Well, our objective is to gain every quarter and we have been for some time now focused
04:32on the top half of the industry, like I said, where we have progressively gained about a
04:38percent every quarter.
04:40I would say we are just a percentage or two percentage points behind, we are away by about
04:47one or two percentage points from leadership of the top half, which is the 125cc plus segment.
04:54So we continue that march towards leadership in the coming quarters.
05:01In the bottom half of the industry, as you know, we are now going to make a significant
05:07play over there because almost 75% of the Indian industry is very mileage sensitive
05:14in two wheelers and we are launching day after tomorrow, the CNG bike.
05:19And we are hoping that as the months and the quarters progress, this will offer us significant
05:26inroads into the market share in the bottom half of the industry as well.
05:33Mr. Sharma, a lot of launches, I mean, it was Pulsar 400 in May, new Chetak variant,
05:40now the CNG bike.
05:42How exciting are times for new launches and where is it that you are the most hopeful
05:47based on responses or assumptions?
05:50Well, we are quite excited about the whole spectrum.
05:56In fact, I would say that the entire portfolio, which has been completely reinvigorated since
06:03last year for the Pulsar portfolio, almost every single model has performed, which is
06:10starting from the new Pulsar 150s, the Pulsar 160s, and recently upgraded Pulsar 250s.
06:19And the NS400Z, which has just started to go into the market.
06:23I mean, even before we have started to, I mean, the details have started, but we have
06:29bookings of over two and a half thousand units, which is the very, which is the top of the
06:34top segment.
06:36And there has been the new Husqvarna launches.
06:39And of course, now, like you said, there is the Chetak, the early indications from the
06:45last 15 days after the launch of the Chetak 2901 are quite spectacular.
06:52We are finding that in July itself, you will see a quantum shift in our sales in Chetak
07:00because we can see the daily booking rate has risen.
07:04And now, of course, there is the CNG, which will take time to ramp up, but it holds a
07:11lot of promise because it is attacking a very large pool of customers, of the target
07:19customers is a very, very big pool for the CNG bike.
07:22So I would say this is, I mean, it's quite satisfying that almost entirely in their own
07:32segments and sub-segments, all the eight or nine launches of motorcycles have done reasonably
07:39well and the early indications of some of the new ones is also quite positive.
07:43So we are optimistic about the new portfolio, which we have.
07:48And just tying it in with the belief about rural having picked up a little bit and maybe
07:57they're being done something on the rural consumption end this time around as well.
08:04If that were to turn out to be true, Mr. Sharma, is there a shot in the arm for everything,
08:09everybody competing in that space?
08:11Maybe not your portfolio, not as large, but I'm still trying to understand.
08:14Do you reckon it'll be shot in the arm for you too?
08:18Well, you see, I have always held the view that the rural and urban divide is just a
08:25matter of distribution.
08:27You know, more than a quarter of our top selling NS pulsars, we sell in what you call rural
08:36areas.
08:38And similarly, that is the kind of number we sell in urban areas of our cheapest product.
08:44So to divide urban and rural based on, you know, pricing and based on other types of
08:51segments, those lines have gone blurred over the last few years.
08:55People are buying, you know, high performance bikes in rural areas and people are buying,
09:00you know, very functional commuter bikes in the urban areas.
09:04So it's a distribution issue rather than, and yes, the economies are driven, of urban
09:11and rural are driven by different factors.
09:13So I wouldn't say that we have a portfolio which is targeted to rural or targeted to
09:19urban.
09:20So if there is a rural economy which kicks in, I think it is going to have a very good
09:27impact across our portfolio.
09:31And that is rolled into our expectation of 6% to 8% growth for the industry.
09:39Very lastly, Mr. Sharma, while I think market participants have been waiting with bated
09:44breath to see their industry return back to its good old days of double digit growth.
09:50In your assessment, how long out are we and what are the challenges that are keeping away
09:55or keeping the industry away from growing into early double digits?
10:00Well, I would say that first of all, a double digit growth for an industry like ours is
10:05a lofty growth.
10:06But I'm also conscious of the fact that the industry reached its peak in 18-19 and ever
10:13since then, it has not gone back to that level, though we expect by end of this year, financial
10:19year or the beginning of financial year, we should be getting to the run rate which had
10:24been achieved at the peak year of 18-19.
10:28The industry, I would say, the motorcycle penetration in India is still low when you
10:36compare it with similar type of economies like Indonesia, etc.
10:41I think the two wheels, power two wheels make a significant difference to a person's life
10:51in that segment.
10:52These are customers who are earning between 30,000 to 50,000 rupees a month and their
10:59productivity, their ability to travel, their ability to get to jobs which are slightly
11:03far away from where they live, etc.
11:05really gets enhanced when they get on top of a motorcycle.
11:12And our demographics and our population is on our side.
11:15So there is still a long runway of growth left for the industry.
11:18Now, what comes in the way, as you know, is the purchasing power and this is motorcycles
11:26are taxed at 28%.
11:28Now, the GST is 28%.
11:30Now, the government has its own pulls and pressures and they have to do a balancing
11:36act.
11:37One understands that.
11:38But if I take a parochial view as a motorcycle manufacturer and as a motorcycle industry
11:44person, then I would say that this is one of the things which could uncork growth.
11:49If we brought down the acquisition cost for the ordinary customer, it will certainly see
11:57because bikes, to begin with, are underpenetrated.
12:00The demographics are on our side and people want them.
12:03So I would say that that was definitely an issue.
12:09And other than that, I think the economic recovery has started to reach the segments
12:16of the country who are into the motorcycle purchase cycle.
12:23And that is very positive.
12:25They become optimistic.
12:26If that sort of thing continues, the inflation is held back.
12:30The optimism also drives people to, you know, buy new motorcycles or the first time buyers
12:38to get into the purchase cycle.
12:40Great.
12:41Sharma, it's always a pleasure to talk to you.
12:43Thank you very much for sharing perspective with us on Bajaj Auto, the quarter ahead and,
12:47of course, the industry outlook.