bajaj auto - strategic management

8/19/2019 Bajaj Auto - Strategic Management

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INDEX

CHAPTER NAME PAGE NO

1

Company history

• Origins

• Completion in 1990

• End of licence raj

• New tools in 1990

3

4

4

5

6

2

Product profile and financial performance• Motorcycles

• Three wheelers

• Oerall performance

8

9

10

12

3

!trategic analysis

• Mission ision and alues

• "# Practices

• $ogo

• !wot

• Porter fie forces model

• Managerial style

• %usiness streategy

18

19

20

21

23

24

25

26

27

1



• Other strategic issue

& CO#PO#'TE !OC('$ #E!PON!(%($(T) *+

, T"E -.T.#E 'N/ #ECOMMEN/'T(ON! *,

%(%$(O#'P") *9

COMPANY HISTORY

O#((N!

COMPET(T(ON (N 1920

EN/ O- $(CEN!E #'3

NE4 TOO$! O- 19905!

P#O/.CT #E6'MP (N +0005!

2



%ajaj 'uto $imited is an (ndian two7wheeler and three7wheeler manufacturing company8 %ajaj

'uto manufactures and sells motorcycles scooters and auto ric:shaws8 %ajaj 'uto is a part of

the %ajaj roup8 (t was founded ;y 3amnalal %ajaj in #ajasthan in the 19*0s8 (t is ;ased

in Pune Mum;ai with plants in Cha:an <Pune= 4aluj <near 'uranga;ad=

and Pantnagar in .ttara:hand8 The oldest plant at ':urdi <Pune= now houses the #>/ centre

?'head?8

%ajaj 'uto is the world?s si@th7largest manufacturer of motorcycles and the fourth7largest in

(ndia8 (t is the world5s largest three7wheeler manufacturer8

On *1 March +01* its mar:et capitalisation was (N# ,+0 ;illion <.!A98,B ;illion= ma:ing it

(ndia?s +*rd largest pu;licly traded company ;y mar:et alue8 The -or;es lo;al +000 list for

the year +01+ ran:ed %ajaj 'uto at 1&18

Compa! H"#$o%!& 'a(a( A)$o *"m"$+,

The %ajaj roup is amongst the top 10 ;usiness houses in (ndia8 (ts footprint stretches oer a

wide range of industries spanning automo;iles <two7wheelers and three7wheelers= home

appliances lighting iron and steel insurance trael and finance8

%ajaj 'uto $imited is (ndia?s largest manufacturer of scooters and motorcycles8 The company

generally has lagged ;ehind its 3apanese rials in technology ;ut has inested heaily to catch

up8 (ts strong suit is high7olume production it is the lowest7cost scooter ma:er in the world8

'lthough pu;licly owned the company has ;een controlled ;y the %ajaj family since its

founding8

O%"-"#

The %ajaj roup was formed in the first days of (ndia?s independence from %ritain8 (ts founder

3amnalal %ajaj had ;een a follower of Mahatma andhi who reportedly referred to him as a

fifth son8 ?4heneer ( spo:e of wealthy men ;ecoming the trustees of their wealth for the

common good ( always had this merchant prince principally in mind? said the Mahatma after

3amnalal?s death8

3

https://en.wikipedia.org/wiki/Scooter_(motorcycle)


https://en.wikipedia.org/wiki/Auto_rickshaw

https://en.wikipedia.org/wiki/Bajaj_Group

https://en.wikipedia.org/wiki/Jamnalal_Bajaj

https://en.wikipedia.org/wiki/Rajasthan


https://en.wikipedia.org/wiki/Pune


https://en.wikipedia.org/wiki/Mumbai


https://en.wikipedia.org/wiki/Chakan,_Maharashtra

https://en.wikipedia.org/wiki/Aurangabad,_Maharashtra


https://en.wikipedia.org/wiki/Pantnagar


https://en.wikipedia.org/wiki/Uttarakhand

https://en.wikipedia.org/wiki/Research_and_development

https://en.wikipedia.org/wiki/Market_capitalisation

https://en.wikipedia.org/wiki/Market_value

https://en.wikipedia.org/wiki/Forbes_Global_2000


http://www.answers.com/library/Company%20Histories-cid-11389152

https://en.wikipedia.org/wiki/Auto_rickshaw

https://en.wikipedia.org/wiki/Bajaj_Group

https://en.wikipedia.org/wiki/Jamnalal_Bajaj




https://en.wikipedia.org/wiki/Chakan,_Maharashtra



https://en.wikipedia.org/wiki/Uttarakhand

https://en.wikipedia.org/wiki/Research_and_development

https://en.wikipedia.org/wiki/Market_capitalisation

https://en.wikipedia.org/wiki/Market_value


http://www.answers.com/library/Company%20Histories-cid-11389152




3amnalal %ajaj was succeeded ;y his eldest son +B7year7old Damalnayan in 19&+8 Damalnayan

howeer was preoccupied with (ndia?s struggle for independence8 'fter this was achieed in

19&B Damalnayan consolidated and diersified the group ;ranching into cement ayuredic

medicines electrical euipment and appliances as well as scooters8

The precursor to %ajaj 'uto had ;een formed on Noem;er +9 19&, as MFs %achraj Trading

$td8 (t ;egan selling imported two7 and three7wheeled ehicles in 19&2 and o;tained a

manufacturing license from the goernment 11 years later8 The ne@t year 190 %ajaj 'uto

;ecame a pu;lic limited company8

#ahul %ajaj reportedly adored the famous 6espa scooters made ;y Piaggio of (taly8 (n 190 at

the age of ++ he ;ecame the (ndian licensee for the ma:e %ajaj 'uto ;egan producing its first

two7wheelers the ne@t year8

#ahul %ajaj ;ecame the group?s chief e@ecutie officer in 192 after first pic:ing up an M%' at

