Pune-based Bajaj Auto is reeling from duty shock from Sri Lanka. After the Sri Lankan government increased import duties by 50 per cent in March 2012, Bajaj Auto stands to lose as many as 55,000 units in exports in the current fiscal.
“We are seeing a slowdown in orders from dealers in Sri Lanka and this situation could persist for two to three months as the market absorbs the hike in duties,” Kevin D'Sa, Bajaj Auto's Chief Financial Officer, told analysts,
The two- and three-wheeler maker has passed on the duty hike – which has gone up to 100 per cent from the earlier 61 per cent – to consumers. Motorcycle prices have gone up by 29 per cent and three-wheeler prices by 32 per cent in Sri lanka.
On Thursday, Bajaj Auto posted a net profit after tax of Rs 772 crore for the quarter ended March 31, 2012 a fall of 40 per cent over the previous fiscal as margins contracted. Revenue increased 11 per cent to Rs 4790.9 crore. The automaker's stock fell 2.6 per cent on the Bombay Stock Exchange on Friday to close at Rs 1,532, while the benchmark Sensex rose 0.51 per cent.
Average monthly volumes that Bajaj exports to Sri Lanka are about 10,000 three-wheelers and 12,000 two-wheelers. At 20 per cent share, the island nation is the second largest export market for Bajaj Auto, after the Africa continent.
“Growth in other export markets like Africa continues to remain high. The only pressure point is Sri Lanka and also Iran because of talks of economic sanctions to the country (Iran)” said D'Sa.
Bajaj Auto is expecting to clock sales of 50 million units, including exports, in fiscal 2013, a 16 per cent annual growth. Analysts, though, are less optimistic and estimate that growth will likely remain in single digits as exports in Sri Lanka take a hit and demand in India remains sluggish.
“FY13 two-wheeler sales are expected to remain flattish as economic environment is still tough. Interest rates and fuel prices continue to remain high,” says market expert Nipun Mehta.
According to industry body Society of India Automobile Makers (SIAM), two-wheelers will grow by about 11 per cent while three-wheeler sales will rise a mere 5 per cent in FY-13.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
