Bajaj announces Rs. 500 crore investment

Bajaj Auto, the country's second motorcycle maker, announced an investment of Rs. 500 crore. The money will be spent to increase capacity and also to launch a new variant of the flagship Pulsar.

"We are investing Rs 500 crore till FY13 for expansion. We had already spent Rs 150 crore last year," Bajaj Auto Finance President Kevin D'sa told reporters here.

The proposed capex will include development cost of the new Pulsar, which will be based on a new technology, and will be launched in December/January, Managing Director Rajiv Bajaj told reporters a day after announcing the Q2 numbers.

The company reported a muted 6 percent rise in net income at Rs 726 crore for the September quarter on a revenue of Rs. 5,342 crore, which rose 21 percent as its sales volume grew 16 percent to 1,164,137 units. The lower numbers were primarily due to a Rs 95-crore hit the company had to take on forex on valuation of forward contracts that were charged to the profit and loss account in this quarter.

With production of over 2.25 million units in the first half, the Pune-based company believes the momentum is in place to end the year at around 4.5 million units.

"We expect to produce about 4.5 million vehicles and hope exports will surpass 1.5 million units this fiscal," Bajaj said. Exports make up 35 percent of total sales, he added.

Bajaj pointed out that there are concerns, specifically in terms of domestic motorcycle market share. "Our market share is going to stay at 27 percent for now, but as the Boxer catches on and as we introduce the new Pulsar in January, I certainly hope that we will gain market share. I hope for 30 percent market share by the time we finish this year."

As to exports, he said Latin America and African markets will be the future growth drivers.

Bajaj is present in Argentina, Columbia and Peru, and is looking at entering Brazil now. "Brazil is a very competitive market and we are looking at devising business model there," International Business Head Rakesh Sharma said.

It is also eyeing Thailand and Vietnam, but has no plans to enter into the Chinese market due to intellectual property rights issues, Bajaj said.

Bajaj received Rs 860 crore in August and is expected to get another Rs 240 crore in the next couple of days, out of Rs. 1,100-crore outstanding VAT refunds, D'sa said.

The Bajaj counter gained 1.72 percent to Rs 1,641.30 on the BSE on a day the main gauge shed 0.9 percent.