2010

BAJAJ AUTO LTD

International
Academy
of
Management Manjri Varu
& PGPM/0911/021
2009-2011
Entrepreneurship
 Bajaj Auto Ltd.
A
JOURNEY FROM
“HAMARA BAJAJ”
TO
“DISTINCTLY AHEAD”

EXECUTIVE SUMMARY

The Bajaj Group was founded in 1926 by Jamnalal Bajaj and now
consists of 27 companies. In 1945, Jamnalal Bajaj had formed M/s
Bachraj Trading Corporation Private Limited, the flagship company, to
sell imported two-wheelers and three-wheelers. The company acquired a
license from the government in 1959 to manufacture these vehicles and
went public the next year. By 1977, the company saw its plant rolling out
100,000 vehicles in a single year. In another nine years, Bajaj Auto could
produce 500,000 vehicles in a year. The present Chairman of the Bajaj
group, Rahul Bajaj, took charge of the business in 1965. He was the first
licensee of the Indian make of the Italian Vespa scooter.
Japanese and Italian scooter companies began entering the Indian
market in the early 1980s. Although some boasted superior technology
and flashier brands, Bajaj Auto had built up several advantages in the
previous decades. Its customers liked the durability of the product and
the ready availability of maintenance; the company's distributors
permeated the country. By 1994-95, Bajaj was racing to beat Honda,
Suzuki and Kawasaki in the two-wheeler segment internationally.
By 1997, Bajaj faced tough competition in the domestic market and its
market share stood at 40.5%. Under the leadership of Rahul Bajaj, the
turnover of Bajaj Auto has gone up from Rs.72 million to Rs.46.16 billion
(USD 936 million), its product portfolio has expanded from one to many
and the brand has found a global market. Bajaj as a brand is well-known
across several countries in Latin America, Africa, Middle East, South and
South East Asia.The company has a network of 498 dealers and over
1,500 authorised service centers and 162 exclusive three-wheeler dealers
spread across the country.
Bajaj has identified a segment of customers called 'Probikers', who are
knowledgeable about motorbikes and appreciative of contemporary
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technology. They are trendsetters and very choosy about what they ride.
Hence, Probikers need to be addressed in a meaningful way that goes
beyond the product. Bajaj Auto is in the process of setting up a chain of
retail stores across the country exclusively for high-end, performance
bikes. These stores are called ―Bajaj Probiking". Fifty two such stores
have been opened across India.
Catering to demand in this sector requires a strong and effective
distribution network as consumers are more demanding and expect
delivery on time. Early delivery is a cause of delight for customers. With
such vast global and Indian rural presence, designing an efficient
distribution system becomes a complex task even for a company like
Bajaj Auto. Lot of time and effort goes into designing a strategy based
efficient distribution system.

Two Wheeler Industry: An Overview

The Indian two-wheeler industry has witnessed spectacular growth in

the last few years. The market dynamics of the industry has substantially
changed with a majority of the customers preferring bikes to scooters
and mopeds. This is primarily due to better fuel efficiencies, dynamics,
looks and longer product lives of motorcycles.
The motorcycle segment constitutes about 81.5% of the two wheeler
market in India1. It also contributes to three-fourths of the total exports
in the two wheeler industry. Exhibit 1 shows that Bajaj is the second
largest player in this segment after Hero Honda.

Exhibit
1. Market Shares of the major players in the two wheeler market segment

The industry exhibits some degree of collusive behaviour and thus

represents an oligopolistic form of market structure. Product and brand

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differentiation are seen as the primary means of sustaining competitive
advantage. In order to sustain brand equity, players spend large
percentages of their revenues in advertising and brand building
activities. The supply and distribution networks are decisive factors in
staying competitive and normally need a huge capital investment.
The two wheeler industry is capital intensive with large fixed cost
requirements and new model introductions mandatory at frequent
intervals in order to sustain the demand. This involves substantial design
and R&D costs. Such high fixed costs can be offset only by achieving
economies of scale. Moreover, developing a distribution channel is
extremely difficult in a country like India. Therefore, it is difficult for a
new player to enter this industry.

INTRODUCTION

Bajaj Auto is a major Indian automobile manufacturer started by a

Rajasthani merchant. It is world's fourth largest manufacturer of two-
wheelers and India's second largest two wheeler manufacturer and the
world's 4th largest two- and three-wheeler maker. It is based in Pune,
Maharashtra, with plants in Akurdi and Chakan (Pune), Waluj (near
Aurangabad) and Pantnagar in Uttaranchal. Bajaj Auto makes and
exports motor scooters, motorcycles and the auto rickshaw.

The Forbes Global 2000 list for the year 2005 ranked Bajaj Auto at 1946.

Over the last decade, the company has successfully changed its image
from a scooter manufacturer to a two wheeler manufacturer. Its product
range encompasses scooterettes, scooters and motorcycles. Its real
growth in numbers has come in the last four years after successful
introduction of a few models in the motorcycle segment.

The company, headed by Rahul Bajaj, is worth more than US$1.5 billion.

Bajaj Auto came into existence on November 29, 1945 as M/s Bachraj
Trading Corporation Private Limited. It started off by selling imported
two- and three-wheelers in India. In 1959, it obtained license from the
Government of India to manufacture two- and three-wheelers and it
went public in 1960. In 1970, it rolled out its 100,000th vehicle. In 1977,
it managed to produce and sell 100,000 vehicles in a single financial
year. In 1985, it started producing at Waluj in Aurangabad. In 1986, it
managed to produce and sell 500,000 vehicles in a single financial year.
In 1995, it rolled out its ten millionth vehicle and produced and sold 1
million vehicles in a year.
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Bajaj has grown operations in 50 countries by creating a line of value-
for-money bikes targeted to the different preferences of entry-level
buyers.

