Chairman’s_Letter

Chairman’s Letter

Dear Shareholder,

As the youngest of five cousins — we always called each other ‘brothers’ — I was the perennial ‘student’ of Rahul-bhaiya. In the process, he taught me everything that I know today. The skill and focus with which he dealt with numbers; his ability to see things from 40,000 feet and instantaneously descend to an ant’s-eye view of things; his unflinching commitment to ethics and integrity; his innate understanding of various businesses; his courage and fearlessness and the conviction to call a spade a spade; his innate understanding of when to be a tough negotiator and when to cut slack, all done with a smile, humour and logic; his quest for details; and his capacity to care, show concern, and have huge amounts of fun.

Even today, I can imagine him calling me at 11.30 at night to check whether I had finished doing something that I was supposed to do. Or to admonish me for wasting precious paper in expressing all these things about him.

I will miss him forever.

Had Rahul-bhaiya been around, he would have been happy with the results of your Company. I can imagine him saying, “What good fortune to have such results in the very first year of your Chairmanship”. And my replying, “It is only with your blessings, Sir”. The numbers are indeed excellent, and demonstrate the ability of your Company’s management to swiftly overcome the enormous crisis brought about by Covid and return to its winning ways. Here are the key results:

  • Net sales for FY2022 was 32,136 crore versus 27,133 crore for FY2021. With a growth of 18.4%, this is your Company’s highest ever annual net sales.
  • Operating earnings before interest, tax, depreciation and amortisation (EBITDA) was 5,389 crore for FY2022 — a growth of 6.4% over the previous year, and also the highest ever.
  • Operating EBITDA margin was 16.3% of net sales and other operating income, versus 18.3% in the previous year. That was on account of serious increases in input costs, and your Company’s inability to further push its high value-high margin sports and super-sports bikes no thanks to a crippling global shortage of semiconductors.
  • Operating profit grew by 6.5% to 5,111 crore – which is also the highest ever. The operating profit margin was 15.4% of net sales and other operating income.
  • Profit before tax and exceptional item increased by 4.2% to 6,190 crore — which is the third highest in your Company’s history.
  • Profit before tax (PBT) grew by 9.5% to 6,505 crore. This, too, was Bajaj Auto’s third highest ever.
  • Profit after tax (PAT) recorded a growth of 10.2% to 5,019 crore. This was your Company’s second highest PAT.
  • Surplus cash and cash equivalent as on 31 March 2022 increased by 7.9% to 19,090 crore after a dividend pay-out of 4,051 crore in FY2022.

One more kudo is in order. That has to do with your Company’s outstanding export performance. This is not new, but FY2022 was special. First, we crossed the export milestone of 2.5 million vehicles. Second, motorcycle exports touched new highs – at almost 2.2 million units, showing a growth of 22% over FY2021. Third, in 10 of the 12 months, your Company exported over 200,000 units. And fourth, exports accounted for 52.7% of net sales — something that we have never witnessed before. Bajaj Auto is truly The World’s Favourite Indian.

I believe that your Company’s Managing Director, Shri Rajiv Bajaj, his entire team and each and every employee deserve congratulations for such results.

Having rightly applauded the management, I should also share with you a short term concern. There is no doubt in my mind — nor should it be in yours — that Bajaj Auto has a complete suite of profitable two-and three-wheelers that can significantly increase the domestic and international market shares and earn higher sales, revenues and profits. However, in all my years as a fiduciary of your Company, I have never seen it face such a global supply constraint that it has in terms of the sheer scarcity of semiconductors. No modern automobile can exist without a slew of semiconductor chips. Motorcycles and top-of-the-line electric vehicles like the Chetak are no exceptions. It is difficult to predict when this supply scarcity will end. But till then, this will constrain your Company’s production volumes, as it will for all other automobile manufacturers.

That said, I have no doubt whatsoever about the medium-and long-term view of your Company. It is a great enterprise in excellent hands — and forever capable of delighting customers, employees and shareholders alike. Which is why it is Hamara Bajaj!

