Bajaj Auto (BAJAJ-AUTO) Q4 97/98 earnings summary

Executive summary

• Sales and other income rose to Rs35,132m from Rs34,541m; profit after tax was Rs4,641.5m before prior-year adjustments, and Rs4,625.8m after adjustments and earlier-year expenses.

• Two- and three-wheeler production fell 5.88% to 1.354m units; an industry shift from scooters to motorcycles and weak demand pressured overall performance.

• Capacity expansion, new product launches and development for stricter emissions standards were central priorities; total two-wheeler capacity was expected to reach 2m vehicles annually in FY98-99.

Financial highlights

• Sales and other income Rs35,132m vs Rs34,541m; profit before tax Rs6,891.5m vs Rs6,770.7m; tax provision Rs2,250m vs Rs2,365m.

• Profit for the year Rs4,641.5m; after earlier-year tax adjustments and expenses, disposable profit was Rs4,625.8m vs Rs4,399.6m.

• Net fixed assets Rs6,829m, investments Rs11,432m and net working capital Rs5,496m at 31 March 1998.

• Export revenue fell 11% to Rs1,408m; exports totaled 43,046 two- and three-wheelers, down 9.4% in units.

Outlook and guidance

• Capacity expansion at Akurdi and Waluj was on schedule, targeting total capacity of 2m vehicles per year in FY98-99; the Chakan plant was expected to start operations early in the next financial year.

• A Kawasaki-developed four-stroke motorcycle was expected in H1 FY98-99; the Bajaj Spirit scooterette and four-stroke scooter were also planned for H1 FY98-99.

• Four-stroke three-wheelers were in final development and expected to launch in early 1999; emission-compliant product development targeted norms effective April 2000.

• Demand outlook remained weak, with recovery awaited; new launches and purchase-financing schemes were expected to stimulate demand.