NATURE OF THE BUSINESS

Bajaj Auto Ltd. is the largest exporter of two and three wheelers. With
Kawasaki Heavy Industries of Japan, Bajaj manufactures state-of-the-art
range of two-wheelers. The brand, Pulsar is continually dominating the
Indian motorcycle market in the premium segment. Its Discover DTSi is
also a successful bike on Indian roads.
The Bajaj Group is amongst the top 10 business houses in India. Its
footprint stretches over a wide range of industries, spanning automobiles
(two-wheelers and three-wheelers), home appliances, lighting, iron and
steel, insurance, travel and finance.
Bajaj Auto, the flagship company of the Bajaj group, manufacturers two-
wheelers and three-wheelers scooters. The company manufactures and
markets scooters, motorcycles, passenger carriers and goods carriers.
Bajaj Auto also trades spare parts and accessories. The company has
distribution network in 50 countries and presence in India, Sri Lanka,
Colombia, Bangladesh, Mexico, Central America, Peru and Egypt. It is
headquartered in Pune, India.

BAL has two main objectives: To cater the market needs of

transportation by
providing 2 wheeler and 3 wheeler vehicles and to produce the catalogue
products to cater to the changing market requirements. Bajaj Auto
Limited makes scooters for commuters. The company manufactures and
sells small motorcycles, scooters, and three-wheeler vehicles. Motorcycle
and scooter models include Avenger, Discover, Kristal, Platina, and
Pulsar. The three-wheelers are used for both passenger transportation
and light delivery. Bajaj's technology partner, Kawasaki Heavy
Industries, has helped the company bring a number of bikes to the
Indian market -- including the Kawasaki Bajaj Eliminator -- India's first
heavy cruiser. Nearly 3 million units of Bajaj's products are annually
distributed to more than 50 countries. Bajaj Auto was founded in 1945.

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BACKWARD ANALYSIS

Founded in 1926, at the height of India's movement for independence

from the British, the group has an illustrious history. The integrity,
dedication, resourcefulness and determination to succeed which are
characteristic of the group today, are often traced back to its birth during
those days of relentless devotion to a common cause.
Jamnalal Bajaj, founder of the group, was a close confidant and disciple
of Mahatma Gandhi. In fact, Gandhiji had adopted him as his son. This
close relationship and his deep involvement in the independence
movement did not leave Jamnalal Bajaj with much time to spend on his
newly launched business venture. His son, Kamalnayan Bajaj, then 27,
took over the reins of business in 1942. He too was close to Gandhiji and
it was only after Independence in 1947, that he was able to give his full
attention to the business.
Kamalnayan Bajaj not only consolidated the group, but also diversified
into various manufacturing activities. The present Chairman of the
group, Rahul Bajaj, took charge of the business in 1965. Under his
leadership, the turnover of the Bajaj Auto the flagship company has gone
up from Rs.72 million to Rs.46.16 billion (USD 936 million),its product
portfolio has expanded from one to and the brand has found a global
market. He is one of India's most distinguished business leaders and
internationally respected for his business acumen and entrepreneurial
spirit.

COMPANY FLASHBACK

'Inspiring Confidence,' the tagline, has build up confidence, through

excitement engineering, not only to domestic consumers but also
internationally. Established just eight decades back in 1926 by Jamnalal
Bajaj, the company has been vested with India's largest exporter of two
and three wheelers, 196,710 units in 2004-05, a great 26 per cent jump
over the previous year.

Bajaj Auto Ltd. sales have increased by approximately 21 per cent in the
year 2004-05, which exceeds Rs 65.4 billion, a record in the history of
the company. The gross operating profit stands at Rs. 9.3 billion, again a
record. The profits after tax of the BAL are close to Rs. 7.7 billion, and
the pre-tax return on operating capital is at an impressive 80 per cent.

The strength of the company is its quality products, excellence in

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engineering and design, and its ability to delight the customers. The
Pulsar, introduced in November 2004, is continually dominating the
premium segment of the motorcycle market, helping to maintain the
market superiority. Discover DTSi, one more successful bike on Indian
roads, is in the 'value' segment of the motorcycle market. It incorporates
a high degree of power with fuel efficiency of a 100 cc motorcycle.

BAL is committed to prevention of pollution, continual improvement of

environment performance and compliance with all environmental
legislation and regulations. They always believe in providing the
customer 'value for money' and keeps a special eye upon quality, safety,
productivity, cost and delivery.

COMPANY PROFILE

Bajaj Auto Ltd. is the largest exporter of two and three wheelers. With
Kawasaki Heavy Industries of Japan, Bajaj manufactures state-of-the-art
range of two-wheelers. The brand, Pulsar is continually dominating the
Indian motorcycle market in the premium segment. Its Discover DTSi is
also a successful bike on Indian roads.

MANAGEMENT

Rahul Bajaj Chairman

Madhur Bajaj Vice Chairman
Rajiv Bajaj Managing Director
Sanjiv Bajaj Executive Director
Pradeep Shrivastava President (Engineering)
Rakesh Sharma CEO (International Business)
R C Maheshwari CEO (Commercial Vehicles
S Sridhar CEO (Two Wheelers)
Abraham Joseph President
(Research & Development)
Eric Vas President (New Projects)
C P Tripathi Vice President (Corporate)
Kevin D‘sa Vice President (Finance)
K Srinivas Vice President
(Human Resources)
N H Hingorani Vice President (Commercial)
S Ravikumar Vice President
(Business Development)

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QUICK FACTS

Founder Jamnalal Bajaj

Year of Establishment 1926
Industry Automotive - Two & Three
Wheelers
Business Group The Bajaj Group
Presence Distribution network covers 50
countries.
Dominant presence in Sri Lanka,
Bangladesh, Columbia, Guatemala,
Peru, Egypt, Iran and Indonesia.
Joint Venture Kawasaki Heavy Industries of
Japan
Registered & Head Office Akurdi
Pune - 411035
India
Tel.: +(91)-(20)-27472851
Fax: +(91)-(20)-27473398