"arard8 "e lied ne@t to the factory in Pune an industrial city three hours? drie from %om;ay8

The company had an annual turnoer of #s B+ million at the time8 %y 19B0 the company had

produced 100000 ehicles8 The oil crisis soon droe cars off the roads in faor of two7wheelers

much cheaper to ;uy and many times more fuel7efficient8

' num;er of new models were introduced in the 19B0s including the three7wheeler goods carrier

and %ajaj Cheta: early in the decade and the %ajaj !uper and three7wheeled rear engine

'utoric:shaw in 19B and 19BB8 %ajaj 'uto produced 100000 ehicles in the 19B7BB fiscal

year alone8

The technical colla;oration agreement with Piaggio of (taly e@pired in 19BB8 'fterward Piaggio

ma:er of the 6espa ;rand of scooters filed patent infringement suits to ;loc: %ajaj scooter sales

in the .nited !tates .nited Dingdom 4est ermany and "ong Dong8 %ajaj?s scooter e@ports

plummeted from #s 1**8+ million in 1920721 to #s ,+ million <A,8& million= in 192172+

although total reenues rose fie percent to #s 181 ;illion8 Preta@ profits were cut in half to #s

* million8

4



#ahul Damalnayan %ajaj has stepped down as managing director of %ajaj 'uto passing on

the mantle of the company to his eldest son #aji8 #ahul %ajaj will continue as the chairman of

the %ajaj conglomerate8 %ajaj 'uto is facing increased competition from "onda and Piaggio8

"onda has oerta:en %ajaj as (ndia?s No81 scooter ma:er in the past two years8

N+. Comp+$"$"o " $/+ 1980#

3apanese and (talian scooter companies ;egan entering the (ndian mar:et in the early 1920s8

'lthough some ;oasted superior technology and flashier ;rands %ajaj 'uto had ;uilt up seeral

adantages in the preious decades8 (ts customers li:ed the dura;ility of the product and the

ready aaila;ility of maintenance the company?s distri;utors permeated the country8

The %ajaj M7,0 de;uted in 19218 The new fuel7efficient ,0cc motorcycle was immediately

successful and the company aimed to ;e a;le to ma:e 0000 of them a year ;y 192,8 Capacity

was the most important constraint for the (ndian motorcycle industry8 'lthough the country?s

total production rose from ++000 ehicles in 19B to 00000 in 192+ companies li:e rial

$ohia Machines had difficulty meeting demand8 %ajaj 'uto?s adance orders for one of its new

mini7motorcycles amounted to A,B million8 4or: on a new plant at 4aluj 'uranga;ad

commenced in 3anuary 192&8

The 19272B fiscal year saw the introduction of the %ajaj M720 and the Dawasa:i %ajaj D%100

motorcycles8 The company was ma:ing ,00000 ehicles a year at this point8

'lthough #ahul %ajaj credited much of his company?s success with its focus on one type of

product he did attempt to diersify into tractor7trailers8 (n 192B his attempt to ;uy control of

'hso: $eyland failed8

END O *ICENSE RA

The %ajaj !unny was launched in 1990 the Dawasa:i %ajaj &! Champion followed a year later8

';out this time the (ndian goernment was initiating a program of mar:et li;eraliGation doing

away with the old ?license raj? system which limited the amount of inestment any one company

could ma:e in a particular industry8

5



(t was hoping to increase its e@ports which then amounted to just fie percent of sales8 The

company ;egan ;y shipping a few thousand ehicles a year to neigh;oring !ri $an:a and

%angladesh ;ut soon was reaching mar:ets in Europe $atin 'merica 'frica and 4est 'sia8 (ts

domestic mar:et share ;arely less than ,0 percent was slowly slipping8

%y 199& %ajaj also was contemplating high7olume low7cost car manufacture8 !eeral of

%ajaj?s rials were loo:ing at this mar:et as well which was ;eing rapidly li;eraliGed ;y the

(ndian goernment8

%ajaj 'uto produced one million ehicles in the 199&79, fiscal year8 The company was the

world?s fourth largest manufacturer of two7wheelers ;ehind 3apan?s "onda !uGu:i and

Dawasa:i8 New models included the %ajaj Classic and the %ajaj !uper E@cel8 %ajaj also signed

deelopment agreements with two 3apanese engineering firms Du;ota and To:yo # > /8 %ajaj?s

most popular models cost a;out #s +00008 ?)ou just can?t ;eat a %ajaj? stated the company?s

mar:eting slogan8

The Dawasa:i %ajaj %o@er and the #E diesel 'utoric:shaw were introduced in 199B8 The ne@t

year saw the de;ut of the Dawasa:i %ajaj Cali;er the !pirit and the $egend (ndia?s first four7

stro:e scooter8 The Cali;er sold 100000 units in its first 1+ months8 %ajaj was planning to ;uild

its third plant at a cost of #s & ;illion <A1118 million= to produce two new models one to ;edeeloped in colla;oration with Cagia of (taly8

NE TOO*S IN THE 1990S

!till intense competition was ;eginning to hurt sales at home and a;road during the calendar

year 199B8 %ajaj?s low7tech low7cost cycles were not faring as well as its rials? higher7end

offerings particularly in high7powered motorcycles since poorer consumers were withstanding

the worst of the recession8 The company inested in its new Pune plant in order to introduce new

models more uic:ly8 The company spent #s B8, ;illion <A12, million= on adanced computer7

controlled machine tools8 (t would need new models to comply with the more stringent emissions

standards slated for +0008 %ajaj ;egan installing #s 200 catalytic conerters to its two7stro:e

scooter models ;eginning in 19998

6



'lthough its domestic mar:et share continued to slip falling to &08, percent %ajaj 'uto?s profits

increased slightly at the end of the 199B792 fiscal year8 (n fact #ahul %ajaj was a;le to ;oast

