Sales, including other income, were up by 12 per cent to Rs 1,820.94 crore from Rs 1,630.79 crore. Of this, exports accounted for Rs 82.71 crore, up from Rs 66.14 crore reported in the previous first half.

Chairman and managing director Rahul Bajaj told The Financial Express that sales for the first half kept in line with the fact that the two-wheeler segment is the only one that is growing in the automobile industry. "However, the second half of the current financial and especially 1999-2000 will be the period when the benefits from the new models would really be realised." The new models are Caliber, Legend and Spirit.

Bajaj said that "god willing", production for 1998-99 would reach 1.45 million vehicles, comprising both two and three wheelers. This would then be the highest number achieved at Bajaj Autoafter the figure of 1.42 million in 1996-97.

According to Bajaj, the four-stroke Saphire scooter would roll out of the new Chakan plant by April 1999. It would come in two versions of 74cc and 90cc. The next scooter planned is the Cageva which again would come in two versions of 125cc and 150cc. Over the next five to seven years, the Chakan plant would have a capacity of one million vehicles. The Waluj and Akurdi facilities would have a combined capacity of two million by the end of March 1999.

According to a press release issued by the company here on Tuesday, gross profit after interest was Rs 410.05 crore, compared with Rs 372.89 crore reported in the first half last year. Depreciation was also higher at Rs 80.85 crore as against Rs 68.51 crore. Tax increased marginally to Rs 103 crore from Rs 99 crore. Earnings per share was Rs 37.56 which was higher than Rs 34.88 (after adjustment for issue of bonus shares allotted in October last year).

In volume terms, sales of two wheelers grew to 601,092 unitsfrom 527,877 units (including sales of Maharashtra Scooters). Comparative figures for the whole industry show that sales grew to 1,648,358 units during the first half of the current financial from 1,438,478 units in the corresponding period last year.

The volume growth has been 13.9 per cent and this, according to the release, has been largely aided by the launch of three new products. Bajaj Auto estimates a sale of 6.75 lakh two wheelers in the second half of the current financial which would then take total sales for 1998-99 to 1.27 million two wheelers. Similarly, in the case of three wheelers, the company sold 85,898 vehicles in the first half, down from 95,498 in the previous year. It expects to sell one lakh in the second half, which means total production of three wheelers would be 1.85 lakh.

INSIGHT

Smooth ride may continue: After an unimpressive 1997-98, the undisputed market leader in two wheelers appears to have bounced back in the first half, with unit sales of two and threewheelers recording a 10.2 per cent jump to 6.87 lakh units. Going by the available CMIE figures, it is undoubtedly the motorcycle segment which has once again helped Bajaj improve revenues. An export growth of 25 per cent to Rs 82.71 crore has also helped.

Thus sales at Rs 1,092.40 crore were up 11.86 per cent compared with Rs 1,512.99 crore last year. But probably the most glaring problem for the company could well be the drop in operating margins from 17.01 per cent to 16.76 per cent, despite its economies of scale. This is because of the launch of several new models, with their attendant increase in marketing costs.

The company's cash-rich status has, coupled with a higher other income component, helped buoy earnings growth which jumped from Rs 205.38 crore to Rs 226.20 crore.

As for the future - Bajaj should continue to benefit from its dominant position in the three-wheeler segment and the marked shift towards motorcycles. A lot would depend on market acceptance and the consequent penetrationlevels achieved by the new models being launched.