INDEX

Chapter NAME PAGE NO

1 Company history

Origins

Completion in 1990

End of licence raj

New toola in 1990

3

4

4

5

6

2 Product profile and financial

performance

Motorcycles

Three wheelers

Overall performance

Financial analysis

8

9

10

12

14

3

Strategic analysis

Mission vision and values

Logo

Swot

Porter five forces model

Managerial style

18

19

20

21

23

24

25

26

1

Business streategy

Other strategic issue

4 Supply chain analysis

Value chain

Subsidiary

Spare part division

27

28

30

31

5 CORPORATE SOCIAL

RESPONSIBILITY

32

6 THE FUTURE AND

RECOMMENDATIONS

36

7 BIBLIOGRAPHY 41

CHAPTER ONE

COMPANY HISTORY

ORIGINS

COMPETITION IN 1980

END OF LICENSE RAJ

NEW TOOLS OF 1990’S

PRODUCT REVAMP IN 2000’S

2

3

BAJAJ FINANCE HISRORY

Bajaj Auto Finance Ltd. (BAFL) was incorporated as a Private Limited

Company on 25th March, 1987. It became a deemed Public Limited

Company by virtue of Section 43(A) of the Companies Act, 1956 w.e.f.,

20th October, 1987.

Initially BAFL was promoted by erstwhile Bajaj Auto Limited and Bajaj

Auto Holdings Limited. Bajaj Auto Limited is the largest manufacturer of

two and three wheelers in the country and Bajaj Auto Holdings Limited is an

investment company and is a wholly owned subsidiary company of Bajaj

Holdings & Investment Limited. As per the Scheme of Demerger of

erstwhile Bajaj Auto Limited, the shareholding of Bajaj Auto Limited in

BAFL has been vested with Bajaj Finserv Limited.

BAFL is an NBFC registered with RBI and authorised to accept public

deposits. Consequent to the re-classification of NBFCs by RBI, BAFL has

been re-classified as an “Asset Finance Company (Deposit Taking)”.

BAFL is engaged primarily in the business of financing of two wheelers,

consumer durables, personal computers, personal loans etc.

4

BAFL made a Public Issue of Equity Shares in 1994 and its Equity Shares

are listed on Bombay Stock Exchange Limited and National Stock Exchange

of India Limited.

BAFL made a Preferential Issue of Equity Shares to the Promoters and a few

foreign corporate bodies and also warrants to the Promoters in 2006.

BAFL made a Rights Issue of Equity Shares and Non-Convertible

Debentures with detachable warrants to the existing shareholders in 2006-

07.

The present Paid-up Capital of the Company is Rs.365,960,760/-

BAFL has its headquarters at Pune and has more than 50 branches spread

across the country

ABOUT BAJAJ FINANCE

Bajaj Auto Finance Limited was incorporated on March 25, 1987 as Bajaj

Auto Finance Private Limited got converted into a public limited Company

w.e.f. September 24, 1988

The company is registered with the RBI as a Non Banking Finance

Company (NBFC) with effect from March 5, 1998

The Company primarily deals in the financing consumer durables, personal

and small business loans, loan against property, loan against shares

The Company achieved its highest ever disbursals of Rs.26,313 million

under its various financing schemes, during the year 2006-2007

5

Network of over 6,000 Bajaj Auto and consumer durable dealerships and

over 50 branch offices throughout the country to handle all the requirements

of our customers

Trust and loyalty of over 40 lakh satisfied customers across the country

Highest Credit Rating of FAAA/Stable from CRISIL for Fixed Deposits

P1+ rating from CRISIL for Short-Term Debt Programme

AA+/Stable from CRISIL and LAA+ from ICRA for Long-Term Debt

Programme

6

CERDIT RATINGS:

Highest Credit Rating of FAAA/Stable from CRISIL for Fixed Deposits

P1+ rating from CRISIL for Short-Term Debt Programme

AA+/Stable from CRISIL and LAA+ from ICRA for Long-Term Debt

Programme

MANAGEMENT TEAM:

RAJEEV JAIN: CEO

Rajeev JAIN is a Management graduate by profession and has 15 years of

experience in consumer lending industry. He comes with an experience of

managing diverse consumer lending business viz. auto loans, durable loans,

personal loans and credit cards. In his previous assignments he has worked for over

four years with GE and eight years with American Express. He Joins Bajaj Auto

Finance Ltd from AIG, where He was Deputy CEO of its consumer finance

business.

7

DEEPAK GUPTA (CHIEF HR)

Deepak has an overall experience of 19 years in Financial Services, ITES and

Manufacturing industry. Deepak has strength in areas like Strategy & Structure,

People Policies, Employee relations, Talent management, Employee engagement,

Performance measurement practices, Compensation, Rewards and Training &

Development.

Deepak joins us from SREI Infrastructure finance, where he was Group Sr. Vice

President and Head of Human Resources. He was responsible for organization

development, and HR effectiveness across the employee eco cycle i.e. spanning

across Talent attraction, Performance Management, Compensation, Rewards &

variable pay, Policies, Employee services, Leadership development and

Productivity.

Prior to that, he worked with Company like CRISIL, ENAM Financial, CEAT

Financial Services and Reliance Industries Limited.

Deepak will be responsible for driving People strategy for the organization and in

making Bajaj Finance an employer of Choice. He will also be responsible for the

Administration function in the company

8

DEEPAK REDDY: HEAD OF PERSONAL AND SMALL BUSINESS LOANS

Deepak is a management graduate with over 14 years of experience in distributing

Financial Services & Consumer Durables. He joins us from American Express,

where he held various positions in its Personal Loans & Consumer Card businesses

over the last 9 years. He was Director - Sales (Consumer Cards) in his previous

assignment there. Prior to American Express, Deepak has worked with Standard

Chartered in Auto Loans business and also with Onida distributing durables for the

first four years of his career.