Awards & Accolades

Product Award Award Body

Bajaj Discover 135 Bike of the Year 2009 NDTV Profit Car India
and
Bike India Awards
Pulsar Ranked First in 'TOP 4Ps Power Brand
30 Awards
AUTOMOBILE
BRANDS OF
INDIA'
XCD 125 DTS-Si Bike of the Year 2008 Business Standard
Motoring
XCD 125 DTS-Si Bike of the Year 2008 CNBC-TV18 Auto car
Auto
Awards
XCD 125 DTS-Si Award for motorcycle NDTV Profit Car India
up to 125cc - and
2008 Bike India Awards
Pulsar 220 DTS-Fi Bike of the Year 2008 Overdrive
Pulsar 220 DTS-Fi Bike of the Year 2008 NDTV Profit Car India

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 and
Bike India Awards
Pulsar 220 DTS-Fi IMOTY Award-Indian All Auto Mags-
Motorcycle Overdrive,
of the Year 2007 Auto Car, BS, Bike Top
Gear
Pulsar DTS-Fi Bike of the year 2007 CNBC-TV18 Auto car
Auto
Awards
Mr. Rajiv Bajaj Man of the year 2005 Auto car Professiona
Mr. Rajiv Bajaj Man of the year 2005 Bike India
Bajaj CT 100 Motorcycle Total TNS Automotive
Customer
Satisfaction Study
2005
Bajaj Discover DTS-i Bike of the Year 2005 Overdrive
Bajaj Discover DTS-i Indigenous Design of Overdrive
the Year
Bajaj Wind 125 Bike of the Year 2004 Business Standard
Motoring
Bajaj Wind 125 Two Wheeler of the CNBC AUTOCAR
Year 2004 AUTOAWARDS 2004
Bajaj Pulsar DTS-i Bike of the Year 2004 ICICI Bank Overdrive
Awards 2004
DTS-i Technology Auto Tech of the Year ICICI Bank Overdrive
2004 Awards 2004
BAJAJ AUTO Bike Maker of the Year ICICI Bank Overdrive
2004 Awards 2004
Bajaj Boxer AT KTEC BBC World Wheels BBC World Wheels
Award for Best
Two Wheeler under
Rs.30,000/-
Bajaj Pulsar 150 DTS-i BBC World Wheels BBC World Wheels
Award for Best
Two Wheeler between
Rs.45,000/-
to Rs.55,000/
Bajaj Pulsar 180 DTS-i BBC World Wheels BBC World Wheels
Award for Best
Two Wheeler between
Rs.55,000
/-to Rs.70,000/-
Bajaj Pulsar 180 DTS-i BBC World Wheels BBC World Wheels

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 Viewers Choice
Two Wheeler of Year
2003
Bajaj Pulsar Motorcycle Total NFO Automotive
Customer
Satisfaction Study
2003
Bajaj Pulsar Bike of the Year 2003 ICICI Bank
OVERDRIVE
Awards 2003
Bajaj Pulsar Bike of the Year 2002 Business Standard
Motoring
Bajaj Pulsar Most Exciting Bike of Overdrive
the Year2002
Bajaj Eliminator Bike of the Year 2002 Overdrive
Bajaj Eliminator Most Exciting Bike of Overdrive
the Year2001

GROUP OF COMPANIES

 Bajaj Auto Ltd.

 Bajaj Holdings & Investment Ltd.
 Bajaj Finserv Ltd.
 Bajaj Allianz General Insurance
Company Ltd.
 Bajaj Allianz Life Insurance Co. Ltd
 Bajaj Financial Solutions Ltd.
 Bajaj Auto Finance Ltd.
 Bajaj Allianz Financial Distributors Ltd.
 Bajaj Auto Holdings Ltd.
 P T Bajaj Auto Indonesia (PTBAI)
 Bajaj Auto International Holdings BV
 Bajaj Electricals Ltd.
 Hind Lamps Ltd.
 Bajaj Ventures Ltd.
 Mukand Ltd.
 Mukand Engineers Ltd.
 Mukand International Ltd.
 Bajaj Sevashram Pvt. Ltd.
 Jamnalal Sons Pvt. Ltd.
 Rahul Securities Pvt Ltd

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  Shekhar Holdings Pvt Ltd
 Madhur Securities Pvt Ltd
 Niraj Holdings Pvt Ltd
 Shishir Holdings Pvt Ltd
 Kamalnayan Investments & Trading Pvt Ltd
 Sanraj Nayan Investments Pvt. Ltd.
 Hercules Hoists Ltd.
 Hind Musafir Agency Pvt. Ltd.
 Bajaj International Pvt. Ltd.
 Bachhraj Factories Pvt. Ltd.
 Baroda Industries Pvt. Ltd.
 Jeevan Ltd.
 Bachhraj & Co Pvt Ltd
 The Hindustan Housing Co. Ltd.

MISSION AND VISION STATEMENT

 MISSION
Focus on value based manufacturing
Fostering team work & enhancing the capability of the team
Continual Improvement
Total elimination of wastes
Pollution free & safe environment

 VISION
To attain World Class Excellency by demonstrating Value added
products to customers

 OBJECTIVE
Bajaj Limited is to cater the market needs of transportation by
providing 2 wheeler and 3 wheeler vehicles. BALW has been
producing the catalogue products to cater to the changing market
requirements. Based on the customer feedback, improvements are
being made continuously in the existing products.

 GOAL
To catapult Bajaj Auto as the country‘s largest automobile
company.

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CULTURES AND VALUES

 BRAND IDENTITY

Brand is the visual expression of our thoughts and actions. It

conveys to everyone our intention to constantly inspire confidence.
Our customers are the primary audience for our brand. Indeed, our
Brand Identity is shaped as much by their belief in Bajaj as it is by
our own vision.
Everything they do must always reinforce the distinctiveness and
the power of their brand.
They can do this by living their brand essence and by continuously
seeking to enhance their customers' experience.
In doing so, they ensure a special place for themselves in the hearts
and the minds of customers.

