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News In Brief Business and Economy

Bajaj Auto Net Up 11%, Strengthening Semiconductor Supply

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 Bajaj Auto Net Up 11%, Strengthening Semiconductor Supply
28 Jul 2022
min read

News Synopsis

For the three months that ended in June, Bajaj Auto recorded a profit of Rs 1,173 crore, a rise of 11% year over year, while revenue increased by 8% year over year to Rs 8,005 crore. During the quarter, volumes decreased 7 percent year over year. Price rises, improved currency realisations, and a favourable product mix all contributed to the company's strong performance; the operating profit margin increased by 100 basis points to 16.6%, pushing the Ebitda up by 15% to Rs 1,328 crore.

According to Rajiv Bajaj, MD and CEO of Bajaj Auto, the company has experienced difficult times over the past 18 months due to supply chain issues, an increase in commodity prices, inflation, geopolitical issues with markets running out of money, and other factors. 

The corporation said that as new sources of semi-conductor supply were created, the semi-conductor deficit began to lessen in the latter portion. The company does anticipate that the shortages would last through the end of 2023. At the company's annual general meeting, Bajaj paraphrased marketing expert Jack Trout as saying, "You cannot sell. You must provide them a cause to purchase even during adversity. The key to Bajaj's strategy, called AI or "Affordable Inspiration," is to make the consumer an alluring offer that will convince them to open their wallets.

Bajaj announced that it would introduce a new product in the under-125 cc segment in India in FY24 as part of the AI strategy, as the business continues to trail the market leader. In order to wrangle a sizable piece of this market, it was considering something radically different. Every year, Bajaj would also release at least one new Chetak, and these models would target both domestic and international markets. 6,200 Chetak units were sold during Q1FY23, and the company has 16,000 Chetak reservations. 

Rakesh Sharma, executive director of Bajaj Auto, commented on the prognosis for FY23 when he claimed that the company's efforts to expand its vendor network for semiconductors will result in a better supply in July and August. They would quickly get to work refilling the running low supplies at the dealerships. Sharma claimed that May was the lowest moment and that the worst is now behind us. He was cautiously optimistic about a steady, gradual recovery in FY23 because he anticipated a typical monsoon and fintech boom.

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