DEVANG MODY: BUSINESS HEAD SALES FINANCE, CROSS SELL AND

INSURANCE

Devang is a Chartered Accountant by education and has experience in consulting

and financial services. He joins us from AIG, where he worked as Vice President –

Business Development & CRM, Consumer Finance Business. Prior to that, he

worked with GE Money for over 8 years in various assignments in Six Sigma,

9

Sales Finance, Cross Sell and Personal Loans. Earlier, he has spent 5 years in

consulting with firms like E&Y. Sales Finance is a strategic and high growth

business for Bajaj Finance. Devang is responsible for profitably growing our

leadership position in Sales finance.

PANKAJ THADANI: CHIEF FINANCIAL OFFICER

Pankaj joined BAFL in 2006 and has an experience of 24 years in financing,

financial accounting, cost accounting, tax and systems. He is a Mathematics

Graduate and is a Chartered Accountant by profession. He joined BAFL from an

equity research company called Corporate Database. His previous assignments

were with Bajaj Auto Limited, Eischer and Mico Bosch.

RAKESH BHATT: CHIEF INFORMATION OFFICER

10

Rakesh has an overall experience of 16 years in finance & technology industry. He

has played several leadership roles encompassing CIO responsibilities, IT product

management and delivery. Rakesh joins us from AIG Consumer Finance (India)

where he was Vice President and Head – Technology. Prior to that, he worked with

3i Infotech Ltd for 5 years with assignments in IT product management and

development, product marketing and pre-sales support. Earlier, he had worked for

Reliance Industries and GE Money.

VIVEK LIKHITE: CHIEF CREDIT AND OPERATIONS

Vivek joined BAFL in 2007. He is a Chartered Financial Analyst and holds a Cost

Accountant degree from ICWAI. He has an experience of 20 years in strategic

planning, process management, operations management, accounts, funds

management, budgeting and MIS. He has worked with Larsen & Turbo Ltd for

eight years. His last assignment was with TATA Motor Finance before joining

BAFL.

11

GURUMEET KAUR: CHIEF RISK OFFICER

Gurmeet is a management graduate with over 16 years of experience in financial

services and airline industry. She joins us from Future Money where she was the

Chief Risk Officer and is credited for successful implementation of Risk policies

and underwriting structure for Consumer Durables, Personal and Business loans

and Loan against properties, implementation of state of art loan origination,

repayment management and collections system. In her role as Chief Risk Officer at

Bajaj Finance, Gurmeet is responsible for creating a proactive risk policy

framework, strengthening our existing collections strategy, strengthening the

existing loan origination platform, creating a world class data warehouse &

analytics platform and reinforcing our fraud control strategy.

12

CODE OF CONDUCT:

CODE OF CONDUCT FOR DIRECTORS AND MEMBERS OF SENIOR

MANAGEMENT

Preface

This code of conduct shall apply to the Directors and members of the Senior

Management of Bajaj Auto Finance Limited (referred to hereinafter as BAFL or

the Company).

For this code, members of the Senior Management (hereinafter referred to as

`Senior Managers’) shall mean those personnel of the Company, who are members

of the core management team, but shall exclude the Managing / Whole-time

Directors.

Directors and Senior Managers shall observe the highest standards of ethical

conduct and integrity and shall work to the best of their ability and judgement.

Directors and Senior Managers shall be governed by the rules and regulations of

the Company as are made applicable to them from time to time.

Directors and Senior Managers shall affirm compliance with this code on an

annual basis as at the end of each financial year.

13

Code of conduct :

1. Directors and Senior Managers shall ensure that they use the Company’s

assets, properties and services for official purposes only or as per the terms

of appointment.

2. Directors and Senior Managers shall not receive directly or indirectly any

benefit from the Company’s business associates, which is intended or can be

perceived as being given to gain favour for dealing with the Company.

3. Directors and Senior Managers shall ensure the security of all confidential

information available to them in the course of their duties.

4. No Director or Senior Manager, other than the designated spokespersons

shall engage with any member of press and media in matters concerning the

Company. In such cases, they should direct the request to the designated

spokespersons.

5. Directors and Senior Managers shall not engage in any material business

relationship or activity, which conflicts with their duties towards the

Company.

6. Senior Managers shall not, without the prior approval of the Managing

Director of the Company, accept employment or a position of responsibility

with any organisation for remuneration or otherwise. In case of Whole-time

Directors, such prior approval must be obtained from the Board of Directors

of the Company.

7. Directors and Senior Managers shall declare information about their

relatives (spouse, children and parents) employed in the Company.

14

PRODUCTS:

BUSINESS LOANS

CONSUMER DURABLE LOANS

IT PRODUCT LOANS

LOAN AGAINST PROPERTY

LOAN AGAINST SHARES

TWO WHEELER LOANS

INSURANCE SERVICES

15

Business Loans

Features

Our Business Loans are unsecured loan which can be availed for your business use

without providing security or guarantors. Business Loans could be taken for your

business expansion, consolidating liability, repaying existing loans or any other

immediate business requirement.

Bajaj Finance Business loans are offered from Rs.3 lacs to Rs.30 lacs which can be

repaid in 12 - 36 monthly installments. Bajaj Finance Business Loans comes with

the following unique features:

1. Free Personal Accident Insurance of up to Rs 5 lacs

2. Prompt Repayment Benefits

3. No Foreclosure Charges

Benefits

Only Bajaj Finance Business Loans comes with the following exclusive benefits:

1. Free Personal Accident Insurance of up to Rs 5 lacs - In case of untoward

incident you would be covered with a personal accident insurance up to Rs 5

lacs.