 BRAND ESSENCE

Brand Essence is the soul of their brand.

Their brand essence encapsulates their mission at Bajaj.
It is the singular representation of terms of endearment with their
customers.
It provides the basis on which they grow profitably in the market.
Their Brand Essence is Excitement.
Bajaj strives to inspire confidence through excitement engineering.
Blending together youthful creativity and competitive technology
to exceed the spoken and the implicit expectations of customers.
By exploring the unknown and thereby stretching themselves
towards tomorrow, today.

 BRAND VALUES

They live their brand by values of Learning, Innovation, Perfection,

Speed and Transparency.
Bajaj will constantly inspire confidence through excitement
engineering.

 Learning: Learning is how they ensure proactivity. It is a value

that embraces knowledge as the platform for building well
informed, reasoned, and decisive actions.
 Innovation: Innovation is how they create the future. It is a value
that provokes them to reach beyond the obvious in pursuit of that
which exceeds the ordinary.

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 Perfection: Perfection is how they set new standards. It is a value that
exhibits their determination to excel by endeavouring to establish new
benchmarks all the time.

 Speed: Speed is how they convey clear conviction. It is a value that

keeps them sharply responsive, mirroring our commitment towards their
goals and processes.

 Transparency: Transparency is how they characterise themselves. It is

a value that makes them worthy of credibility through integrity, of trust
through sensitivity and of loyalty through interdependence.

ORGANISATIONAL STRUCTURE

India's premier automotive company, has unveiled a focused

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, called strategic units, are,

 R&D
 Engineering
 Two-wheeler business unit
 Commercial vehicles business unit and
 International business unit

Sanjiv Bajaj said that they are trying to make the organisational structure
more responsive. They have brought down the number of layers between
the chief executive officer (CEO) and the shop-floor level to four, which
is in line with existing standards. They are further looking at cutting
down on one more layers in the organisational structure.

This re-organisation, according to him, is a reflection of the changing

market structure and dynamics. Bajaj Auto Ltd also plans to invest in
marketing, sales and the R&D side.

BAL had recently announced a voluntary retirement scheme for middle-

level management covering around 400-500 people of which 170 odd,
opted for the VRS. BAL has previously stated that it intends to bring
down its workforce level to 10,000 from its current 13,000 odd levels.

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Interestingly, the country‘s other major two-wheeler manufacturer Hero
Honda has also embarked on a manpower rationalisation drive at the top
level. The aim is to induct fresh competencies at the senior level.

BAJAJ: THE TURNING POINT

The early 1990s saw a recession in the Indian two-wheeler market.

Overall sales of two wheelers declined by 15% in 1991 and 8% in 1992.
This period saw a steep rise in fuel prices which resulted in consumers
placing greater emphasis on fuel efficiency when purchasing a new two
wheeler.
However, even as late as 1997-98, the scooter segment was the largest
sub segment in the two wheeler market. Scooters, with 42% of the
market (in terms of unit sales), were followed by motorcycles (37%), and
mopeds (21%).

BAJAJ FIGHTS BACK

By the end of FY2000, the numbers clearly indicated that consumer

preference had shifted firmly towards motorcycles with four-stroke
engines and industry watchers predicted that this trend would continue.
Geared scooter sales registered a fall of 41% in 2001. ―The market has
shifted to motorcycles. We will have to follow the trend‖, says Venu
Srinivasan.
BAL realised though rather belatedly, that it would have to cater to the
changing consumer tastes and preferences, if it had to survive. Rajiv,
who later agreed that BAL had been slow in reading the demand pattern
said that the company had failed to anticipate
consumer behaviour.

THE FALL OF AN ICON

“HAMARA BAJAJ”
Ad campaign helped Bajaj position CHETAK:
“A geared model-scooter occupying near iconic status”.
In January 2006, BAL announced that it had stopped production of
Chetak. With this announcement, BAL closed a major chapter in its
history. Rajiv said that it was a history he would like to forget. His
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 company has lived too long on nostalgia... holding on to anything from
the past is a sign of weakness.

Change in Communication Strategy

DISTINCTLY
AHEAD

INSPIRING
CONFIDENCE

HAMARA BAJAJ

“INSPIRING CONFIDENCE”
Bajaj Launched a series of motorcycle in an attempt to capture market
share.In 2001, BAL showed ‗slice of life situations‘ of ‗new age
India‘.Analyst felt that by 2004, BAL‘s image had undergone
considerable change. But In spite of changing its focus & strategy
from scooters to motorcycles BAL - MD felt that:

• "Like Volkswagen Beetle, the product (Bajaj Chetak) had

lost its relevance."
• "We believe it is not good enough to be better, it is
important to be distinct.”
•
This Lead to the strategy of…………

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 “DISTINCTLY AHEAD”

BAL announced new corporate strategy in mid 2007. Its USP – Styling &
Technology. Bajaj repositioned itself – aggressive & fast-paced. Their
new strategy ‗Distinctly Ahead‘ focused on 3-core values:
Innovation, Speed & Perfection.
The ad featured pay-off line,
“Alag Andaaz, Alag hai Khoj, Rakhe Aage, Hamari Soch.”
Bajaj launched Bajaj Pulsar – flagship brand- based on this strategy.

BCG MATRIX FOR BAJAJ

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SWOT ANALYSIS

STRENGTH WEAKNESS
 High economies of scale.  Hasn't employed the
 High economies of excess cash for long.
scope.  Centralized paternalistic
 Legacy of brand name. management style. Not a
 Widespread distribution global player in spite of
network. huge volumes.
 No collaboration with any
of the foreign players.

