Bajaj Auto’s executive director speaks on a range of topics including the high level of exports, judicious stock management, Auto Expo 2020 and BS VI readiness.
2019 has been challenging for not just for India but also globally. Bajaj Auto is once the top exporter in the country, across segments. In fact, as per our calculation, Bajaj Auto has achieved 44% sales from export markets alone in CY2019.
Exports are a very important business for us, and we have been actively pursuing exports from over a decade. We have nurtured our export market for at least 15 years — establishing the brand, distribution system, training people, dealer network, understanding the market, and the consumer behaviour. That is what is reflecting in our continued growth and performance in the exports.
Of course, when there is up and down in one market let's say like India, which is a very large market, there are ups and downs in international markets too, which is why it's helpful to have a wide reach. It is helpful for the company (Bajaj Auto) but also the vendors because they are also putting in certain investment, and they see this as more of certainty particularly in today's circumstances.
Last year, many OEMs and suppliers announced non-working days and downsizing, among others. Bajaj Auto was one of the few companies that didn't. Was export the only reason to have helped you with this cushion?
Yes, exports is one contributing factor, the other one being that in our supply chain, we never over- stock a lot. And we, therefore, never needed to decrease it – we didn't have a single no-production day in 2019.
With April 1 and BS VI around the corner, is Bajaj Auto expecting a smooth ride, or will there be challenges?
It is a challenging task because India is a vast country, it is deeply penetrated and it is a very big change. It is difficult to time, to bring them at every corner in the country. It is a massive supply chain exercise, we won’t say it is easy but it has been helpful that we do not have the pressure of stocks. Some of our competitors had added stocks in December; we have not and in that way it has been easy for us to manage.
In terms of new emission norms, India becomes the first two-wheeler market to introduce BS VI norms (equivalent to Euro 6) from April 2020, even as some developed countries are moving to Euro 5 norms this year. This means you will need to manufacture different engines for different countries.
Yes, but don't forget we are there in over 70 countries, and there are countries which have no emission regulation, that does not mean we just sell whatever we want. But there are countries which have gone to Euro 5, there are countries which are at Euro 3, some at Euro 2 like Colombia moved to Euro 3 on January 1, 2020. Similarly, Peru is already at Euro 3, so is Philippines, we manufacture as per the requirement of the country.
It certainly adds to the complexity to the production, but the point is that we have already been doing this for many years. When BS IV came to India, that time Africa had a different norm. You are also forgetting we are producing for KTM, in addition, we are selling products in Brazil, which has a special engine need that is capable of handling the ethanol blending. We are also selling in Japan, which has a very different need. We have been in this game for quite some time now.
Going forward, where will the company focus in terms of investments and development?
We are a product-driven company and feel that we need constantly need to upgrade the prowess and bring new products to the platform. Once this BS VI implementation/business is over, it allows us to be a bit more vigorous to our products in the pipeline.
Auto Expo is not an event where Bajaj Auto has constantly participated at least for the last couple of shows. This year, many leading two-wheeler OEMs have decided to give it a skip. Do you think the Auto Expo is losing its charm?
I don't think so. Maybe for us it doesn't make sense, because when we are launching something for which we want to get undivided attention. But at the Auto Expo, where there are many people like vendors and international companies just entering the market, it serves a purpose. But maybe I haven't realised that many major brands are not participating at this year's Auto Expo. I am not saying Bajaj Auto will never participate in the Auto Expo, but the point is at this time it is not serving our purpose. It doesn't mean it has lost its charm. It is a big industry, there are a lot of people who profit from it.