Company is on the path to deliver its highest ever topline performance in dollar terms this financial year. Continued leadership in the three-wheeler segments is also supporting the growth of the company. Bajaj Auto emerged as the number one player in the electric auto segment in quarter 3. In electric two-wheeler TVs, Bajaj Auto have consolidated their position as the top two players followed by Ather Energy, Hero MotoCorp and Ola in the fifth place. Bajaj Auto has said that for electric two wheelers, the company has emerged out of supply chain disruptions and is working on a rapid scale up of sales and production. While Bajaj Auto's two-wheeler sales in the domestic market were up 25% at 2 lakh 14,000 units in January this year, overall between April to January, the domestic two-wheeler sales for the company were down by about 2%. To drive domestic growth, Bajaj Auto has taken seven initiatives in the form of upgrades recently and eight more interventions or products are expected to come out in the next four months. Increasing growth in the 125cc plus segment and the 150cc plus segment will be a priority for the company. Joining us now to talk about all of this is Bajaj Auto's Rajiv Bajaj, the managing director of the company. Mr. Bajaj, thank you very much. The export performance has stood out in the last quarter. How do you see the export momentum continuing?
Hi Parishit. Yes, exports has been our most standout vertical over the last quarter as you mentioned. After a long time we crossed an average of 200,000 vehicles per month. In the last quarter we are set to repeat that in this quarter and hopefully do even better in the next year. Let me just share some data points with you starting with our oldest markets. Sri Lanka for example from complete collapse about 2 years ago is back to over 10,000 a month. Nepal also very troubled in recent times now over 5,000 a month. Our biggest market Nigeria, that used to average at its best 60,000 a month, had gone to zero and now back to 30,000 a month consistently and I believe looking at 35,000 to 40,000 a month in the near future. Doing very well in Kenya, Uganda, DRC, but the star really is LATAM as Rakkesh has been telling you, not just the older markets like Colombia and Central America but the relatively newer ones Mexico, Brazil where we are up to now over 3,000 a month and I believe in the top five in the market in terms of number of players. You know Parishit, I never thought a day would come when I would be saying to you that in just one month of January we recorded a sale in Latam alone of over 50,000 motorcycles most of which are Pulsar and Dominar and over 5,000 three-wheelers. I never thought this would happen but it has.
All right. So that's a strong performance in Latin America as you pointed out. 50,000 two wheelers in January, 5,000 three-wheelers. So if the export numbers crossed 600,000 in quarter 3, would you expect similar numbers or could you give us a growth projection for this quarter for quarter 4 and going forward?
This quarter should be very similar also because the month of March, as you know, in terms of accounting term for us ends by 20th of March in terms of exports, making sure that all the bill of lading etc is available to close the books. So this month despite a shorter month in that sense, this quarter we will still finish at 600,000 having done 215,000 in Jan, we are set to repeat that number this month and then the balance will come in March, but from first quarter of next year we should certainly be doing better. I'm hopeful that with the spillover from March into April we should be edging towards 250,000 in April.
All right. Also to ask you about the recent trade deals. How are you encouraged by the FTA conclusion with the European Union? It's going to come into effect next year and we will be getting zero duty access for our two wheelers. How does this help you and how does it open up new markets?
Well, I'm very positive Parishit obviously because fundamentally let me tell you this from our recent experience with so many European suppliers that are supplying to KTM that I've been speaking with and it's very clear they say to us that in the pursuit of China plus one they evaluated India, they evaluated Thailand, and they evaluated Vietnam. These are the three sources that most people are looking at and almost without exception everyone says that so long as there is scale, you cannot beat India. India is more competitive than all these alternatives including at least in our industry what I have heard from them even China on both quality and cost. So you know ours is a business where we have tremendous scale unlike, you know, for example the car industry in India. So this deal is going to be great for the two wheeler industry.
All right. And what about the United States? We're seeing a lot of uncertainty with the trade deal there. Yes, it has been agreed upon at 18%. Then of course the Supreme Court struck down the IPAR tariffs. Then Donald Trump increased tariffs to 10% and now to 15%. How do you see the uncertainty there? How does the company and your export push get impacted?
