Bajaj Auto chairman Rahul Bajaj does not believe in pulling his punches whether it be buyback of shares or restructuring his company or going international. The industrialist who prides himself in heading one of the few Indian multinational companies, spoke to Business Standard in the concluding day of the World Economic Forum, yesterday. Following are the excerpts from the interview.
What are Bajaj Auto's plans for new product launches?
We will introduce 17 new and upgraded models in the next one year. We have introduced the diesel three-wheeler, the 60 cc two-wheeler Sprint and are advertising the country's first four-stroke scooter.
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The series of new and upgraded models would consolidate our number 1 position in India in the two and three-wheeler sector. We expect to touch a total production of 1.4 million units in 1998-99, the highest number of vehicles ever sold bu Bajaj Auto.
What are the company's restructuring plans?
What restructuring? My sons have already taken over and have kicked me upstairs, as they say. There is one company and it is running fine in good financial health. Only those restructure who diversify and lack focus.
What are your chances of joining hands with the Italian two-wheeler major Piaggio?
First let Piaggio and the Singhanias settle their dispute and then we'll think of speaking to the Italian major. But what does it have to offer in terms of technology?
Will Bajaj Auto buy back shares?
We have Rs 2,000 crore in reserves and that itself is a good value creation for our investors. A company goes for buyback to increase the share value. For that I should be able to buy back my shares at a lower price. But nobody will sell it at a lower price and they will expect the company to quote a higher price for selling. For example, today if I buy back the shares at Rs 500, then the EPS would go up, but if I get them at a higher price, then the EPS will go down. Bajaj Auto is quoting at around Rs 560. So, keeping the Rs 2000 crore with the company is more sensible.
Why did you back out of the proposed car project?
Am I mad to go in for such a project? After having watched the other car players struggle, we have almost abandoned our plans. But earlier, we had talked to several automobile majors like Chrysler, Toyota and Hyundai and all were prepared to give us the majority stake except one which wanted a 50:50 joint venture.
What are Bajaj Auto plans to become global?
The earlier advantage of setting up bases abroad no longer exists with the opening of the economies. Now it makes sense to manufacture in India at lower costs and market abroad where the entry barriers are being dismantled at a faster pace.
No company wants to become global, but wants to be an international player. Also, if I produce in my own country it will generate employment and contribute to its economic growth.
But we are unable to make a serious dent abroad as the major two-wheeler producers are based where the market exists like Japan, Korea and Italy. Local companies like Honda, Suzuki and Piaggio are already pumping their products in these markets.