?My competitors are doing well ;ut my net profit is still more than the ne@t four ;iggest

companies com;ined8? "ero "onda was perhaps %ajaj?s most serious local threat in fact in the

fall of 1992 "onda Motor of 3apan announced that it was withdrawing from this joint enture8

REAMPING THE DESIGN

%ajaj 'uto had uadrupled its product design staff to ,008 (t also acuired technology from its

foreign partners such as Dawasa:i <motorcycles= Du;ota <diesel engines= and Cagia

<scooters=8 ?"onda?s annual spend on # > / is more than my turnoer? noted #uhal %ajaj8 "is

son !angi %ajaj was wor:ing to improe the company?s supply chain management8 '

mar:eting e@ecutie was lured from T6! !uGu:i to help push the new cycles8

!eeral new designs and a doGen upgrades of e@isting scooters came out in 1992 and 19998

These and a surge in consumer confidence propelled %ajaj to sales records and it ;egan to

regain mar:et share in the fast7growing motorcycle segment8 !ales of three7wheelers fell as some

states citing traffic and pollution concerns limited the num;er of permits issued for them8

SHARE IN COMPETITOR

(n late 1999 #ahul %ajaj made a ;id to acuire ten percent of Piaggio for A, million8 The

(talian firm had e@ited a relationship with entrepreneur /eepa: !inghania and was loo:ing to

reenter the (ndian mar:et possi;ly through acuisition8 Piaggio itself had ;een mostly ;ought

out ;y a erman inestment ;an: /eutsche Morgan renfell </M= which was loo:ing to sell

some shares after turning the company around8 %ajaj attached seeral conditions to his purchase

of a minority share including a seat on the ;oard and an e@clusie Piaggio distri;utorship in

(ndia8

Employment fell from a;out +*000 in 199,79 <the year %ajaj suffered a two7month stri:e at its

4aluj factory= to 1B000 in 19997+0008 The company planned to lay off another +000 wor:ers in

the short term and another *000 in the following three to four years8

7



P%""pa S)#","a%"+#& %ajaj 'uto -inance $td8 %ajaj 'uto "oldings $td8 %ajaj Electricals

$td8 %ajaj "industan $td8 Maharashtra !cooters $td8 Mu:and $td8

P%""pa Comp+$"$o%#& "onda Motor Co8 $td8 !uGu:i Motor Corporation Piaggio !p'8

'CISITIONS

%ajaj 'uto ;ought a controlling sta:e in the Tempo -irodia company renaming it H%ajaj TempoH8

ermany?s /aimler7%enG a long7time colla;orator with -irodia ;ecause of their ownership of

the original Tempo wor:s in ermany owned 1I of %ajaj Tempo8 /aimler sold their sta:e

;ac: to the -irodia group in +001 meaning that they once again held a controlling interest with

%'$ retaining +&I of the shares8 (t was agreed that %ajaj Tempo would gradually phase out the

use of the HTempoH ;rand name as it still ;elonged to Mercedes7%enG8J+0K The name of the

company was changed to -orce Motors in May +00, dropping H%ajajH as well as HTempoH oer

the o;jections of %ajaj 'uto with whom the company shares a long history as well as a

compound wall8J+1K

$m Po.+% Spo%$# A-

(n Noem;er +00B %ajaj 'uto acuired 1&8,I sta:e in DTM Power !ports ' <holding

company of DTM !portmotorcycles '=8 The two companies hae signed a cooperation deal ;y

which DTM will proide the :now7how for joint deelopment of the water7cooled four7stro:e

1+, and +,0 cc engines and %ajaj will ta:e oer the distri;ution of DTM products in (ndia and

some other !outheast 'sian nations8J++K 's on *1 March +01* %ajaj 'uto held &B89I sta:e in

the company8J1K

8

https://en.wikipedia.org/wiki/Daimler-Benz



https://en.wikipedia.org/wiki/Bajaj_Auto#cite_note-change-20

https://en.wikipedia.org/wiki/Bajaj_Auto#cite_note-21

https://en.wikipedia.org/wiki/KTM




https://en.wikipedia.org/wiki/Bajaj_Auto#cite_note-AR201213-1


https://en.wikipedia.org/wiki/Bajaj_Auto#cite_note-change-20




https://en.wikipedia.org/wiki/Bajaj_Auto#cite_note-AR201213-1



DEMERGER IN 2008

The demerger of %ajaj 'uto $td into three corporate entitiesL%ajaj -inser $td <%-$= %ajaj

'uto $td <%'$= and %ajaj "oldings and (nestment $td <%"($=Lwas completed with the

shares listing on + May +0028

9



C/ap$+% 2

PRODCT PROI*E AND INANCIA*

PERORMANCE

Motorcycles

Three wheelers

Oerall performance of the company

-inancial ratio analysis

10



P%o,)$#

Mo$o%!+#

Two7wheeler sales of (ndian players are dominated ;y the domestic mar:et and within it ;y

motorcycles8 'fter growing at a sharp clip from the late 1990s motorcycle sales witnessed a

B82I drop in olume in +00B702 due to falling domestic demand as a result of rising interest

rates and many priate sector ;an:s reducing their retail lending e@posures8 +002709 saw a

modest increase in motorcycle sales of &I drien largely ;y growth in cash sales8 Een so sales

of motorcycles <;oth domestic and e@ports= in +002709 has ;een lower than what it was in +007

