Bajaj Auto aims to reduce output in the two-wheeler and three-wheeler sectors by up to 25% at its export-focused factories. The decision was prompted by concerns in Nigeria, the company’s largest market, according to the Economic Times on February 27, citing numerous people familiar with the situation.
As a result, the stock dropped more than 3.5 percent in early trade on February 27, marking its sharpest drop in the previous five months. It is also the Nifty Auto index’s worst performance. The stock has dropped more than 5.89 percent in the previous month.
According to the study, Bajaj Auto would produce about 250,000–270,000 units in March, a considerable decrease from its average output of 338,000 units during the first nine months of FY23.
Due to the circumstances, the overall capacity utilisation rate at Bajaj Auto factories may fall below 50%.Every month, the corporation has an installed capacity of 550,000 units.
“Indeed, there is a lot of uncertainty in Nigeria—bboth civil and economic—oon account of elections and demonetisation. “So, we have cut our shipments substantively until things settle,” Rakesh Sharma, executive director of Bajaj Auto, told the daily.
Nigeria, Africa’s most populous country, chose last year to begin circulating freshly designed 200, 500, and 1,000 naira notes, allowing residents until January 31 to dispose of their old currency notes, which would no longer be legal tender after that date.
The bank stated that it wished to lower the quantity of currency in circulation in order to improve liquidity control, cut inflation, and move towards a cashless economy.