That story is we've done very well. Perhaps you know as someone said you can't control the wind but you can adjust your sails, and it's a real testament as I told you the last time we spoke as well to Indian engineering and Indian engineers that when the 50% tariff was imposed, Bajaj Auto absorbed most of that for the export of both KTM and Triumph out of India to the US, a volume for us about 15,000 per year. And let me tell you, despite absorbing most of that 50% increase, our EBITDA on those products was over 20%, over our corporate average. You know that just tells you how competitive India is. Now of course we are shipping not at 50% tariff but at 15% tariff. We've just changed FOB in that context. So obviously the volume has been protected and the EBITDA is going to be very strong. So again, US is looking great for us.
Right now. Just to ask you about certain measures that the Indian government is taking to support exports but at the same time the ROTEP scheme, the government there has slashed duty benefits by 50%. Now exporter bodies have expressed concern. They've urged the government to rethink. How does this impact the two-wheeler segment specifically?
Well, it can only have a negative impact. You know, I've always said that more than anything, the government just in this regard has to ensure greater and greater ease of doing business. In terms of what I like to call the five L's: labor, legislation, land, logistics and electricity. And it's true again if I compare with markets like Thailand and Vietnam and some others that we have some experience of, it is still harder to do business in India than it is to do out of those places. And ROTEP as everyone knows is not a subsidy or an incentive, it is basically trying to negate exporting your inefficiencies or the inefficiencies of the ecosystem in which you have to perform. So frankly for an exporter like Bajaj Auto whose export EBITDA is way above its corporate EBITDA of 20%, and the way the rupee is depreciating, it is not the most significant thing, but for a lot of the other people who are especially in a B2B kind of business who do not have price elasticity, I can imagine that this is not a trivial issue and I just don't understand, it could not have been more ill-timed.
All right. Just to ask you about EV sales. The company has been looking to tackle supply chain issues. EV sales as per Vahan numbers for January were in the range of 26,000 units. Bajaj Auto was in second place after TVS Motor Company and somehow both companies have consolidated their position over the last one year. How do you look to drive sales going forward and how do you expect the sales and production to increase?
Well, let me tell you correct as much as we remain India's number one automotive exporter by volume, we are actually we have been for some time India's number one EV company. You know, this year our PLI claim in that regard will be of the highest slab and I think will be to the tune of almost 1,000 crores of rupees, of which recently I told you a couple of months back that the first tranche of 642 crores or so that we applied for was granted to us by the government without any modification. Coming more specifically to your question, I'll start with the three-wheeler where as you said in your introduction we are now the market leader in E3 wheelers. We've been in the top two with Mahindra for a long time but in recent months we are clearly pulling away to the number one position. We are close to the 40% market share at which we hope to close this month, representing 10,000 vehicles a month which is not a small volume. But you know our ambition is very clear: in the three-wheeler market in India we have 70% share and we are not going to stop till we get this 40% to 70%. In the E2 market where our brand is the Chetak, again we are in the top two as you mentioned but there I must admit that TVS has been ahead more months than we have. We are now stabilized at about 30,000 vehicles a month, having overcome the supply chain issues and other operating issues, and our capacity will be up to 40,000 across the supply chain from April, so that's what we've set our eyes on as the next target. The answer to your question, what's the way forward? The way forward in this business is always product strategy in the widest sense of the term. And I feel very confident that we will continue to be a very significant EV company if not the largest EV company in India for some time.
So you said sir that you will increase electric two-wheeler production to 40,000 units by March, by next month?
By April that will be our capacity and of course we will be ready to make that. Hopefully Rakkesh can stir up demand in line with that.
On that note we take a short break but don't go anywhere, this conversation with Rajiv Bajaj continues on the other side.
Welcome back. You're watching CNBC TV18 and we are in an exclusive conversation with Rajiv Bajaj, the managing director of Bajaj Auto. EV subsidies, especially the central level subsidies are going to end in March this year. How is that going to impact electric two-wheeler segment?