OPPORTUNITIES
 The growing gearless
trendy scooters and
scooterette market.
 Can use the existing
R&D capabilities for
new models.
 Can invest and grow the
life style segments.
THREATS
 The competition catches-
up any new innovation in
no time.
 Threat of cheap imported
motorcycles from China.
 Tough competition faced
by foreign as well as
domestic players.

PRODUCT PROFILE

Two-wheelers: domestic
The domestic two-wheeler market is dominated by motorcycles. Its
growth in 2006-07 needs to be viewed in two clearly distinct phases. For
thefirst three quarters of the year, the two-wheelers witnessed very
healthy growth, and it was a part of the continuing growth story of the
previous few years. In the last three months of the year, however, overall
market growth slackened considerably – largely due to steadily rising
interest rates and constraints on credit growth due to actions taken by
the Reserve Bank of India, banks and financial institutions to
control non-food credit.
However, this credit squeeze is, at worst, a short term phenomenon. The
fact is that over the last four years, India has achieved a compound
annual GDP growth rate well in excess of 8 per cent - something that is
expected to continue over the future. Over the last decade, household
incomes have increased significantly in urban as well rural India and,

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with it, consumer spends - especially on non-food items and durables.
Two-wheeler
penetration still remains very low by any standard. Therefore, the longer
term story for two-wheeler is an extremely good one, where the country
is bound to see healthy double-digit market expansion in the years to
come. In 2006-07, the industry‘s overall sales of two wheelers grew by 12
per cent from 7.57 million to 8.47 million units. Motorcycles sales grew
by 14 per cent from 6.2 million to 7.1 million. The share of motorcycles in
the two-wheelers segment for the industry as a whole increased from 82
per cent in 2005-06 to 84 per cent in 2006-07.

Chart A depicts the industry sale of two-wheelers over the years.

Chart A: Industry‟s sale of Two-Wheelers

Motorcycles
Bajaj Auto‘s sale of motorcycles by volume grew by 24.4 per cent in
2006-07 - which was significantly greater than that of the industry.
Consequently, the Company has continued to increase its market share
in motorcycles, which stands at 33.5 per cent in 2006-07, compared to
30.8 per cent in 2005-06.

Table 1 gives the data for the last five years.

As in the previous year, this Management Discussion and Analysis

analyses the performance of Bajaj within different broad segments of the
motorcycle industry:
1. The high performance segment: This includes motorcycles in the
engine class of 150 cc and above. Bajaj Auto competes here with the
Pulsar range and Avenger DTS-i.

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2. The 125 cc segment: Bajaj Auto competes in this category with
Discover DTS-i 125 and the
recently launched Discover DTS-i 135.
3. The 100 cc segment: Here, Bajaj Auto competes with the Discover
110, Platina and the CT-100.

Chart B : depicts industry-wise sales across these three segments

Chart B: The Market Segment for Motorcycles

The High Performance Segment

(≥ 150cc)

With several variants of its Pulsar DTS-i and the Avenger DTS-i, Bajaj
Auto has a dominating share (61%) in this segment. In 2006-07, the
Pulsar DTS-i (the 150 cc and 180 cc models) was upgraded with sportier
looks and industry-first features like digital speedometer console, LED
tail lamps and self cancelling direction indicators. Despite launches by
the competition, Bajaj continues its domination in this category due to
these and other product initiatives. It is a case of being ‗Distinctly Ahead‘

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- the Pulsar range effectively sets the benchmark for the rest of the
industry to follow.

Some other initiatives include a new variant, the Pulsar 200 DTS-i,
which was launched in January 2007 entirely through Bajaj Auto‘s own
Pro‑biking showrooms. It has been received very well by the consumers.
Yet another upgrade, the Pulsar 220 DTS-Fi, was pilot launched in April
2007. The Pulsar DTS-Fi (fuel injection) sets a new benchmark in the
high performance segment with a fuel injected engine and features like
projector headlamp, clip on handle bars and rear disc brake.

Due to these upgrades and new launches, sale of the Pulsar range has
grown to 40,000 vehicles per month - an increase of 24 per cent over last
year.

The 125cc Segment

Bajaj Auto is the pioneer in this segment through its Discover DTS-i. Its
success has spawned a host of introductions from competitors. Despite
heightened competition, Bajaj Auto‘s share in this segment has grown,
and stands at 32 per cent with a volume growth of 28 per cent in 2006-
07 over last year. To create greater play in this space, a newer version of
the Discover DTS-i with a 135 cc engine has been launched in April 2007.
This, along with a styling upgrade on the existing 125 cc Discover DTS-i,
is expected to continue the Company‘s momentum in this growing
segment. Bajaj Auto will demonstrate what ‗Distinctly Ahead‘ means
with the introduction of an all-new engine platform in the second
quarter of 2007-08. This will be a model that has great style as well as a
robust design; it will show how customers can enjoy low emissions at low
costs; and demonstrate that there can be both good performan ce and
great fuel economy.

100cc Segment

Although the largest segment in the motorcycle market, it has been

falling in percentage terms over the last few years. Moreover, it has been
beset with intense competition from all players, accompanied by
aggressive pricing initiatives and promotions. It is no secret that with
heightened price sensitivity and competition, this segment is becoming
increasingly commoditised. While the domestic 100 cc segment accounts
for 41 per cent of the company‘s motorcycle sales (numbers) it
contributes less than a quarter of the Company‘s revenues. Hence,

20 | P a g e
reduced margins here affect Bajaj Auto far less than the competition, for
which this is a more dominant play.

However, Bajaj Auto will continue to aggressively play in this segment

and expand both markets as well as its market share. Equally, at the top
end of
the 100 cc space, it will encourage consumers to migrate to the 125 cc
and 135 cc Discover DTS-i and even the Pulsar 150 cc variants. This
migration to higher value is expected to intensify with the Company‘s
launch of new motorcycles in the upper end.

