In a career spanning nearly four decades, Kevin P. D’sa, CFO and President (Finance), Bajaj Auto has seen numerous transformations taking place in the country’s most profitable two-wheeler company, be it Bajaj’s dominance in the scooter market and its decision to exit it or the company becoming a major force in the overseas market. Armed with a Bachelor’s degree (Commerce), he began his career with Bajaj Auto in September 1978. D’Sa completed his chartered accountancy in 1978 and ICWA in 1981.
India’s automotive industry is full of sudden challenges. Rather than panicking, it is important to keep things simple, says D’Sa. “Try to anticipate the future challenges and prepare for the worst case scenario. This keeps us ahead of the curve,” he says.
Bajaj Auto’s innovation in cost practices has always kept the company ahead in the race. The company was having a dream run until demonetisation was implemented. The move impacted the company’s sales in the domestic market. In FY15-16, Bajaj Auto’s net sales grew by 5.4 per cent to Rs 22,253 crore and PAT increased 29.8 per cent at Rs 3,652 crore. The operating Ebitda margin was 22.4 per cent of net sales and other operating income, which was the highest in the industry. In the first half of FY17, Bajaj Auto continued to have its dream run and it again posted a record profit.
However, its profit in October-December quarter fell 4.7 per cent to Rs 924.6 crore compared to Rs 970.6 crore in year-ago period. Revenue during the quarter declined 9 per cent y-o-y to Rs 5,354.13 crore on lower sales volumes due to demonetisation. The company sold 8.51 lakh units in the quarter ended December 2016, down 10.5 per cent compared to 9.51 lakh units sold in same quarter last year as domestic as well as exports sales were down 5 per cent and 17.5 per cent, respectively.
“Demonetisation did have a significant impact on Bajaj Auto’s domestic motorcycle and commercial vehicle business, as it did on the overall two-wheeler industry. The industry was doing well with a growth of ~12 per cent in the six months preceding demonetisation. After demonetisation, the industry went into negative territory and is since recovering,” says D’Sa. Despite all the macro challenges, Bajaj still remains the most profitable two-wheeler player.
When asked about innovations in cost practices the company adopts to be on top of its game, D’Sa explains that the results are a reflection of their strategy, which rests on three pillars: globalisation, deep differentiation and operating on variable cost structure.
“Our ability to convert and operate under a variable cost structure, thus helping us control our fixed cost to ~8 per cent. This takes care of the variability in levels of operations,” says D’Sa.
For the company, the “world” is the market and not just India and it prefers to be a specialist in its field. “Differentiation is one parameter that can help us gain market share and, in turn, garner higher profits,” he adds.
D’sa is not confined to just reading and travelling when it comes to hobbies. He likes to be in the field and dons the hat of a farmer. “I love to do physical and manual work in my farm, especially along with my wife. Every weekend I am in my farm, just out of Pune, where I work in the field with my wife and my small team doing hard manual labour — most enjoyable experience in the midst of nature,” the CFO says.
BW Reporters
The author is Senior Correspondent with BW Businessworld