2. Prompt Repayment Benefit - You get refund of 50% of the processing fee

charged if you clear all your monthly installment on time.

3. Nil Foreclosure Charges -If you want to repay your loan, please go ahead,

we do not charge any foreclosure charges if the loan is closed after repaying

16

6 monthly installments.

Eligibility

Entities – Partnerships, Private limited and closely held limited companies.

Documents

  Professionals Businessmen

Application form Yes Yes

1 Photograph Yes Yes

Identity Details Yes Yes

Residence Details Yes Yes

Signature

verification from

Bank

Yes Yes

Degree

Certificate &

Certificate of

Practice

Yes No

Repayment

Track recordNo* Yes

Income Details IT Returns & Balance

Sheet & P/L Account

statement for the last 2

IT Returns & Balance

Sheet & P/L Account

statement for the last 2

17

years years

Bank Account

StatementsFor the last 6 months For the last 6 months

 

Processing Fees 2% of the loan amount Prepayment Charges

6% of the principal outstanding amount if the loan is closed within 6 months

5% of the principal outstanding amount if the loan is closed after 6 months

EMI bounce charges Rs 500 for every bounce Penal Interest 2.15% p.m

Consumer Durable Loans

Features

Bajaj Finance, the sole organized financier in the market offering Consumer

Durable loans offers you Dreams on EMI, with 0% finance options also available.

CD loans are EMI loans for Consumer Durable items like Washing Machines,

Refrigerators, Color TV's, LCD's etc. These CD loans come at a very reasonable

price, with a very simple process. You can just walk into one of our Dealer partner

showrooms and avail of this facility for the item of your choice. Loans are

available for amounts more than Rs.7500. Multiple Credit programs are also

available to suit your fitment.

18

Benefits

1. 0% finance options available (for select schemes).

2. Simple process with minimum documentation.

3. On the spot approvals with fastest processing.

4. Flexible repayment options.

5. ECS clearing, reducing hassle of arranging cheques.

6. Extended Warranty available.

Eligibility

If you are a Salaried person your age should be between

o 21 years to 60 years.

If you are Self Employed your age should be between

o 21 years to 65 years.

19

Documents

  SalariedSelf

Employed

Id Proof Y Y

Residence Proof Y Y

3 Cheques Y Y

Credit Program Specific Documents (Any 1 of the following):

1. Credit Card front side photocopy Y Y

2. Visiting Card & Employee Id proof Y N

3. Photocopy of RC book (Not applicable for

vehicles registered after 2004 & commercial cars)Y Y

4. PPF Account Statement. Y N

5. Bajaj Finance existing loan Repayment

Schedule (subject to not later than 18 months old)Y Y

6. Any other Bank/NBFC Repayment Schedule Y Y

7. Latest Original Post Paid mobile bill Y Y

8. Insurance Premium Receipt Y Y

9. Salary Slip Y N

20

FEES & CHARGES:

As per schemes selected by Customer

IT Product Loans

Features

Bajaj Finance, the sole organized financier in the market offering IT Product loans,

offers your Dream Desktop/Laptop on EMI, with 0% options also available. These

IT Product loans come at a very reasonable price, with a very simple process. You

can just walk into one of our Dealer partner showrooms and avail of this facility

for the item of your choice. PC loans are available up to 100% of the product price.

Loans are available for amounts above Rs. 20000.

Benefits

1. 0% finance options available (for select schemes).

2. Simple process with minimum documentation.

3. On the spot approvals with fastest processing.

4. Flexible repayment options.

5. ECS clearing, reducing hassle of arranging cheques.

6. Extended Warranty available.

Eligibility

21

If you are a Salaried person your age should be between

o 21 years to 60 years.

If you are Self Employed your age should be between

o 21 years to 65 years.

Documents

  SalariedSelf

Employed

Id Proof Y Y

Residence Proof Y Y

3 Cheques Y Y

Credit Program Specific Documents (Any 1 of the following):

1. Credit Card front side photocopy Y Y

2. Visiting Card & Emp. Id proof Y N

3. Photocopy of RC book (Not applicable for

vehicles registered after 2004 & commercial cars)Y Y

5. Bajaj Finance existing loan Repayment

Schedule (subject to not later than 18 months old)Y Y

6. Any other Bank/NBFC Repayment Schedule Y Y

9. Salary Slip Y N

22

Loan against Property:

Features

Loan Against Property is a Loan facility which a person or an entity avails by

keeping property as a collateral.

Bajaj Finance offers Loan Against Property for all your business and personal

needs - whether you need money for your business expansion, working capital,

loan consolidation, marriage in the family, children’s education or any other need

you may have.

The loans are available up to Rs.12.5 Crores and can be paid back over a

comfortable term up to 15 years.

We offer you a wide range of products to choose from:

1. Loan Against Residential Property

2. Loan Against Commercial Property

3. Loan for Purchase of Commercial Property

4. Loan Against Plot

23

5. Lease Rental Discounting

To meet the needs of all our customer we bring you a complete suite of programs

that are tailor made to your requirements, you can avail a loan under any of the

following programs:

Normal Income Program: You can avail loan basis your financial

statements.

Debt Consolidator: If you have multiple loans running and want to

consolidate to one single EMI this has been designed just for you. There is

also a flexibility of availing additional loan under this program.

