Mumbai: Bajaj Auto indicated potential disruptions in electric scooter production starting in July, should China’s restrictions on rare earth magnet exports persist. During the company’s March quarter earnings call, they highlighted operational risks stemming from dwindling inventories of these vital components without a foreseeable resolution.
Rakesh Sharma, the executive director of Bajaj Auto, explained to reporters the complications posed by a stringent approval process. This process requires certifications from Indian ministries, the Chinese embassy, and local Chinese provincial authorities. Despite over 30 industry applications, no approvals have been granted. Chinese authorities estimate a 40–45 day process; however, Sharma noted uncertainty regarding the timeline, raising concerns about the system’s reliability.
Sharma warned that without resolution or incoming shipments, production would be adversely affected by July. Bajaj Auto emphasized the absence of short-term alternatives, as refining rare earth elements demands significant investment and technical expertise, despite available deposits in India and elsewhere.
Rare earth magnets are crucial for electric motors, and any supply constraints could hinder Bajaj Auto’s electric vehicle goals amid its efforts to expand the EV pipeline. With China dominating 80% of the supply, the company acknowledged that these challenges, coupled with geopolitical and currency issues, might limit export and EV growth in the near future.
Despite these challenges, Bajaj Auto reported a 6% increase in net profit for the quarter ending March 31, reaching ₹2,049 crore from ₹1,936 crore in the previous year. Revenue rose by 6% to ₹12,148 crore. This growth was supported by a favorable product mix, strong domestic demand, and stable margins despite cost pressures. The company’s financial performance exceeded analyst expectations for the quarter.
Total sales increased by 4% to over 11 lakh units, with motorcycles and three-wheelers performing well. EBITDA margins remained stable, boosted by premium segments like Pulsar and KTM. For FY25, Bajaj Auto reported a standalone net profit of ₹8,151 crore, a 9% rise from the previous year. Adjusted for a one-time deferred tax provision, the profit was ₹8,363 crore, with full-year revenue increasing 12% to ₹50,010 crore, as volumes surpassed 46.5 lakh units.
Encouraging signs appeared in export markets, particularly in Latin America and parts of Asia, with exports in 30 key countries growing by 31%, surpassing the industry’s 26% growth. Record sales of models like Pulsar and Dominar were noted, though the outlook for Africa remains cautious due to economic instability.
Bajaj Auto concluded the year with ₹7,267 crore in operating cash flow and declared a dividend of ₹210 per share. A ₹4,932 crore share buyback was also completed earlier. Shares of Bajaj Auto closed at ₹8,873.30 each, up 0.28% on the BSE.
