It is perhaps the sign of times that the biggest two-wheeler manufacturer reported a 23 per cent drop in net profit to Rs164 crore during the third quarter ended December and yet saw its stock price rise by 4 per cent.

With the announcement of its third quarter results the company also said that it plans to launch 9 new models in the next nine months. Six of these models will be two wheelers and three models in the three wheelers segment.

Bajaj Auto reported a sharp improvement in operating margins to 14.5 per cent of net sales compared with 2.5 per cent in a year before. The company attributed this to shift in its product-mix in favour of high-margin 125 cc motorcycles.

It has also reported a continuously improved product mix with the more profitable 125 cc bikes now constituting 63 per cent of its portfolio.

Boosting bottom line
Cost cutting measures have worked in favour of improving margins at Bajaj Auto

The company has been running a lean operation with two-thirds of its employees retiring

It has also rationalised its suppliers from 855 down to 200 only over the last decade

Bajaj Auto is now looking to boost its bottomline with savings from export and raw materials. The company is likely to save over Rs50 crore on this account in the next quarter.

With raw material prices softening, the company hopes to save Rs1000 per bike. The back of the envelope figure for this works to a saving of Rs30 crore this quarter

An additional saving of Rs24 crore comes from exports, thanks to the duty entitlement passbook (DEPB) benefits, which have been scaled up from 6 per cent to 9 per cent