Alternate Income Program: You can avail of loans upto Rs. 1 Crore under

our Low LTV and Banking programs, which have been designed specifically

to meet your requirements in a quick and hassle free manner.

Benefits

Only Bajaj Finance Loan Against Property comes with the following exclusive

benefits:

Nil Prepayment Charges – You have the flexibility of partially or

completely repaying your loan at any point of time!

We do not levy any charges on partial (1 EMI or more) or complete closure

of your loan after repayment of 6 monthly installments.

Prompt Repayment Reward – You will be rewarded for repaying your

loan in time!

We pay you 1% of the Equated Monthly Installment (EMI) paid in the first

24

12 months subject to timely clearance and no defaults. This amount shall be

sent to you as a token of appreciation from Bajaj Finance at the end of the

13th month.

Free Personal Accident Insurance – You are given a completely free

Personal Accident Coverage!

In case of untowards incident you would be covered with a personal accident

insurance upto Rs. 10 Lacs.

Best in class Insurance Schemes: You can avail attractive Insurance

packages at a very competitive premium!

o Group Suraksha from Bajaj Allianz

Non Medical Loan & Life Insurance up to Rs. 70 Lacs

Level term Plan, which means you are covered for the complete

amount despite reduction/ prepayment of loan amount

Coverage for the complete tenor of the loan to a maximum of

30 Yrs

o Home Safe Plus from ICICI Lombard

Non Medical Insurance up to Rs. 3 Crores

Provides coverage against accidental death, permanent or total

disability, diagnosis of critical illness and loss of job*

Coverage for 5 years

Transparency and Flexibility - You are given the details of all the charges

upfront. A no surprises in future promise from Bajaj Finance awaits you!

25

Bajaj Finance believes in complete transparency and flexibility for its

customers. To ensure that you are aware upfront of every charge that you

might have to incur over the term of 15 years we have taken the following

steps:

o You are issued a sanction letter and a copy of loan documentation for

your records.

o You are issued a welcome letter which is exclusively designed and

customized for you. It is sent to you within a week of the loan

disbursal giving you complete details of your loan, repayment

schedule and comprehensive details on Insurance along with a tariff

card detailing all applicable charges and benefits available as a

customer.

o You have the option to make a prepayment in part or full at your

convenience without any charges

o And a special gift for a special customer!

RE-PRICING POLICY

The prevalent Bajaj FRR is 17% effective 1st Dec 2008. Bajaj FRR is the

benchmark reference rate of BAFL Loan against Property and is determined based

on the prevalent market conditions and the cost of funds of BAFL. As the cost of

funds reduces/ increases, Bajaj FRR may reduce/ increase.

26

Any revision in this rate would impact the interest rate on the floating interest

rate loans. Re pricing would be done only for the loans booked under the floating

rate scheme. For the loans which have been booked under the fixed rate scheme

there will be no changes done for the fixed rate period.

The increase/ decrease in the Interest rate will by default increase/decrease the

loan tenor.

In case of increase in interest rate, if you want to retain your existing EMI/

Tenor, you will have an option of making a part pre payment and keeping your

EMI/ Tenor at the same level. No additional charges would be levied on the part

pre payment.

The communication on the changes (Increase/ decrease) in the rate of

interest would be sent by mail

Personal Loans

Features

Our Personal Loans are the cash loan which can be availed for your own personal

use without providing security or guarantors. Personal Loans could be taken for

renovation of your home, marriage in the family, a holiday with your family, your

child's education, medical expenses or any other emergencies. Bajaj Finance

Personal loans are offered from Rs. 3 lacs to Rs. 30 lacs which can be repaid in 12

- 60 monthly installments. Bajaj Finance Personal Loans comes with the following

unique features:

1. Free Personal Accident Insurance of upto Rs 5 lacs

2. Prompt Repayment Benefits

27

3. No Foreclosure Charges

Benefits

Only Bajaj Finance Personal Loans comes with the following exclusive benefits:

1. Free Personal Accident Insurance of up to Rs 5 lacs - In case of untoward

incident you would be covered with a personal accident insurance up to Rs 5

lacs.

2. Prompt Repayment Benefit - You get refund of 50% of the processing fee

charged if you clear all your monthly installment on time.

3. Nil Foreclosure Charges -If you want to repay your loan, please go ahead,

we do not charge any foreclosure charges if the loan is closed after repaying

6 monthly installments as per repayment schedule.

Eligibility

Salaried person

o Individuals working in the approved list of companies

Self Employed

o Businessmen ( Traders, Small Manufactures etc)

o Professionals ( Doctors (MBBS , MD , BDS , MDS only) & Chartered

Accountants only)

Documents

  Salaried Professionals Businessmen

28

Individual

Application

formYes Yes Yes

1 Photograph Yes Yes Yes

Identity

DetailsYes Yes Yes

Residence

DetailsYes Yes Yes

Signature

verification

from Bank

Yes Yes Yes

Degree

Certificate &

Certificate of

Practice

No Yes No

Repayment

Track recordNo* No* Yes

Income

Details

Latest payslip &

Form 16 (Form

16 required only

when applying

under holiday

finance)

IT Returns &

Balance Sheet &

P/L Account

statement for the

last 2 years

IT Returns &

Balance Sheet &

P/L Account

statement for the

last 2 years

29

Bank Account

Statements

For the last 3

months

For the last 6

months

For the last 6

months

leProcessing Fees2% of the loan amount

Prepayment Charges

6% of the principal outstanding amount if the loan is closed within 6 months

5% of the principal outstanding amount if the loan is closed after 6 months

EMI bounce charges

Rs 500 for every bounce

Penal Interest

2.15% p.m

Two Wheeler Loans

Bajaj Auto Finance Ltd offers attractive loans for purchase of new Bajaj

vehicles.