0B ;efore the slowdown hit this sector8 Chart ' depicts the data from 19927998

Chart ' !ales of two7wheelers <million units=

11



Motorcycles /omestic !ales for the (ndustry

The company classifies motorcycles into three segments ;ased on consumer categories and

appro@imate price points8 These are

Motorcycles of %ajaj can ;e categoriGed as

SEGMENT O

'IESEATRES 'A* PRODCTS

COMPETITORS

PRODCTS

E$%! #+-m+$&100 cc motorcycles

at #s8*, 0008

the Platina8 The

segment accounted

for *&I in (ndia in

+002709

"ero "onda Passion

Plus

E:+)$";+ #+-m+$&

comprises 100 cc to

1*, cc motorcycles

priced ;etween

#s8&0 000 to #s8,0

0008

(n this segment with

two ;rands C/ and

/iscoer8

"E#O "ON/' C%

E@treme and

!plendour

P+%<o%ma+

#+-m+$&

These are slee: high

performance with

price points in e@cess

of #s8,0 0008

flagship ;rand the

Pulsar and our

cruiser the 'enger8

%'$ dominate this

space with a

domestic mar:et

share in e@cess of

&BI8

"EO "ON/'

DariGma and "un:

13



14



T/%++=./+++%#

The company5s domestic sales of three7wheelers in +002709 were 1+I lower compared to the

preious year and stood at 1*,&B* units8 E@port demand grew at +I to 1*90, units <see Ta;le

+ a;oe=8 "oweer that was not sufficient to preent a decline in the company5s total three7

wheeler sales L which fell ;y ,8&I to +B&,+9 units in +0027098 ien that total industry sales

shran: ;y 18I in +002709 oer the preious year while %ajaj 'uto5s fell ;y ,8&I the

company5s mar:et share dropped ;y +8* percentage points to ,,81I8 't this mar:et share

howeer %ajaj 'uto remains the leading three7wheeler player in (ndia8

Ta;le gies the data8

Pa##+-+% ;+/"+ #a+#& 2007=08 2008=09 Ra$+ o< -%o.$/(ndustry sales *B,120 &1,&11 108BI

%ajaj 'uto sales +*,92 +&**+ 08*I

%ajaj 'uto mar:et share B08*I *8I <8BI=

Goo,# a%%"+%#

(ndustry sales 1*02+ 2+*2+ <*B80I=

%ajaj 'uto sales +B1& 1019B <182I=

%ajaj 'uto mar:et share +08&I 1+8&I <280I=

To$a 3=./+++%#&

(ndustry sales ,000 &9BB9* <18I=%ajaj 'uto sales +90*1+ +B&,+9 <,8&I=

%ajaj 'uto mar:et share ,B8&I ,,81I <+8*I=

!ource !('M and Company data8

15



CHAPTER THREE

STRATEGIC ANA*YSIS

a> 6ision mission and alues

> $ogo

> !4OT 'nalysis

,> Porter5s fie -orces Model 'nalysis

+> Managerial style

<> %usiness strategies

-> Other strategic issues

16



ISION MISSION AND A*ES

%ajaj doesn?t hae a straight ision or mission statement8 They define it in terms of ;rand

identity ;rand essence <deried from mission= and ;rand alues8

O)% '%a, I,+$"$!

Our %rand is the isual e@pression of our thoughts and actions8

(t coneys to eeryone our intention to constantly inspire confidence8

Our customers are the primary audience for our ;rand8

(ndeed our %rand (dentity is shaped as much ;y their ;elief in %ajaj as it is ;y our own

ision8

Eerything we do must always reinforce the distinctieness and the power of our ;rand8

4e can do this ;y liing our ;rand essence and ;y continuously see:ing to enhance our

customers5 e@perience8

(n doing so we ensure a special place for ourseles in the hearts and the minds of our

customers8

O)% '%a, E##++

Our %rand Essence is the soul of our ;rand8

Our ;rand essence encapsulates our mission at %ajaj8

17



(t is the singular representation of our terms of endearment with our customers8

(t proides the ;asis on which we grow profita;ly in the mar:et8

Our %rand Essence is E@citement8

%ajaj stries to inspire confidence through e@citement engineering8

%lending together youthful creatiity and competitie technology to e@ceed the spo:en

and the implicit e@pectations of our customers8

%y challenging the gien8 %y e@ploring the un:nown and there;y stretching ourseles

towards tomorrow today8

O)% '%a, a)+#

4e lie our ;rand ;y its alues of $earning (nnoation Perfection !peed and Transparency8

%ajaj will constantly inspire confidence through e@citement engineering8

*+a%"-

$earning is how we ensure proactiity8 (t is a alue that em;races :nowledge as the

platform for ;uilding well informed reasoned and decisie actions8

• Io;a$"o

(nnoation is how we create the future8 (t is a alue that proo:es us to reach ;eyond the

o;ious in pursuit of that which e@ceeds the ordinary8

• P+%<+$"o

Perfection is how we set new standards8(t is a alue that e@hi;its our determination to

e@cel ;y endeaoring to esta;lish new ;enchmar:s all the time8

• Sp++,

!peed is how we coney clear coniction8 (t is a alue that :eeps us sharply responsie

mirroring our commitment towards our goals and processes8

18



• T%a#pa%+!