With my best wishes,

Yours sincerely,

Niraj Bajaj

Chairman

27 April 2022

Chairman’s_Letter

Chairman’s Letter

Dear Shareholder,

As the youngest of five cousins — we always called each other ‘brothers’ — I was the perennial ‘student’ of Rahul-bhaiya. In the process, he taught me everything that I know today. The skill and focus with which he dealt with numbers; his ability to see things from 40,000 feet and instantaneously descend to an ant’s-eye view of things; his unflinching commitment to ethics and integrity; his innate understanding of various businesses; his courage and fearlessness and the conviction to call a spade a spade; his innate understanding of when to be a tough negotiator and when to cut slack, all done with a smile, humour and logic; his quest for details; and his capacity to care, show concern, and have huge amounts of fun.

Even today, I can imagine him calling me at 11.30 at night to check whether I had finished doing something that I was supposed to do. Or to admonish me for wasting precious paper in expressing all these things about him.

I will miss him forever.

Had Rahul-bhaiya been around, he would have been happy with the results of your Company. I can imagine him saying, “What good fortune to have such results in the very first year of your Chairmanship”. And my replying, “It is only with your blessings, Sir”. The numbers are indeed excellent, and demonstrate the ability of your Company’s management to swiftly overcome the enormous crisis brought about by Covid and return to its winning ways. Here are the key results:

  • Net sales for FY2022 was 32,136 crore versus 27,133 crore for FY2021. With a growth of 18.4%, this is your Company’s highest ever annual net sales.
  • Operating earnings before interest, tax, depreciation and amortisation (EBITDA) was 5,389 crore for FY2022 — a growth of 6.4% over the previous year, and also the highest ever.
  • Operating EBITDA margin was 16.3% of net sales and other operating income, versus 18.3% in the previous year. That was on account of serious increases in input costs, and your Company’s inability to further push its high value-high margin sports and super-sports bikes no thanks to a crippling global shortage of semiconductors.
  • Operating profit grew by 6.5% to 5,111 crore – which is also the highest ever. The operating profit margin was 15.4% of net sales and other operating income.
  • Profit before tax and exceptional item increased by 4.2% to 6,190 crore — which is the third highest in your Company’s history.
  • Profit before tax (PBT) grew by 9.5% to 6,505 crore. This, too, was Bajaj Auto’s third highest ever.
  • Profit after tax (PAT) recorded a growth of 10.2% to 5,019 crore. This was your Company’s second highest PAT.
  • Surplus cash and cash equivalent as on 31 March 2022 increased by 7.9% to 19,090 crore after a dividend pay-out of 4,051 crore in FY2022.

One more kudo is in order. That has to do with your Company’s outstanding export performance. This is not new, but FY2022 was special. First, we crossed the export milestone of 2.5 million vehicles. Second, motorcycle exports touched new highs – at almost 2.2 million units, showing a growth of 22% over FY2021. Third, in 10 of the 12 months, your Company exported over 200,000 units. And fourth, exports accounted for 52.7% of net sales — something that we have never witnessed before. Bajaj Auto is truly The World’s Favourite Indian.

I believe that your Company’s Managing Director, Shri Rajiv Bajaj, his entire team and each and every employee deserve congratulations for such results.

Having rightly applauded the management, I should also share with you a short term concern. There is no doubt in my mind — nor should it be in yours — that Bajaj Auto has a complete suite of profitable two-and three-wheelers that can significantly increase the domestic and international market shares and earn higher sales, revenues and profits. However, in all my years as a fiduciary of your Company, I have never seen it face such a global supply constraint that it has in terms of the sheer scarcity of semiconductors. No modern automobile can exist without a slew of semiconductor chips. Motorcycles and top-of-the-line electric vehicles like the Chetak are no exceptions. It is difficult to predict when this supply scarcity will end. But till then, this will constrain your Company’s production volumes, as it will for all other automobile manufacturers.

That said, I have no doubt whatsoever about the medium-and long-term view of your Company. It is a great enterprise in excellent hands — and forever capable of delighting customers, employees and shareholders alike. Which is why it is Hamara Bajaj!

With my best wishes,

Yours sincerely,

Niraj Bajaj

Chairman

27 April 2022