Bajaj Auto's Q1 profit slumps on supply chain disruptions, lower sales

Bajaj Auto’s first quarter numbers in FY2021 have been impacted by the Covid-19 pandemic and the lockdown to contain it. The standalone profit for Q1FY2021 was down 53.09% to Rs 528 crore from Rs 1,126 crore in Q1FY2020. Q1 revenue from operations dropped 60 percent to Rs 3,079.24 crore from Rs 7,755.82 crore in the same period a year ago.  

The two- and three-wheeler major’s operating profit declined 68 percent year on year to Rs 376 crore from Rs 1,189 crore in Q1FY2020. Precautionary measures have resulted in disrupted supply lines and a sharp decline in overall demand impacted the company’s performance.

Sales in the domestic motorcycle market was zero in April and impacted for a large part of May 2020. The company clocked some recovery in June 2020. On the whole, Bajaj Auto’s share in the domestic motorcycle market was 20.7% so far in this financial year as against 18.5% in FY2020. Specifically in June, Bajaj Auto’s sales went down by 26 percent to 146,695 units (June 2019: 1,99,340 units). Similarly, exports fell by 29 percent to 1, 08,427 units (June 2019: 1, 51,951 units).

On YTD basis, during the period from April-June 2020, domestic sales went down by 70 percent to 1,85,981 units ( April-June 2019: 6,10,936 units). Likewise, the export fell down by 55 percent during the same period to 2.13,948 units (April-June 2019: 4, 71,691 units).

The company which had seen a spate of Covid-19 positive cases in its Waluj plant said salaries were paid to all employees of Bajaj Auto for the entire period of March to June 2020 and work from home was enabled wherever possible.

Given the scale of the pandemic, various measures were implemented for the entire business eco-system helping the end-customers, dealers, vendors and employees wade through this crisis. These included free distribution of Covid safety kits under CSR programme for existing drivers of three-wheeler commercial vehicles, across brands, free battery check-up camp to increase footfalls in service centres.