Transparency is how we characterise ourseles8 (t is a alue that ma:es us worthy of

credi;ility through integrity of trust through sensitiity and of loyalty through

interdependence8

19



HR PRACTICES&

18 The Company affirms that its competitieness is interlin:ed with the well;eing of all sections

of the (ndian society8

+8 The Company ;eliees that eual opportunity in employment for all sections of the society is acomponent of its growth and competitieness8 (t further ;eliees that inclusie growth is acomponent of growth and deelopment of the country8

*8 The Company affirms the recognition that diersity to reflect socially disadantages sections

of the society in the wor:place has a positie impact on ;usiness8

&8 The Company will not practice nor support conscious discrimination in any form8

,8 The Company does not ;ias employment away from applicants ;elonging to disadantaged

sections of society if such applicants possess competitie s:ills and jo; credentials8

8 The Company?s selection of ;usiness partners is not ;ased on any considerations other thannormal ;usiness parameters8 (n case of eual ;usiness offers the Company will select a ;usiness partner ;elonging to a socially disadantaged section of society8

B8 This Code of Conduct for 'ffirmatie 'ction will ;e put up on the company we;7site toencourage applications from socially disadantaged sections of society8

28 The Company ma:es all efforts for up s:illing and continual training of all its employees in

order to enhance their capa;ilities and competitie s:ills8 No discrimination of any type will ;e

shown in this process8

98 The Company may hae a partnership programme with educational institutionFs to support and

aid students from socially disadantaged sections of society8

108 The Company will maintain records of 'ffirmatie 'ction8

118 The Company has nominated Mr D !rinias 6ice President <"#= too ersee and promote

the 'ffirmatie 'ction policies and programmes8 "e will ;e accounta;le to the Chairman8

1+8 The Company will ma:e aaila;le its learning and e@periences as a good corporate citiGen in

'ffirmatie 'ction to other companies desiringg to incorporate such policies in their own

;usiness8

20



*OGO o< 'AA&

(N(T('$ $OO <upto +00&= C"'NE/ $OO <upto

+00B=

$'TE!T $OO <since +00B=

"e@agonal ;lue and white

logo

Completely ;lue logo to

signify modernity and

dynamism

To stress the leadership

position of the ;rand in

the mar:et

21



SOT Aa!#"#&

$et?s analyGe the position of %ajaj in the current mar:et set7up ealuating its strengths

wea:nesses threats and opportunities aaila;le8

S$%+-$/#&

• "ighly e@perienced management8

• Product design and deelopment capa;ilities8

• E@tensie # > / focus8

• 4idespread distri;ution networ:8

• "igh performance products across all categories8

•"igh e@port to domestic sales ratio8

• reat financial support networ: <-or financing the automo;ile=

• "igh economies of scale8

• "igh economies of scope8

+a?+##+#&

• "asn?t employed the e@cess cash for long8

22



• !till has no esta;lished ;rand to match "ero "onda?s !plendor in commuter segment8

• Not a glo;al player in spite of huge olumes8

• Not a glo;ally recogniGa;le ;rand <unli:e the 36 partner Dawasa:i=

T/%+a$#&

• The competition catches7up any new innoation in no time8

• Threat of cheap imported motorcycles from China8

• Margins getting sueeGed from ;oth the directions <Price as well as Cost=

• T'T' 'ce is a serious competition for the three7wheeler cargo segment8

Oppo%$)"$"+#&

• /ou;le7digit growth in two7wheeler mar:et8

• .ntapped mar:et a;oe 120 cc in motorcycles8

• More maturity and moement towards higher7end motorcycles8

• The growing gearless trendy scooters and scooterette mar:et8

• rowing world demand for entry7leel motorcycles especially in emerging mar:ets8

23



Po%$+%@# ";+ o%+# Aa!#"#&

S)pp"+% 'a%-a""- Po.+%& !uppliers of auto components are fragmented and are

e@tremely critical for this industry since most of the component wor: is outsourced8 Proper

supply chain management is a costly yet critical need8

')!+%# 'a%-a""- Po.+%& %uyers in automo;ile mar:et hae more choice to choose from

and the increasing competition is driing the ;argaining power of customers uphill8 4ith

more models to choose from in almost all categories the mar:et forces hae empowered the

;uyers to a large e@tent8

24



I,)#$%! R";a%!& The industry rialry is e@tremely high with any product ;eing matched in

a few months ;y competitor8 This instinct of the industry is primarily drien ;y the technical

capa;ilities acuired oer years of gestation under the technical colla;oration with

international players8

S)#$"$)$+#& There is no perfect su;stitute to this industry8 'lso if there is any su;stitute to a

two7wheeler %ajaj has presence in it8 Cars which again are a mode of transport do neer

directly compete or come in consideration while selecting a two7wheeler cycles do neer

een compete with the low entry leel moped for een this choice comes at a comparatiely

higher economic potential8

Maa-+%"a S$!+&

Off late %ajaj 'uto $imited (ndia5s premier automotie company has emphasised

a lot on organiGational restructuring for the 'uto ;usiness8 4ith this restructuring

the e@isting ;usiness roles and responsi;ilities at the company has ;een

strengthened and enhanced to ensure greater operational empowerment and

effectie management8

The fie pillars of this new structure <!trategic units= are #>/ Engineering Two4heeler %usiness .nit and Commercial 6ehicles %usiness .nit > (nternational

%usiness .nit8 These pillars will ;e supported ;y functions of -inance M(! "#

%usiness /eelopment and Commercial8

Pradeep !riastaa who was 6P7Engineering prior to restructuring will now ;e

President7 Engineering8 's per the reorganiGed structure the company will hae

three CEO5s8 !8 !ridhar currently 6P M:tg8 > !ales Two74heelers will now head

the Two 4heeler %usiness .nit as CEO with manufacturing operations at 4aluj

and ':urdi also reporting to him8 #C Maheshwari has joined %ajaj 'uto as CEO

Commercial 6ehicles8 The company is in the process of identifying a CEO for its

(nternational %usiness8 The three CEO5s will ;e responsi;le for Top line %usiness

