Bajaj Auto to hike prices to cushion Budget

Bajaj Auto Ltd (BAL) will soon go for an across the board price hike in order to maintain profitability and offset the impact of the education cess introduced in the Budget, said Bajaj Auto Managing Director Rajeev Bajaj.

He declined to comment on media reports about an imminent split in the family owing to some differences between himself and his sibling, saying "that was a personal matter".

Bajaj also quashed rumours of Bajaj Auto taking over Indian operations of Yamaha in the immediate future.

On the issue of the auto sector getting incentives from the government, he said the industry was doing pretty well for itself and did not need any such sops. "These incentives can also not be sustained for a very long time."

Referring to the Union Budget, Bajaj said the auto industry, especially the two-wheeler segment, was not expecting any significant incentives or concessions from the government.

"When the industry is performing well without much of government support then why should the government sacrifice its revenues?" he asked.

Voicing his views on special economic zones (SEZs), he said the government should frame policies, which dissuade promoters from wrongly exploiting SEZs merely for the value of the land. However, he personally felt that there was no need of sops by way of SEZs, especially for the automobile industry.

Bajaj informed that the company would finally do away with the 100 cc motorcycles and that the phase out would take at least two years.

"We will definitely exit the segment as the trends show that it is losing its share in the market," he said and added that some five years ago, this segment comprised 90 per cent of all vehicles plying on the road. Now, it has come down to 45 per cent and will go down further and faster.

However, he clarified that Bajaj would only exit from the product and not from its customers. The company was also coming up with a new facility for its 100 cc Platina model in Uttarakhand, which would be operational by April. It will have a capacity to manufacture one million motorcycles a year.

For its four-wheeler facility, he said the company was looking for around 300 acres of land in Chakhan near Pune. The new facility will be solely used to manufacture commercial vehicles and will be started between 2009 and 2010, he said, adding the company had no plans to go for manufacture of passenger cars. Also, BAL had no plans for Vidarbha as well, he stated.

Bajaj said the current year had been very excellent for the company as well as for the industry. "The industry did very well and grew by almost 15 per cent and Bajaj Auto grew at almost double the rate of the industry."

This year, the company would achieve a record target of having sold almost 2.8 million vehicles, which converts into a growth of 20 per cent over the last year.

"We will also register a total revenue of Rs 10,000 crore this year and will clock a record breaking profit too," he said.