Bajaj Finance executives are available at most of the Bajaj Auto dealerships

to offer finance schemes to suit the requirements of individuals.

Bajaj Finance is the only finance company to offer a unique Extended

30

Warranty on the two wheelers financed by it. 

Bajaj Finance also finances Bajaj three wheelers.

Insurance Services

Bajaj Auto Finance Limited (BAFL) has tied up with Bajaj Allianz Life (part of

Bajaj Group), to offer a rich bouquet of world class life insurance products to suit

the financial needs of all segments of buyers through different stages of their lives.

With its successful track record and its highly acclaimed standing, Bajaj Allianz

Life Insurance Company (BALIC) prides on serving over 8 million Indian

customers. BAFL shares BALIC's philosophy of providing insurance solutions

relevant to the customer's needs.

Employment fell from about 23,000 in 1995-96 (the year Bajaj suffered a two-

month strike at its Waluj factory) to 17,000 in 1999-2000. The company planned to

lay off another 2,000 workers in the short term and another 3,000 in the following

three to four years.

Principal Subsidiaries: Bajaj Auto Finance Ltd.; Bajaj Auto Holdings Ltd.; Bajaj

Electricals Ltd.; Bajaj Hindustan Ltd.; Maharashtra Scooters Ltd.; Mukand Ltd.

Principal Competitors: Honda Motor Co., Ltd.; Suzuki Motor Corporation;

Piaggio SpA.

31

Balance Sheet of Bajaj Auto------------------- in Rs. Cr. -------------------

Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds

Total Share Capital 101.18 101.18 144.68 144.68 144.68

Equity Share Capital 101.18 101.18 144.68 144.68 144.68

Share Application Money 0.00 0.00 0.00 0.00 0.00

Preference Share Capital 0.00 0.00 0.00 0.00 0.00

Reserves 4,669.55 5,433.14 1,442.91 1,725.01 2,783.66

Revaluation Reserves 0.00 0.00 0.00 0.00 0.00

Networth 4,770.73 5,534.32 1,587.59 1,869.69 2,928.34

Secured Loans 0.02 22.46 6.95 0.00 12.98

Unsecured Loans 1,467.13 1,602.97 1,327.39 1,570.00 1,325.60

Total Debt 1,467.15 1,625.43 1,334.34 1,570.00 1,338.58

Total Liabilities 6,237.88 7,159.75 2,921.93 3,439.69 4,266.92

Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

12 mths 12 mths 12 mths 12 mths 12 mths

32

Application Of Funds

Gross Block 2,894.22 3,178.54 2,994.68 3,350.20 3,379.25

Less: Accum. Depreciation 1,761.22 1,904.94 1,726.07 1,807.91 1,899.66

Net Block 1,133.00 1,273.60 1,268.61 1,542.29 1,479.59

Capital Work in Progress 43.33 107.62 34.74 106.48 120.84

Investments 5,856.97 6,447.53 1,857.14 1,808.52 4,051.52

Inventories 272.93 309.70 349.61 338.84 446.21

Sundry Debtors 301.55 529.83 275.31 358.65 272.84

Cash and Bank Balance 80.84 62.16 54.74 135.68 100.20

Total Current Assets 655.32 901.69 679.66 833.17 819.25

Loans and Advances 2,282.98 2,925.24 1,099.68 1,567.09 2,291.29

Fixed Deposits 1.25 21.32 1.33 1.19 1.21

Total CA, Loans & Advances 2,939.55 3,848.25 1,780.67 2,401.45 3,111.75

Deffered Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities 1,419.08 1,683.46 1,185.19 1,378.20 2,218.06

Provisions 2,315.89 2,833.79 834.04 1,224.15 2,248.72

Total CL & Provisions 3,734.97 4,517.25 2,019.23 2,602.35 4,466.78

Net Current Assets -795.42 -669.00 -238.56 -200.90 -1,355.03

Miscellaneous Expenses 0.00 0.00 0.00 183.30 0.00

Total Assets 6,237.88 7,159.75 2,921.93 3,439.69 4,266.92

33

Contingent Liabilities 719.06 811.66 1,129.29 924.96 818.25

Book Value (Rs) 471.49 546.96 109.73 129.23 202.40

Chapter 2

PRODUCT PROFILE AND FINANCIAL PERFORMANCE

34

Bajaj Auto Finance Limited (BAFL) has launched today a unique finance scheme

exclusively for all Bajaj Motorcycles. With this initiative Bajaj Auto Finance

aspires at capitalizing on the void created in the market due to the exit of many

Banks and NBFC’s from the 2-wheeler financing business. 

The major profit of this worth full scheme is that A FREE EXTENDED

WARRANTY is availed on each Bajaj Motorcycle. Now the Bajaj motorcycle

customers enjoy a dual play by its finance availability and extended warranty.

Mr K Srinivas. Vice President of Retail Finance said that , for a loan of 36 months

tenor the free extended warranty offered by Bajaj Auto Finance extends for the

entire 3months. Timely payment of EMI is the only required thing from the

customers. The maintenance cost for the vehicle will be taken care by the finance

itself. 

Extension is going on in a rapid speed. BAFL has now extended its reach to more

than 300 Bajaj dealership locations. Each of this Bajaj dealership invokes full-time

employees to ensure a smooth and hassle free financing to deserving customers.