rowth > profita;ility of their respectie ;usinesses8 ';raham 3oseph will

25



')#"+## S$%a$+%-"+#&

Ma%?+$"- S$%a$+-"+#&

The focus of %'$ off late has ;een on proiding the ;est of the class models at

competitie prices8 Most of the %ajaj models come loaded with the latest features

within the price ;and accepta;le ;y the mar:et8 %'$ has ;een the pioneer in

stretching competition into proiding latest features in the price segment ;y

updating the low price ;i:es with the latest features li:e dis:7;ra:es anti7s:id

technology and dual suspension etc8

%'$ adopted different mar:eting strategies for different models few of them are

discussed ;elow 7

a.a#a?" 4S = -irst attempt ;y ;ajaj to ma:e a mar: in the motorcycle segment8

The target customer was the father in the family ;ut the target audience of the

commercial was the son in the family8 The time at which Dawasa:i &! was

launched "ero "onda was the mar:et leader in fuel7efficient ;i:es and )amaha in

the performance ;i:es8

'o:+% = (t too: the reins from where the Dawasa:i &! left8 Target was the rural

population and the price sensitie customer8 %o@er mar:eted as a alue for money

;i:e with great mileage8 $arger wheel;ase high ground clearance and high

mileage were the selling factors and it was in direct competition to "ero "onda

/awn and !uGu:i M1008

Ca"+% = The focus for the Cali;er 11, was youth8 'nd though %ajaj made the

;i:e loo: ;igger and feel more powerful than its predecessor <characteristics that

will attract the aerage +,7plus e@ecutie segment ;i:e ;uyer= its approach

towards adertising is een more radically different this time around8 %ajaj gae

27



the mandate for the ad campaign to $owe pic:ing them from the cliue of three

agencies that do promos for the company <the other two ;eing $eo %urnett and

O>M=8 oing ;y the initial mar:et response the campaign was clearly a hit in the

,710 years age ;rac:et8 !o the teaser campaign and the emphasis on the Cali;er

11, ;eing a `Hoodibabaa' ;i:e placed it as a trendy motorcycle for the college7

goers and the +, plus e@ecuties ;oth at the same time8

P)#a% = Pulsar was launched in direct competition to the "ero "onda?s ?C%?

model in 1,0 cc plus segment8 The campaign ;eared innoatie punch line of

H/efinitely MaleH positioning Pulsar to ;e a masculine7loo:ing model with an

appeal to the performance sensitie customers8 The Pulsar went one step ahead of

"ero "onda?s ?C%? and launched a twin ariant of Pulsar with the 120 cc model8

The model was a great success and has already crossed 1 million mar: in sales8

D"#o;+% = The same /T!( technology of Pulsar e@tended to 1+, cc /iscoer was

a great success8 4ith this %ajaj could realiGe its success riding on the ;ac: of

technological innoation rather than the joint enture way followed ;y competitors

to gain mar:et share8 %'$ now is ta:ing a leaf out of the -MC ;usiness model to

ta:e the company to greater heights8%ajaj has :ic:ed off a project to completely

restructure the company?s retail networ: and create multiple sales channels8

Oer the ne@t few months the company will set7up separate sales channels for

eery segment of its ;usiness and consumers8 %ajaj 'uto?s entire product portfolio

from the entry7leel to the premium is ;eing sold ;y the same dealers8 The

restructuring will inole separate dealer networ:s catering to the ur;an and rural

mar:ets as well as its three7wheeler and premium ;i:es segments8 %ajaj 'uto also

plans to set7up an independent networ: of dealers for the rural areas8 The needs of

financing selling distri;ution and een after7sales serice are completely different

28



in the rural areas and do not ma:es sense for city dealers to control this8 The

company also plans to set7up e@clusie dealerships for its three7wheeler products

instead of haing them sold through an estimated *00 of its e@isting dealers8

29



O$/+% S$%a$+-" I##)+#&

Ca#/ "# #$%+-$/& %ajaj 'uto has ;een sitting on a cash pile for oer fie years

now8 Oer the ne@t couple of years competition in the two7wheeler mar:et is set to

intensify8 T6! Motors and "ero "onda are on a product e@pansion ;inge8 To fight

this ;attle and retain its hard7earned mar:et share in the motorcycle segment %ajaj

'uto will need its cash muscle8 ' loo: at its own story oer the past fie years

proides alua;le insight8

S$a?+ <o% a.a#a?"& %ajaj 'uto?s attempt to est the surplus cash in a separate

company may ;e a prelude to offering a sta:e to Dawasa:i of 3apan in the euity of

the automo;ile company8 The latter has ;een playing an increasingly actie role in

%ajaj?s recent models and its ;rand name is also more isi;le in %ajaj ;i:es than in

the past8

'+$$+% ;a)+ p%opo#"$"o& !hareholder interests may ;e ;etter sered if the cash is

retained to pursue growth in a tough mar:et8 This would also o;iate the need to

for:7out fancy sums as stamp duty to the goernment for the de7merger8 '

com;ination of a large one7time diidend and a regular ;uy;ac: program through

the tender route may offer ;etter alue8 ' strategic sta:e for Dawasa:i would only

positiely influence the stoc:?s aluation8

S$%a$+-"+# <o% $/+ O;+%#+a# Ma%?+$#&

%ajaj 'uto loo:s at e@ternal mar:ets primarily with three strategies 7

1> ' mar:et where all %'$ need to do is distri;ute through CD/ or C%. routes8

2> Mar:ets where %'$ need to create new products8

30



3> Mar:ets where %'$ need to enter with e@isting products and pro;a;ly with a

good distri;utor or a production facility or a joint enture8

Earlier most of the products that %ajaj e@ported were scooters and some

motorcycles8 "oweer in its target mar:ets li:e in (ndia the shift was towards

motorcycles8 4ith the e@pansion in %ajaj?s own range to almost fie7si@ platforms

of motorcycles it had a ;etter offering to e@port also the reason for its stronger

