High margin to drive Bajaj into the next lap

In the quest for profitability, Bajaj has initiated diversification and is venturing into light commercial vehicle and passenger car segments. It will launch new variants of existing brands like Discover 150 DTS-i and XCD Sprint as well as a 125cc scooter Blade this year. Super bikes from its partnership with KTM and Kawasaki will also debut this year.

“For us there are only three things worth focussing — a clear image and brand identity, profitability and then volumes. If the latter becomes a priority then things can go wrong,” said Rajiv Bajaj. “Products sell but brands profit and so we’ll concentrate on brands and not products. Even now, we’re the most profitable company with 15 per cent EBITDA margin.”

In a market reeling under recession, courtesy high interest rates, Bajaj’s sales have taken a downturn even as Hero Honda has managed to stay affloat. For the 11th consecutive month, Bajaj has taken a hit on sales while Hero Honda has seen flat growth. Hence, the shift seems more of a compulsion than a strategy.