The Base Rate

This is the rate of interest at which the financier is willing to do business. For

example, a financier may be willing to provide car loans at a base rate of 10.5% to 11%

per year. This rate is generally fixed and cannot be negotiated. Most financiers operate at similar base

rates. However, financiers generally provide "interest rate breaks" to the extent of 0.5% to 1% per year

for customers who have an existing relationship with them, a credit card issued by them or an income

level that is higher than their eligibility requirement. Contrary to popular belief, reduction of a

customer's car loan interest rate is achieved as a result of financial contributions provided by other

players such as the manufacturers, dealers or sales agents, and not the financier except for the "interest

rate breaks".

35

Car manufacturers' subvention

Car manufacturers give a financial incentive to a select few car finance firms to

push sales of their cars. This makes some of the larger car financiers more

competitive than the smaller players who are not eligible to receive manufacturers'

subvention. For example, a financier may receive Rs.6000 from Maruti Udyog for

every Esteem car loan booked by him. Generally, the financier will build this

incentive amount received from the manufacturer into the pricing of the car loan.

Dealer discount

Agent re-subvention

Agents market the financier's loan schemes to you and complete all the paperwork

on behalf of the financier. It is the agent who negotiates the discounts provided by

the car dealers. The amount of discount that the agent is able to negotiate from the

dealer depends upon how many cars are sold from the dealership by the agent and

the relative importance of the given agent's business to the dealership. The agent

also receives a commission from the financier for bringing him his car finance

customers. This commission is of two types. The first is a standard commission

given to the agent by the financier on the loan amount disbursed to you. This

could be around 3% of the loan amount disbursed. The second is a target-

achievement incentive. Most agents give away the standard commission so that

their rates can be cheaper than those of their competitors'. This is called the agent's

re-subvention i.e. the agent giving back his standard commission to the financier

in order to further reduce the borrowing rate for you.

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Borrowing rate

From the above you would observe that you may get your loan at 9.5% per year

even though the car finance firm has priced the loan at 11% per year. The

difference between your borrowing rate and the financier's base rate is the benefit

to you, the customer, created as a result of the car manufacturers' subventions,

dealers' discounts and agent re-subventions.

Two wheeler loan

Whichever the bike, our Two Wheeler loan is the answer. With quick approvals,

flexible payment options and easy repayment - we'll help you buy the bike you

desire.

Features & Benefits

Flexible repayment options, ranging from 12 to 48 months available even at the

point of purchase.

Repay through post-dated cheques with easy EMIs. Calculate your EMI.

Hassle free loans - No guarantor required.

Speedy loan approval.

Available for almost all models at attractive interest rates.

Free gifts from time to time on approval of your Two Wheeler Loan. (Watch

this space for more details on the free gift promotion).

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Special Schemes to suit your needs

Now enjoy exciting offers on Honda Two-Wheeler bikes with the Bajaj Auto

Finance Two-Wheeler Loan. Choose from a great range of top quality models

on offer and enjoy the amazing experience of riding your dream machine.

Some of the key features of Bajaj Auto Finance Two-Wheeler Loan include:

- 3% lower interest rate

- 50% discount on processing fees

- Additional One year warranty*

- Priority delivery of your Honda within 30 days*

- Upto 95% Loan on Honda Two wheelers

*Offer from HMSI, Conditions apply

To avail offer please click here

Offer vaild till 10th October 2011

FastTrack - If a spot approval is what you need, this highly flexible scheme

gets you a loan of up to 70% with minimum interest rates.

EasyLoan - This great scheme gets you a loan of upto up to 85% with

minimal documentation. All you need as a Surrogate Income proof is:

- A copy of credit card and credit card billing statement for the last 2 months

OR

- A repayment track record OR

- Last 3 months bank statements.

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New car loan

Features & Benefits

Covers the widest range of cars and multi-utility vehicles in India.

Avail 100% finance on your favourite car**

Loan repayment tenure ranging from 12 to 60 months.

Borrow up to 3 times your annual salary (for salaries professionals) and 6

times your annual income (for self employed professionals)*.

Speedy processing - within 48 hours.

Repay with easy EMIs

Attractive car loan plans - To fastrack your loan, just choose the plan that is

right for you.

Attractive interest rates

Hassle-free documentation.

Customer Priviledges

If your an Bajaj Auto Finance account holder, we have special rates for

you.

If you have a Preferred Account or a Corporate Salary Account with

Bajaj Auto Finance for more than 6 months, you can get fast approvals on your

loans with minimal documentation.

If you are an Bajaj Auto Finance Car Loan customer with a clear

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repayment of 12 months or more we can Top-Up your car loan to the extent

of the original loan value.

Features & Benefits

Choose any car manufactured in India within a certain age*.

Borrow up to 80% of the value of the car.

Flexible repayment options, ranging from 12 to 60 months.

Borrow up to 3 times your annual salary (for salaried professionals) and 6

times your annual income (for self employed professionals)**.

Available for almost all car models at attractive interest rates.

Repay with easy EMIs.

Attractive car loan plans - To Fastrack your loan, just choose the plan that is

right for you.

Additional loan on existing loan - If you are a existing Bajaj Auto Finance

Auto loan customer with a clear track record of 12 months or more, then you

can get an additional loan to the extent of your existing loan amount at attractive

rate of interest.

Customer Privileges

Special benefits for Bajaj Auto Finance account holders.

If you have had a Preferred Account or a Corporate Salary Account with

Bajaj Auto Finance for more than six months, you can get fast approvals on

your loans with minimal documentation.