Other Two-Wheelers
With motorcycles accounting for 84 per cent of the two-wheeler market,
most of the other segments like geared scooters, mopeds and step-thru‘s
have
shrunk during 2006-07. Sale of geared scooter for the industry has fallen
by 47 per cent, from 198,600 in 2005-06 to 104,000 in 2006-07. The
un-geared segment has registered a growth of 11 per cent, from 791,676
in 2005-06 to 878,829 in 2006-07. Bajaj Auto introduced its un-geared
Kristal DTS-i towards the end of the year. This vehicle has scored well on
customer satisfaction
and, within three months, has recorded an average monthly volume of
2,700 vehicles.

Three-Wheelers
Domestic demand for autorickshaws is being driven by the regulatory
need to replace earlier vehicles with clean fuel models. In earlier years,
Delhi, Mumbai and Ahmedabad had legislated in favour of CNG/LPG
vehicles. 2006-07 saw the addition of a number of cities, including
Hyderabad, Bangalore, Chennai, Lucknow, Kanpur, Agra, Kolkata,
Gurgaon, Faridabad and Ghaziabad. Bajaj Auto‘s sales in these cities
contributed significantly to its growth in the small passenger segment.

The large diesel passenger autorickshaw segment has been enjoying

fairly rapid growth. Bajaj Auto is in this space with its model, the Mega -
which has been upgraded in the current year, and has been well received
in the market. The Company will also be launching a CNG-based Mega in
the second quarter of 2007-08, and looks forward to a more aggressive
presence in this market in 2007-08.

The sub-1 ton cargo segment also has shown a robust growth at 15 per
cent, and Bajaj Auto has grown in line with the industry, with its market

21 | P a g e
share remaining at a little over 26 per cent. Like the Mega, the Company
has launched the CNG
version of its cargo vehicle in cities where diesel vehicles are now
banned.

Table 2 : Three-wheeler sales and share of Bajaj Auto (in

numbers)

In its efforts at being ‗Distinctly Ahead‘, Bajaj Auto has introduced a first
of its kind two-stroke digital direct injection three-wheeler, which offers
customers 30 per cent higher fuel efficiency and superior operating
performance.
Moreover, the Company has been able to de-risk the vagaries of the
domestic market by having around 45 per cent of its total three-wheeler
sales in 2006-07 coming from exports - up from 30 per cent in the
previous year.

22 | P a g e
MARKET SHARE

Mkt share Motorcycle/Stepthrou's

2008-09
Bajaj Auto
24% Hero Honda
44%
6%
TVS
18% Yam aha
8%

Mkt share 3-wheelers 2008-09

2%
Atul Auto
15% Bajaj Auto
9%
Bajaj tempo
4%
70% M&M
Piaggio vehicles

Mkt share Scooter/Scooterette 2008-

09
Bajaj Auto
25%
HMS
39%
TVS
17% Others
19%

scooters/scooterette moped motorcycle/step-throu's

6000000

4000000

2000000

0
FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03

23 | P a g e
COMPETITORS

Last Price Market Sales Net Profit Total

Cap. Turnover Assets
(Rs. cr.)
Hero 1,700.25 33,951.87 12,356.88 1,281.76 3,879.24
Honda

Bajaj Auto 1,712.35 24,774.88 8,810.36 656.48 3,439.69

TVS 65.90 1,565.41 3,736.67 31.08 1,719.11

Motor

LML 9.55 78.30 167.77 -51.62 -26.48

Kinetic 25.15 53.00 15.70 97.61 -5.18

Motor

Bajaj Auto V/s Hero Honda

Comparison
Attributes Bajaj Auto Hero Honda

P/E Ratio 31.74 25.75

EPS 45.39 64.18

NET PROFIT MARGIN(%) 7.40 10.30

LAST DIVIDEND (%) 220 1000

RETURN ON AVG. EQUITY 38.92 33.72

GROSS PROFIT MARGIN(%) 11.06 12.75

24 | P a g e
DISTRIBUTION NETWORK

Bajaj Auto is restructuring its marketing and distribution network to

address the different requirements of the urban and rural markets.
The company has recently launched its high-end bike dealership —
Probiking — and is now in the process of categorising its existing 479
dealership network into urban and rural dealerships.

Rajiv Bajaj, MD, Bajaj Auto said, ‗‗Besides Probiking, which is our
channel for high-end bikes, we will split the rest of the two-wheeler
dealer network into rural and urban.
This is being done to cater to the different needs of the rural and urban
customer in terms of product, infrastructure, working capital, financing
and servicing.

As competition hots up in the Indian motorcycle industry, Bajaj Auto Ltd

and TVS Motor Company are chalking out aggressive marketing plans to
race ahead in this sector. In a bid to regain its leadership position, Bajaj
Auto is planning to expand its distribution network to reach out to a
wider target audience. Likewise, TVS Motor Company is all set to extend
the number of its dealership and service centres in the near future.
Clearly, Bajaj Auto and TVS Motor are shifting gears.

On Bajaj Auto‘s distribution strategy, says Bajaj Auto vice-president

(business & product development) RL Ravichandran: ―We plan to
expand our dealership network and service centres to improve our
penetration into smaller towns across the country.

In fact, we plan to increase the number of dealerships and service centres

by 20 to 25 per cent. With this move, we will be able to cover towns with
a population of two to three lakh.‖

Incidentally, the company is all set to unveil its entry-level motorcycle

called BYK this month. ―Priced at Rs 30,000, BYK is positioned as a
‗stylish bike targeted at the entry-level audience‘. Ogilvy & Mather India
will be designing the communication strategy for the new bike from the
Bajaj stable. As part of its offline promotion strategy, the company
recently hosted the Bajaj Boxer Indian Telly Awards 2002 on Star Plus to
promote its Bajaj Boxer range.

