Saturday, June 30, 2012

Notes From Bajaj Auto Annual Report 2011-12

Financial's at a Glance
- Net sales and other operating income grew by over 19% to 19,804 crore

- Company sold 4.35 million units — consisting of over 3.83 million motorcycles and more than 515,000 three-wheelers. Market share of 32.1% in motorcycles (Not exactly in domestic market as it includes export numbers) ( Current capacity - 4.5 million motor cycles, 6 lac 3 wheelers.)
Exports rose by 31% over last year to 1.58 million units. It grew even faster in revenue terms — by 45% to 6,604 crore. And accounted for 35% of your Company’s net sales.
Bajaj Auto’s operating EBITDA crossed the 4,000 crore mark — increasing by over 18% to 4,001 crore. The operating EBITDA margin was 20.2% of net sales and other operating income.
Profit before taxes (PBT) grew by 15% to 4,160 crore.
Profit after tax (PAT) but before exceptional items grew by 18% to 3,095 crore (exceptional item of 724 crore in FY11 vs -ve 134 in FY 12.
- PAT at 3004 Vs 3339 crore in FY 11 a decline of 10% considering exceptional item.
Surplus cash and cash equivalents, as on 31 March 2012, stood at 5,451 crore as against 4,239 crore as on 31 March 2011. 
- tax rate roughly 25% (because of exports?)
- Bajaj auto is now world's 3rd largest motorcycle manufacturer.
Bajaj Auto operates on a very lean cost structure. Currently, fixed cost including employee cost, form just 6% of operating income.
Return on capital employed (operating) stood at a healthy 253%.
The Board of Directors of Bajaj Auto has proposed a dividend of 45 per equity share

(450 per cent) for the financial year 2011-12
books of the Company will remain closed from Saturday, 07 July 2012 to Wednesday, 18 July 2012, both days inclusive. will be credited/dispatched between 23 July 2012 to 25 July 2012.
- Price level for the year 1260 to 1839.

- Use of Earning - 1,513 crore out of 3095 crore being paid out divided.
- R & D spend as %tage of sales 0.83%
- Long term Debt - 414 crore
- Cost of raw materials at 67.8% of sales Vs 67.2% in FY11.

Cash Flow
- Net Cash from operating activities - 2959.91 crores. 98.5% of reported PAT.

Management Discussion and Analysis

After growing at over 39.6% in FY2010 and 35.5% in FY2011, our domestic motorcycle sales in FY2012 grew by 6.3%. The reasons may be many. Yet, the fact remains that the market grew faster, at over 11.9%. It is imperative that Bajaj Auto increases its domestic motorcycle sales and market share in the years ahead.
It is also due to an excellent export performance where 31% growth in volume — itself very creditable on a relatively high base — was bettered by 45% growth in value. (Effect of currency ?) 
After clocking 26% growth in FY2010 followed by 23% growth in FY2011, the number of motorcycles sold in India increased by 11.9% in FY2012 — growth slowing down to 9% in Q3 FY2012, followed by 6% in Q4 FY2012. Despite this, Bajaj Auto has posted excellent results. In such an environment, the Company focused on driving the sales of more profitable products in its portfolio, coupled with strong improvement initiatives on the input side. In a nutshell, FY2012 was a year of consolidation, with slower growth than the past two years, but with high profitability
Both urban and rural markets were affected by high consumer interest rates, increasing petrol prices and overall inflation. Even the 11.9% growth was severely skewed across quarters as well as segments. Sales of models belonging to the upper end Performance segment remained flat year-on-year. With a substantial proportion of Bajaj Auto’s business coming from the Performance segment, the Company’s sales growth by volume was more muted at 6%.
The good news is that Bajaj Auto continues to dominate the performance segment. It sold 716,267 motorcycles in this segment in FY2012, with a market share of 44%. This, despite the segment being most hotly contested by every major two-wheeler company with a large number of models fighting for market share.
Bajaj Auto unveiled the next generation Pulsar 200 NS in January 2012.
To dominate the high end, Bajaj Auto launched the KTM Duke 200 in January 2012.
Domestic sales for three-wheelers across the industry in FY2012 declined by 2.4% to 513,251 units.

- Bajaj Auto, too, saw a marginal fall in sales — by 1.3% to 202,979 vehicles. However, with a fall lower than the industry, the Company’s market share increased by 40 basis points from 39.1% in FY2011 to 39.5% in FY2012.
Growth in exports for the Company for the financial year 2012-13 in both motorcycles and three wheeler segments is facing some headwinds due to international events such as substantial rise in import duty in Srilanka, trade restrictions imposed in Argentina, Dollar trade embargo in Iran.

Company has not granted any shares by way of stock option to any of the employees so far.


- Bajaj Auto International Holdings BV is a 100% Netherlands based subsidiary has invested € 189.9 million for a 47.18% ownership KTM Power Sports AG of Austria.
In calendar year 2011, KTM strongly rode out of the downturn selling 81,200 motorcycles, achieving a turnover of € 526.8 million and a profit of €20.8 million. (Bajaj's share in profit roughly 70 crore ?)

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