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LOGO of BAJAJ:

INITIAL LOGO (upto

2004)

CHANGED LOGO (upto

2007)

LATEST LOGO (since

2007)

Hexagonal blue and white

logo

Completely blue logo to

signify modernity and

dynamism

To stress the leadership

position of the brand in

the market

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SWOT Analysis:

Let's analyze the position of Bajaj in the current market set-up, evaluating its

strengths, weaknesses, threats and opportunities available.

Strengths:

Highly experienced management.

Product design and development capabilities.

Extensive R & D focus.

Widespread distribution network.

High performance products across all categories.

High export to domestic sales ratio.

Great financial support network (For financing the automobile)

High economies of scale.

High economies of scope.

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Weaknesses:

Hasn't employed the excess cash for long.

Still has no established brand to match Hero Honda's Splendor in commuter

segment.

Not a global player in spite of huge volumes.

Not a globally recognizable brand (unlike the JV partner Kawasaki)

Threats:

The competition catches-up any new innovation in no time.

Threat of cheap imported motorcycles from China.

Margins getting squeezed from both the directions (Price as well as Cost)

TATA Ace is a serious competition for the three-wheeler cargo segment.

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Opportunities:

Double-digit growth in two-wheeler market.

Untapped market above 180 cc in motorcycles.

More maturity and movement towards higher-end motorcycles.

The growing gearless trendy scooters and scooterette market.

Growing world demand for entry-level motorcycles especially in emerging

markets.

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Porter’s Five Forces Analysis:

Supplier Bargaining Power: Suppliers of auto components are

fragmented and are extremely critical for this industry since most of the

component work is outsourced. Proper supply chain management is a costly yet

critical need.

Buyer's Bargaining Power: Buyers in automobile market have more choice

to choose from and the increasing competition is driving the bargaining power

of customers uphill. With more models to choose from in almost all categories,

the market forces have empowered the buyers to a large extent.

Industry Rivalry: The industry rivalry is extremely high with any product

being matched in a few months by competitor. This instinct of the industry is

primarily driven by the technical capabilities acquired over years of gestation

under the technical collaboration with international players.

Substitutes: There is no perfect substitute to this industry. Also, if there is

any substitute to a two-wheeler, Bajaj has presence in it. Cars, which again are a

mode of transport, do never directly compete or come in consideration while

selecting a two-wheeler, cycles do never even compete with the low entry level

moped for even this choice comes at a comparatively higher economic

potential.

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Managerial Style:

Off late Bajaj Auto Limited, India’s premier automotive company, has

emphasised a lot on organizational restructuring for the Auto business.

With this restructuring, the existing business roles and responsibilities

at the company has been strengthened and enhanced to ensure greater

operational empowerment and effective management.

The five pillars of this new structure (Strategic units) are R&D,

Engineering, Two Wheeler Business Unit, and Commercial Vehicles

Business Unit & International Business Unit. These pillars will be

supported by functions of Finance, MIS, HR, Business Development

and Commercial.

Pradeep Srivastava, who was VP-Engineering prior to restructuring,

will now be President- Engineering. As per the reorganized structure

the company will have three CEO’s. S. Sridhar, currently, VP, Mktg. &

Sales Two-Wheelers, will now head the Two Wheeler Business Unit as

CEO with manufacturing operations at Waluj and Akurdi also reporting

to him. RC Maheshwari has joined Bajaj Auto as CEO Commercial

Vehicles. The company is in the process of identifying a CEO for its

International Business. The three CEO’s will be responsible for Top

line, Business Growth & profitability of their respective businesses.

Abraham Joseph will continue to lead Research & Development.

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Business Stratergies:

Marketing Strategies:

The focus of BAL off late has been on providing the best of the class models at

competitive prices. Most of the Bajaj models come loaded with the latest features

within the price band acceptable by the market. BAL has been the pioneer in

stretching competition into providing latest features in the price segment by

updating the low price bikes with the latest features like disk-brakes, anti-skid

technology and dual suspension, etc.

BAL adopted different marketing strategies for different models, few of them are

discussed below: -

Kawasaki 4S - First attempt by bajaj to make a mark in the motorcycle segment.

The target customer was the father in the family but the target audience of the

commercial was the son in the family. The time at which Kawasaki 4S was

launched Hero Honda was the market leader in fuel-efficient bikes and Yamaha in

the performance bikes.

Boxer - It took the reins from where the Kawasaki 4S left. Target was the rural

population and the price sensitive customer. Boxer marketed as a value for money

bike with great mileage. Larger wheelbase, high ground clearance and high

mileage were the selling factors and it was in direct competition to Hero Honda

Dawn and Suzuki MX100.

Caliber - The focus for the Caliber 115 was youth. And though Bajaj made the

bike look bigger and feel more powerful than its predecessor (characteristics that

will attract the average, 25-plus, executive segment bike buyer), its approach

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towards advertising is even more radically different this time around. Bajaj gave

the mandate for the ad campaign to Lowe, picking them from the clique of three

agencies that do promos for the company (the other two being Leo Burnett and

O&M). Going by the initial market response, the campaign was clearly a hit in the

5-10 years age bracket. So, the teaser campaign and the emphasis on the Caliber

115 being a `Hoodibabaa' bike placed it as a trendy motorcycle for the college-

goers and the 25 plus executives both at the same time.

Pulsar - Pulsar was launched in direct competition to the Hero Honda's 'CBZ'

model in 150 cc plus segment. The campaign beared innovative punch line of

"Definitely Male" positioning Pulsar to be a masculine-looking model with an

appeal to the performance sensitive customers. The Pulsar went one step ahead of

Hero Honda's 'CBZ' and launched a twin variant of Pulsar with the 180 cc model.

The model was a great success and has already crossed 1 million mark in sales.