25 | P a g e
POSITIONING STRATEGIES

Ever since losing its leadership position, BAL was trying out new
strategies including use of new technology and new marketing
communication campaigns. For instance, in the early 2000s it started
focusing more on the motorcycle market with new product launches,
complemented by new communication campaigns to inject vibrancy into
the Bajaj brand.

The ad spots launched in late 2001 showed 'slice of life' situations of

"new age"India. Analysts felt that by 2004, BAL's image had undergone
considerable change in the mind of the target audience. BAL reinforced
this through another campaign called 'Inspiring Confidence' that year.

In addition to bringing change in its products and creating brands that

inspired confidence, BAL wanted its products to be 'distinctly ahead' in
the wake of growing competition in the intensely competitive automobile
market.

BAL's new corporate strategy announced in mid 2007, 'Disinctly Ahead',

was aimed at embedding these changes in the collective consciousness of
the company. It was aimed at offering consumers products that were
unique and at the forefront compared to its competitors.

The 'Distinctly Ahead' strategy focused on three core values - innovation,

speed, and perfection. Commenting on its new strategy, Rajiv Bajaj,
Managing Director, BAL, said, "We believe it is not good enough to be
better, it is important to be distinct.

That is a filter that we apply to everything we do - be it product

development, manufacturing processes or communication development.
Our flagship brand Pulsar is the strongest evidence of this philosophy. It
is only a differentiated offering that customers see value in and aspire
for."3

The company launched a 'Distinctly Ahead' communication campaign,

created by ad agency Lowe, to signify its new aggressive and fast paced
image.

The ad showed a 220 Pulsar DTS-Fi morphing into several 220 Pulsars
as they raced with each other. The ad featured the pay-off line, "Alag
Andaaz, Alag hai Khoj, Rakhe Aage, Hamari Soch"and a background

26 | P a g e
theme music that was a much peppier version of the original 'Hamara
Bajaj' theme music. Through this, the company sought to communicate
that BAL lays down its own standards and principles and believes in
competing with itself.

Bajaj Auto's new brand strategy in motorcycles paid off well with the
company on course to recording its best year ever in terms of
profitability and market share.

Its market share, which was barely 17 per cent a year ago, has increased
since to 35 per cent today. ―We have more than doubled our market
share in a year and would be at our highest level by the end of this
quarter,‖ Mr Rajiv Bajaj, Managing Director, told Business Line.

The confidence stems from the fact that there are still three months to go
for the recently launched Pulsar 135 to consolidate itself in the market
and start clocking volumes. Bajaj Auto has targeted a monthly output of
100,000 Pulsars by end-March 2010 and believes the new 135cc will play
a key role in achieving this goal. At present, the Pulsar 150, 180 and 220
versions together account for around 60,000 units each month.

Discover on track

The Discover is on track with its targeted monthly numbers of 100,000

units. This has been spurred largely by the new 100cc version which is
doing over 70,000 units a month with the Discover 135 making up the
balance.

Bajaj Auto's comeback script this fiscal began with the launch of the new
Pulsar in the first quarter followed by the 100cc Discover in the second
and the 135cc Pulsar in the third. No new launches have been scheduled
in the January-March period but the first quarter of 2010-11 is likely to
see another new motorcycle making its debut.

While Mr Bajaj did not comment on what this vehicle was likely to be,
market grapevine suggests that it could be a new Discover version which
is keeping in line with the company's focus on these two brands (the
Pulsar being the other) as key growth drivers.

―We have reinvented our marketing strategy and this has been validated
by the growth in market share thanks to the Pulsar and Discover. The
key lies in specialisation especially when it means addressing a bigger
market,‖ Mr Bajaj said.

27 | P a g e
Had the company been present only in a couple of States in India, Mr
Bajaj averred, it would have had an array of products in the two-wheeler
space. On the other hand, the product portfolio would have been
trimmed to scooters and motorcycles for a bigger canvas like India, and
narrowed down even further to only motorcycles for the global arena.

This is precisely what Bajaj Auto has done today given that its
international business is an important part of its overall strategy.

―Sacrifice is a key part of strategy and is essential to its success. Hence,

our scooters had to make way for motorcycles,‖ Mr Bajaj said, referring
to the reaction across the country to his recent statement on exiting the
scooter segment.

Brand positioning

Similarly, the company also learnt that divergence was another

important part of its focus on specialisation, with the Discover clearly
positioned for the commuter segment and the Pulsar as the ‗sporty'
option. The features, therefore, had to be exclusive for each brand in
terms of looks and ride while ensuring profitability.

From Bajaj Auto's point of view, the commuter and sporty segments are
the backbone of India's motorcycle market. And even while it has bikes
to offer from the KTM and Kawasaki stable, these largely remain in the
niche category as off-road and on-road performers translating into
limited numbers.

As Mr Bajaj said, an effective strategy was finally about strong brand

positioning at the front-end while keeping things simpler at the back-end
comprising design, manufacturing and development.

MARKET SPEND

28 | P a g e
The above graph shows the market spend for Bajaj Auto. It has taken the
data for three years to see the trend in the spending.

As seen from the graph, the expenditure for forwarding, freight and
packaging has been increasing over the years and especially for the year
2008-09. This may be due to the fact that in the last 2 years:

Bajaj sales from the export market increased by 31% whereas the
domesticsales fell by around 23%. Hence, the transportation costs etc.
shoot up due to the exports.

Bajaj focused more on executive and premium bikes which are

transported in small lot sizes and the packaging etc are more
sophisticated thus resulting in high forwarding, freight and packaging
costs.

The advertising costs for the year have sharply fallen in the year 2008-
09. It is mainly due to the recession that the company has cut down on
these costs. The major saving was done on the print ads and hoardings.
The sales promotion expenses have fallen in year 2007-08 and again
increased in year 2008-09. The increase in year 2008-09 is because
Bajaj has forayed into premium bikes, which is a new segment in India,
and was backed by heavy sales promotions to boost the sales.