showing8 -or the last fiscal 0 per cent of its e@ports were two7wheelers and the

rest three7wheelers8 E@ports to middle 'frica and the !aharan nations8 Egypt and

(ran also continue to ;e strong mar:ets for %ajaj8

31



CHAPTER IE

CORPORATE SOCIA* RESPONSI'I*ITIES

Enironmental friendly techniues

Community leadership programmes health

education

Other C!# actiities

•

32



C ORPORATE SOCIA* RESPONSI'I*ITY

Co#$ +<<+$";+ a, E;"%om+$a #$%a$+-"+#&

Co#+%;a$"o o< ++%-!&

's a part of continuing efforts to consere arious resources following steps were

ta:en to consere energy

Electrical energy saing was achieed ;y installation of localised porta;le air

compressors at arious shops during low production periods energy efficient

screw compressors ;y replacing CPT compressors real timer electrical circuits

installed to switch off electrical euipments during lunch F tea ;rea:s and during

non utilisation of production euipments fan less cooling towers for 'C plants

high efficiency reflector fittings with electronic ;allasts tu;e lights use of $E/ >

C-T street lights replacement of *,0 4 air circulators ;y 120 4 air circulators

1,0 4 M" lamps instead of +,0 4 "P!6 lamps at shop floors 6aria;le

-reuency /ries 6-/= for '!.s in paint shops washing machine ;lowers

compressors etc and rationalisation of pumping hours of main pump as well as

;ooster pump of pump house8 4ater saing was achieed ;y replacement of old

under7ground water pipes with a;oeground pipes to aoid water wastage through

lea:age drip irrigation system for gardening installation of localised fresh water

storage systems usage of treated water for ;in washing and paint shop process

rain water haresting and use of ;io7chemical addities to reduce freuency of water change in arious paint processes and $P saing was achieed ;y

installation of waste heat recoery system for hot water generation used in pre7

treatment process of paint shop use of reflectie coating inside furnaces for ;etter

heat retention three7wheeler electro7deposition <E/= painting process changed

33



from 'crylic E/ to Cathodic E/ optimisation of loading pattern in CC and seal

uench furnaces reduction of hot water temperature for pre7treatment use of ;io7

gas for coo:ing in canteens start7up losses in oens and hot water generation

plants and changed design of paint jigs to reduce jig stripping freuency8

Impa$ o< m+a#)%+# $a?+&

's a result of the initiaties ta:en for conseration of energy and natural

resources the company has effected an oerall reduction in consumption as

under7

I;+#$m+$ B #a;"-#&

(nestment for energy conseration actiities #s898*, million

!aing achieed through a;oe actiities #s8+&8+ million

Comm)"$! +a,+%#/"p p%o-%amm+#&

/uring the year the employees olunteered for ;lood donation camp at /eenanath

Mangesh:ar "ospital Pune and /r !usheela Tiwari "ospital Pantnagar -ire

fighting teams of the company along with ehicles responded to +0 -ire assistance

calls from oernment -ire /epartment F other industrial units outside the factory

premises in the larger interests of saing inalua;le life and property8

Comm)"$! Ca%+&

(n line with the commitment to enrich the life of all with whom ;ajaj deals it

showes sensitiity to the employees who opted for oluntary retirement at the

':urdi Plant8 !oon after the ':urdi employees e@pressed their interest in

accepting the 6oluntary #etirement !cheme the company organised a series of

interactie meetings with leading financial institutions8 The officers e@plained the

34



need to prudently and safely inest the monies receied considering the arious

options aaila;le today8 The company deised attractie schemes for interested

employees so that they could receie regular monthly payments in addition to

lump sum compensation announced8 They were also proided with options of

ta:ing loans at competitie rates of interest8

%y these actions it is the company?s endeaour that the employees who hae

accepted oluntary retirement scheme are independently self7sustaining and can

ta:e good care of their families8 Employees were also guided for alternatie

possi;ilities whether as employee or entrepreneur8

H+a$/&

oernment of (ndia7 Ministry of "ealth and -amily 4elfare 7 National 'ids

Control Organisation <N'CO= and C(( hae initiated Pu;lic Priate Partnership

<PPP= in order to proide ;etter healthcare to '(/s patients8 The company has

signed a tripartite Mo. with N'CO and )eshwantrao Chaan Municipal "ospital

<)CM"= in Pimpri to set up an 'nti #etroiral Treatment Centre <'#T Centre= at

)CM" in Pimpri Pune with the cooperation of Pimpri Chinchwad Municipal

Corporation for "(6 patients8

Many dignitaries from lo;al -und 4"O and such other organisations hae

isited the '#T centre which is the largest unit run ;y an industry under Pu;lic

Priate Partnership programme8 'part from two doctors and si@ supporting medical

staff the '#T centre has added audio7isual facilities for group counseling as a

result of which the '#T centre registration has reached 1900 num;ers and the unit

is recognised today as one of the ;est '#T centres in the country8 #ural and

community deelopment actiities and empowerment of women8

35



E,)a$"o

The company has launched a programme that would help !CF!T students achiee

academic e@cellence and ma:e them on par with those who can afford coaching

for entrance to ((Ts8 /uring the year under reiew one student with a ;rilliant

academic record was identified from the underpriileged and low7income group

for reim;ursement of complete fees for the preparation of ((T entrance test under

the guidance of ((Tians Prashi:shan Dendra8

.nder the central goernment initiatie of Pu;lic Priate Participation <PPP= the

company has olunteered to adopt * (T(s <(ndustrial Training (nstitute= for up7

gradation

(T( Mulshi

(T( "aeli

(T( #amnager

T/+ o$/+% a$";"$"+# "),+&

• %ajaj 'uto $td8 was the first and only company to launch ecologically

friendly CN engines for three wheelers in /elhi8

• %ajaj 'uto promotes seeral welfare programmes for its employees as well

as arious initiaties related to enironment health education and rural

deelopment in the communities around the plant areas8

36



CHAPTER SIX

• T"E -.T.#E

• #ECOMMEN/'T(ON!

