Bajaj Auto working on expanding EV portfolio; expects price hikes in Q4 to offset cost increase

Sharma mentioned that there will be a lot of action on the electric vehicle (EV) front,  going ahead. He explained that the company is working on expanding its current EV portfolio. Shedding light on the production of EVs, he said that it will begin from June.

He said, “We have announced a plant of half a million capacity and production from that should start as early as June. Our first objective right now is to roll out the current product, Chetak, which has received a very good rate of adoption across the country."

"So between now and the next 6-9 months, our whole focus will be to powerfully expand the current Chetak all across India and introduce a very dependable electric proposition to our customers all over. Building on that in H2FY23, we will expand the portfolio. There will be a new Chetak, plus we will cover some other emerging segments like deliveries and more youthful products, etc. So, in the next 12-18 months, expect a lot of action on the electric vehicle portfolio," he mentioned.

On the company's Q3 performance, he highlighted that the demand environment was uncertain, coupled with semiconductor shortage issues and supply chain disruptions. Additionally, cost increases that hit the industry in Q4FY21 couldn't be passed on initially by way of price hikes since demand was weak. However, this time around, in Q3, the company was able to pass it on to its customers. Going ahead, Sharma expects full recovery of cost increases by way of price hikes taken in Q4. Sharing details on the cost increase, he mentioned that it's marginal.

On the business front, he believes the overseas market will continue to do well if there are no further cost increases. He also expects the devaluing rupee to aid in this respect.

On margins, he believes it has bottomed out. He expects it to improve, going ahead. He said, “It (margins) should improve; they already have in Q3.  Compare the underlying margins, take off the Remission of Duties and Taxes on Export Products (RoDTEP) and the Merchandise Exports from India Scheme’s (MEIS) cumulative effect in Q2, our EBITDA margins in Q2 were 15 percent and in Q3, it was 15.6 percent. So already recovery is in play.”