Discover - The same DTSI technology of Pulsar extended to 125 cc Discover was

a great success. With this, Bajaj could realize its success riding on the back of

technological innovation rather than the joint venture way followed by competitors

to gain market share.

BAL now is taking a leaf out of the FMCG business model to take the company to

greater heights.Bajaj has kicked off a project to completely restructure the

company's retail network and create multiple sales channels.

Over the next few months, the company will set-up separate sales channels for

every segment of its business and consumers. Bajaj Auto's entire product portfolio,

from the entry-level to the premium, is being sold by the same dealers. The

restructuring will involve separate dealer networks catering to the urban and rural

markets as well as its three-wheeler and premium bikes segments. Bajaj Auto also

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plans to set-up an independent network of dealers for the rural areas. The needs of

financing, selling, distribution and even after-sales service are completely different

in the rural areas and do not makes sense for city dealers to control this. The

company also plans to set-up exclusive dealerships for its three-wheeler products

instead of having them sold through an estimated 300 of its existing dealers.

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Other Strategic Issues:

Cash is strength: Bajaj Auto has been sitting on a cash pile for over five years

now. Over the next couple of years, competition in the two-wheeler market is set to

intensify. TVS Motors and Hero Honda are on a product expansion binge. To fight

this battle and retain its hard-earned market share in the motorcycle segment, Bajaj

Auto will need its cash muscle. A look at its own story over the past five years

provides valuable insight.

Stake for Kawasaki: Bajaj Auto's attempt to vest the surplus cash in a separate

company may be a prelude to offering a stake to Kawasaki of Japan in the equity

of the automobile company. The latter has been playing an increasingly active role

in Bajaj's recent models, and its brand name is also more visible in Bajaj bikes than

in the past.

Better value proposition: Shareholder interests may be better served if the cash is

retained to pursue growth in a tough market. This would also obviate the need to

fork-out fancy sums as stamp duty to the government for the de-merger. A

combination of a large one-time dividend and a regular buyback program through

the tender route may offer better value. A strategic stake for Kawasaki would only

positively influence the stock's valuation.

Strategies for the Overseas Markets:

Bajaj Auto looks at external markets primarily with three strategies: -

1) A market where all BAL need to do is distribute through CKD or CBU routes.

2) Markets where BAL need to create new products.

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3) Markets where BAL need to enter with existing products and probably with a

good distributor or a production facility or a joint venture.

Earlier, most of the products that Bajaj exported were scooters and some

motorcycles. However, in its target markets, like in India, the shift was towards

motorcycles. With the expansion in Bajaj's own range to almost five-six platforms

of motorcycles, it had a better offering to export, also the reason for its stronger

showing. For the last fiscal, 60 per cent of its exports were two-wheelers and the

rest three-wheelers. Exports to middle Africa and the Saharan nations. Egypt and

Iran also continue to be strong markets for Bajaj.

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Conclusion

The company currently offers six lending products, including loans for two-wheelers and three-wheelers, consumer durables, small business loans, construction equipment finance, mortgages and loan against securities, it said.

Bajaj Auto Finance recently got shareholders' approval for changing the name of the company to Bajaj Finance.

Meanwhile, Bajaj Finserv, the holding company of Bajaj Auto Finance, has picked up a further 4.37 per cent stake in the auto finance company for Rs 111.33 crore through open market transactions.

As per the bulk deal data available with the National Stock Exchange, Bajaj Finserv yesterday bought 16,01,900 shares of Bajaj Auto Finance, representing a 4.37 per cent stake, at a price of Rs 695 per piece.

After the latest deal, Bajaj Finserv now holds a 54.79 per cent stake in Bajaj Auto Finance. Bajaj Finserv is engaged in the life and general insurance and consumer finance businesses.

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Recommendations

The impression of Bajaj in the minds of the public is that it is a moped & a

three-wheeler company, & it is a very orthodox & unhappening image in the

minds of the youth. It should use a powerful brand ambassador & individual

whom the youth can relate with.

It should aggressively market itself as a motorcycle company & move from

its traditional mindset (Rahul Bajaj had once stated that he had only one

department in his company the dispatch department & that he did not require

a marketing department.)

Bajaj should aggressively push sales of higher margin products & launch

new products in niche segments.

Bajaj should also try & push for tie-ups & Joint Ventures in foreign market

& try & increase its export base. (E.g. Tata Motors tie-up with Rover for

marketing of India & Joint Venture with Senegal government for

manufacturing trucks & commercial vehicles.)

Bajaj should look for possible mergers & acquisitions. (E.g. Maharashtra

Scooters) & try & improve its distribution network & provide it with

products in niche segments & help increase production capacity & provide

economies of scale.

Bajaj should evaluate the process of backward integration as it has huge cash

reserves surplus. This process would help it in acquiring inputs continuously

at lower cost & at regular intervals.

Increase its dealer network to tap rural growing markets by going in for tie-

ups & offering better margins to dealers.

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The key to Bajaj real success lies in Research & development. How it is able

to use value analysis & value engineering by adding new features to its

existing product line & how it is able to come out with new product for

different niche markets. Analysis of different alternatives like outsourcing,

in-house, purchase & tie-up should be evaluated.

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BIBLIOGRAPHY

www.bajajauto.com

http://www.business-standard.com/india/news/bajaj-auto-revamps-

organisational-structure/

http://www.karmayog.org/csr500companies/csr500companies_7373.htm

www.wikipedia.org

http://www.bma.ac.in/KnowledgeCentre/index1.html

http://www.prdomain.com/companies/B/BajajAuto

http://www.coolavenues.com/know/gm

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