37



THE TRE

'a(a(=R+a)$=N"##a $o ,%";+ #ma a% *C>

%ajaj 'uto has redrafted its ;i:e strategy for this fiscal that will see the Pulsar and /iscoer act

as the :ey growth driers8 The script goes according to plan it has hae set ourseles a target of

+00000 units from ;oth ;rands ;y March +0108 %ajaj 'uto and the #enault7Nissan 'lliance to

;uild the car code7 named .$C with wholesale price range starting from +,00 .!/

'll this is part of a renewed thrust ;y the company to focus on two :ey reuirements of the

mar:et which oer the years hae pretty much remained constant for either fuel7efficient

commuter ;i:es or sporty powerful products8 The /iscoer has now ;een positioned to fulfill

the former need in a segment where "ero "onda reigns supreme while the Pulsar has esta;lished

itself in the sporty slot with monthly sales of oer &0000 units8

%ajaj 'uto $td has announced that the company may launch a small car in the year +010 in

(ndia8 The second largest two wheeler ma:er in (ndia will enter the small car segment in

partnership with -rench car giant #enault and Nissan8 The small car prototype was uneiled

today and the company wants to promote the ehicle as economical and afforda;le car8 The %ajaj

'uto5s car will ;e e@pensie as it will meet safety and emission norms8 The standard ersion will

come with an air conditioner8

%ajaj 'uto has said in a statement that the car will offer a mileage of *& :ilometer per litter8 %ajaj

will launch the car in Petrol and /iesel ariants8 %ajaj has plans to manufacture the small car at

its facility in Cha:an near Pune8

Bajaj Auto Ltd = 50 per cent

Bajaj Auto, which is et to si!n a joint "enture a!ree#ent with its partners,

$enau%t and &issan' (he )L* project was concei"ed as a three+wa a%%iance

where Bajaj wou%d ho%d 50 per cent euit'

38

http://burnyourfuel.com/tag/joint-venture/




$enau%t = 25 per cent

(he )L* project was concei"ed as a three+wa a%%iance where $enau%t wou%d

ho%d 25 per cent euit'

&issan = 25 per cent

(he )L* project was concei"ed as a three+wa a%%iance where &issaan wou%d

ho%d 25 per cent euit'

Bajaj Auto, which is et to si!n a joint "enture a!ree#ent with its partners,

$enau%t and &issan' (he )L* project was concei"ed as a three+wa a%%iance

where Bajaj wou%d ho%d 50 per cent euit with $enau%t and &issan

accountin! -or 25 per cent each' Bajaj+$enau%t+&issan wi%% #iss its 2011

dead%ine on its u%tra+%ow+cost car project' Bajaj Auto #ana!in! director $aji"

Bajaj has ordered that the wor. done so -ar on the project /e scrapped and

has de#anded #ajor #odications on desi!n, positionin! and other detai%s,

accordin! to a person -a#i%iar with the de"e%op#ent'

39


http://www.infibeam.com/Cars/search?make=Nissan


http://www.infibeam.com/Cars/search?make=Nissan



R+omm+,a$"o#

The impression of %ajaj in the minds of the pu;lic is that it is a moped > a three7wheeler

company > it is a ery orthodo@ > unhappening image in the minds of the youth8 (t

should use a powerful ;rand am;assador > indiidual whom the youth can relate with8

(t should aggressiely mar:et itself as a motorcycle company > moe from its traditional

mindset <#ahul %ajaj had once stated that he had only one department in his company the

dispatch department > that he did not reuire a mar:eting department8=

%ajaj should aggressiely push sales of higher margin products > launch new products in

niche segments8

%ajaj should also try > push for tie7ups > 3oint 6entures in foreign mar:et > try >

increase its e@port ;ase8 <E8g8 Tata Motors tie7up with #oer for mar:eting of (ndia >

3oint 6enture with !enegal goernment for manufacturing truc:s > commercial

ehicles8=

%ajaj should loo: for possi;le mergers > acuisitions8 <E8g8 Maharashtra !cooters= > try

> improe its distri;ution networ: > proide it with products in niche segments > help

increase production capacity > proide economies of scale8

%ajaj should ealuate the process of ;ac:ward integration as it has huge cash reseres

surplus8 This process would help it in acuiring inputs continuously at lower cost > at

regular interals8

(ncrease its dealer networ: to tap rural growing mar:ets ;y going in for tie7ups >

offering ;etter margins to dealers8

The :ey to %ajaj real success lies in #esearch > deelopment8 "ow it is a;le to use alue

analysis > alue engineering ;y adding new features to its e@isting product line > how it

is a;le to come out with new product for different niche mar:ets8 'nalysis of different

alternaties li:e outsourcing in7house purchase > tie7up should ;e ealuated8

40



41



'I'*IOGRAPHY

• www8;ajajauto8com

• httpFFwww8;usiness7standard8comFindiaFnewsF;ajaj7auto7reamps7

organisational7structureF

• httpFFwww8:armayog8orgFcsr,00companiesFcsr,00companiesQB*B*8htm

• www8wi:ipedia8org

• httpFFwww8;ma8ac8inFDnowledgeCentreFinde@18html

• httpFFwww8prdomain8comFcompaniesF%F%ajaj'uto

httpFFwww8coolaenues8comF:nowFgm

bajaj auto - strategic management

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