Falling sales, VRS pull BAL's net down by 78%

Falling sales, VRS pull BAL's net down by 78%
ENS ECONOMIC BUREAU

MUMBAI, JAN 16: Country’s largest two-wheeler firm, Bajaj Auto on Tuesday performed worse than expected in the third quarter as net profit crashed by 77.86 per cent due to tumbling scooter sales and provisions for Voluntary Retirement Scheme. The firm posted a net profit of Rs 28.4 crore in the three months ended December 31 against Rs 128 crore in the same period last year.

The company had announced a voluntary retirement scheme for its employees in response to which approximately 2,000 employees opted for the scheme. Liability aggregating approximately Rs 80 crore to date, in respect of VRS is being charged over three quarters of the year commencing from the quarter ended September 2000.

Accordingly, a sum of Rs 26.50 crore has been charged in the current quarter taking the cumulative charge during the nine months ended December 2000 to Rs 53.60 crore. The balance amount of Rs 26.40 crore together with any further sums in this regard will be charged in the last quarter of the current financial year.

Soon after the company announced its sagging results, Bajaj shares fell sharply by eight per cent to Rs 253 in late afternoon trade, while the benchmark Bombay index was up 0.33 per cent. Over 7 lakh Bajaj Auto shares changed hands on the counter.

Sales declined from Rs 841.76 cr in Q4 99 to Rs 752.70 cr in Q4 2000, down by 10.58 per cent. Analysts said consumers' preference for classy motorcycles and cars over scooters has hit Bajaj hard as it derives a good chunk of revenue and profits from scooters.

Analysts had forecast net profit to fall 57.4 per cent to Rs 54.9 crore while net sales was expected to fall 16.2 per cent to Rs 836 crore. Other income stands at Rs 46.82 crore in Q4 2000 as compared to Rs 74.51 crorein Q4 99.

The company bought back 1,82,07,304 equity shares at Rs 400 per share on 21 Oct 2000. Consequent to the buy-back the paid-up equity capital as on December 31 stands reduced to Rs 101.18 crore.

During the nine month period ending December, net profit was Rs 198.63 crore (Rs 377.12 crore), while sales stood at Rs 3,021.18 crore (Rs 2957.19 crore). During the nine months ended December 2000, BAL's income from investment of surplus funds was lower by Rs 34 crore to Rs 209 crore due to reduction in surplus funds by Rs 730 crore utilised for the buy-back scheme and market conditions, it added.

In the two and three wheelers' (including the CKD kits) segment, the companyproduced 9.56 lakh units as against 10.19 lakh in the nine months ended December 31, 1999, while it sold 9.25 lakh units during the same period as against 10.05 lakh in December 1999.

In the ungeared scooter segment, the company registered a 19 per cent growth in volumes by selling 62,945 numbers over 52,796 numbers in 1999-00 and also increased its market share by 0.2 per cent to 19.4 per cent, said Madhur Bajaj, President of BAL in a statement.

However, BAL's volumes declined by 38.6 per cent in the geared scooter segment with sale of 3,27,658 numbers in the current year as compared to 5,33,887 in the previous year.

``In order to expand this market, the company has introduced a range of low cost scooters in the current month. Besides a new premium four stroke scooter will be launched in February 2001 followed by the four stroke Chetak,'' the company said.