Strong June Sales | Allowing Hybrid Products Would've Made Delhi EV Policy More Balanced: Bajaj Auto

Good morning, Prashant. Well, I wouldn't say that it was a surprise because the industry was in dialogue with the Delhi government and also the Ministry of Heavy Industry for some time. A draft had been circulated with opinions asked. So, it was not a complete surprise. It's definitely a very bold move, particularly because it is very handsomely supported by subsidy and scrappage incentives, which will be persuasive for the customer. Having said that, Delhi is a very large city with vast distances. In such a market, there are different types of use cases: personal use cases, commercial use cases, gig workers. Three-wheelers are almost entirely commercial. There are people who have high-frequency travel within limited radius, and people who have low-frequency travel across long distances. Commercial people travel 120 odd kilometers, 12 hours to make the money they need. A singular approach based entirely on electric may not serve the purpose of all customer segments. Our position has always been that it is very important to define the standards of emissions and the environmental burden, but one must be technology agnostic and use the multiple technologies available. We are very fortunate in India that we have a very good CNG network that the government has supported. We have upcoming ethanol blending, higher blending of ethanol and gasoline, which assuages a lot of concerns. Balancing the environment issues, society or customers, particularly the bottom half of the pyramid customers' needs, foreign exchange requirements, energy security, balancing all that requires a multiple approach.

Because see, OEs will adjust to it. A company like ours already has 30% of our domestic revenues from electric. We are at the forefront of electric development. So, I'm not making these comments from a parochial way, but if one has to really balance all these issues, we must use the array of options available and have a solution drawn from that. Banning everything else in preference to just one approach may not serve all the purposes in the longer term. But of course, we are at the forefront of electric. We are now a profitable electric company. With 30% share of our domestic revenues, it's probably one of the highest in the automotive industry. We will adjust to it.

Well, I wouldn't call it exposure. I would say it's an opportunity first of all because we've not been in scooters and 40% of two-wheelers in Delhi are scooters, which is all new business for us. Three-wheelers, we have 100% market share with a very good network and connection with users. It stacks up to between 2 to 4% of our all India sales. So that's the thing. But this kind of a thing, as long as it's a more holistic approach, should be taken in some other cities also because almost everyone suffers from similar situation, though the degrees may be slightly different.

Yes, actually, we were hampered by supply chain issues, both on the availability side due to manpower interruptions across vendors and some plants. And logistics, shipping opportunities declined. So exports should have been closer to 300 thousand units rather than the 250 odd we recorded. We have got an unprecedented amount of spillovers now because of supply chain and logistics issues. The supply chain side is getting resolved and we hope to see a much better July. But concerns remain on the logistics side because shipping opportunities have become less and there is a big build-up at ports across industries. It's a very important issue to manage. We are looking at between 250 to 300,000 which continues this growth rate for at least a couple of months.

The domestic business should also continue. July is a very lean month. August onwards it picks up a little, and September is a very busy quarter for us in Q2 because there are many new launches lined up. That will sparkle the business. We hope there'll be some unlock in capacity in our electric three-wheelers and the Chetak electric scooters, which could have done about 10% or better but were restricted due to supply chain issues.

Well, a lot depends on how customers respond to the gradual easing off of subsidies. But the trend is very positive for electric because gasoline prices have increased and the maths supports adoption at a much faster rate. We think that will continue. We are taking measures to progressively double our capacity, which is now 50,000 units per month. We are looking to double this capacity over time because we think this segment is set to grow very fast.

Well, the margin story is mixed. You're right, there was inflation due to forex and price increases of around 1.5 to 2% which we mitigated last quarter. But going forward, there is cost side inflation in aluminum, electronics, and polymers. Markets don't respond quickly to oil price changes, and there are manufacturing issues in West Asia creating demand-supply issues, and the AI boom is driving up electronics costs. We have taken mitigating actions and covered at least 50% of the inflation. Exports is a very strong story continuing for us. The exchange rate has stabilized and the premium end of our businesses is doing well.

See, we don't drive to a precise number. Ultimately it depends on how the chips fall because of the mix. Individually, we see progression in margins, but it might be thwarted by inflation. It depends on how fast the electric business grows and how much of the exports opportunity we can supply. When we put all this together, we will get a margin view. Yeah.

Well, you'll have to ask the promoters that question. Once the buyback is closed, we will put out a detailed note on how it has gone. Yeah.

No, no, no. We've already got a policy in practice. It says 90% of our profits, given a certain level of cash reserves, are distributed through a combination of dividend and buyback. It's spelled out in detail and has been in practice for the last couple of years. So, no change.