Bajaj profits hit by Lankan tax hike, export slump

Bajaj, the world’s biggest manufacturer of three-wheeled rickshaws used for passenger and goods transportation, said exports of the vehicles fell 41% in the June quarter, hit by a tax hike in Sri Lanka and political instability in Egypt.

“Bajaj Auto, along with its distributor, has undertaken pro-active measures like rationalising the end-user cost of vehicles in Sri Lanka,” the company said in a statement, adding that it expected sales to return to normal levels by September.

Bajaj is India’s second-largest motorcycle maker.

Net profit during the quarter rose 1% to 7.18 billion rupees ($130.2 million), and that its industry-topping profit margins had risen.

Umesh Karne, industry analyst at Brics Securities in Mumbai said: “Exports are a worry, but the company expects them to improve by the end of the next quarter.”

Net sales rose 4% to 47.14 billion rupees.  The company’s operating margin for the quarter stood at 19.4%, up from 19.1% a year previously.

Sales of its motorcycles in India fell 1% during the first quarter of the fiscal year that began in April, against 6% growth in the overall market.  

 Bajaj and its local rivals Hero MotoCorp and TVS Motor are starting to come under pressure from Japanese manufacturers such as Honda Motor Co, as they ramp up activity in the fast-growing market.