The above graph shows the percentage breakup of the three components.
The highest cost is the forwarding, freight and packaging, followed by
advertising expenditure and sales promotion expenditure.
The graph shows the advertising and sales & expenditure costs as a
percentage of sales.

29 | P a g e
From the above graph it can clearly make out that Bajaj Auto relies more
on its sales& distribution. Hence, it can be safely concluded that Bajaj
Auto focuses more on the push factor for its sale.

GLOBAL PRESENCE OF BAJAJ

Bajaj Auto continues to be India‘s largest exporter of two and three

wheelers. During 2008-09, the company exported 772,519 two and
three-wheelers recording a growth of 25 percent over 2007-08.Exports
now constitute 37 percent in terms of volume and 35 percent in value of
net sales.

The company currently exports to over 30 countries in Latin America,

Africa, the Middle-East, South and South-East Asia. Bajaj Auto has a
dominant presence in the countries of Sri Lanka, Columbia, Bangladesh,
Central America, Peru and Egypt, and is looking to increase its share in
the African market.
The company has commissioned an assembly unit in Nigeria with the
help of its distributor, to cater to the growing demand in the African
markets. It already has an assembly plant in Indonesia and is looking at
setting up a plant in Manaus, a Free Trade Zone, in Brazil by 2010-11,
after delaying the decision for six years. A distributor of Bajaj Auto has a
plant in Egypt. They are also planning to set up plants at Columbia and
Iran.

30 | P a g e
CORE COMPETENCIES

Bajaj Auto is one of the oldest and the second largest two wheeler
manufacutrer in India. In addition to coping with fierce competition
from other players in the two wheeler segment, it also has to protect its
market share from the impending onslaught of low price small cars such
as Tata Nano. Holding on to its postion in such a challenging market
environment requires innovative strategies and deep understanding of
consumers needs.
Bajaj Auto, sitting on surplus funds of over Rs 7,000 crore, was
inundated with offers to diversify from telecommunications and power
generation to software but stuck to core business of automobiles. Mr
Bajaj said that any company, which wants to survive, must have quality
and service orientation. The automotive sector was in its death throes
with some of the major American automotive manufacturers on the
verge of bankruptcy, he said.
There are several reasons why Bajaj should concentrate on its core
segment, i.e. greater than 125cc segment. With the introduction of DTS-i
and DTS-Fi technology, Bajaj Auto Limited has led the way in pioneering
technology along with style.
The Profitability Pyramid in Exhibit 4 shows that the margin is very low
in the sub-125cc segment but volumes are high. BAL wants to shift users
from 100, 115cc segment to 125cc and higher. Thus Bajaj not only wants

31 | P a g e
to play on the margins but also wants to increase the market share of
125cc bikes. With its recent launch of XCD 125cc, it has brought in
competition for its own 100cc model, Platina by delivering a bike that is
better in all respects (including fuel efficiency).

Thus, we conclude that Bajaj wants to make a slow departure from

100cc segment. It has already stopped production of the Discover 125
and will continue production of the Platina until the demand for the
100cc remains. It has priced the XCD between the Platina and the
Discover and in the future, would ideally wish to project the XCD 125
as its base model.

SUPPLY CHAIN MANAGEMENT

Vendors – Bajaj Auto has a consolidated base of 180 vendors

supplying components to all Bajaj Auto‘s plants. A large number of
vendors are located either near Pune or Aurangabad. Those that are far
are encouraged to tie up with third party logistics providers, who along
with local vendors supply multiple deliveries daily to Chakan & Waluj
plant. Bajaj Auto has extended the TPM (Total Preventive Maintenance)
to vendor as well. Around 60% by value of Bajaj vehicle is outsourced.
Virtually no components are imported & 70% of Bajaj Auto‘s
requirements are sourced from within the state of Maharashtra. To
improve quality, Bajaj Auto has also begun actively assisting its suppliers
in finalizing joint ventures with counterparts in Japan, Italy, Taiwan &
Spain.

Dealers- Bajaj Auto has a network of 422 dealers and over 1,300
authorized service centers. The company plans to increase the number of
dealers to 500 by this financial year. A large number of these new
dealerships are planned in semi-urban & rural areas.
During the financial year 2007-08, the company extended BASS (Bajaj
Auto Service Standard) to standardize the workshops of 250 dealers & 50
authorized service centers. These programmers included a uniform

32 | P a g e
external & internal look. This initiative has improved work hygiene,
promoted consistent & better service quality, & greater productivity.
Faster turnaround of serviced vehicles coupled with higher spare parts
sales in converting such workshops into independent profit centers for
the dealers.

Management of Global Supply Chain

With operations spanning to such vast geographies, managing a supply

chain globally becomes more and more complex. In countries where
Bajaj perceives a strong market potential, they establish a tie up with one
major industrial establishment eager to invest in the project. This
investment may include setting up strategic manufacturing or assembly
units, apart from a well-established nation-wide network for marketing,
distribution and after sales services. These investors who form alliances
with Bajaj Auto are termed as ―Business Partners‖.

Bajaj Auto offers a number of services to its business partners. They

include:

Training in sales, service and spare parts management based on

the Bajaj distribution system.

Active support for setting up manufacturing facilities overseas

including
transfer of technical know-how.

Assistance in setting up an assembly plant for assembly of vehicles

from
complete knocked down (CKD) kits.

Selecting of machinery and equipment and training of technical

personnel, all in a phased manner as required by the regulations in
the recipient country.

Active support in setting nation-wide dealer network, also

involving identification and recommending suitable partner who
would assist the distributor in Business growth.

33 | P a g e
FINANCIAL ANALYSIS OF BAJAJ AUTO

Liquidity and Solvency ratio‟s

This ratio suggests the short-term liquidity position of the firm. The
following
ratios are to be calculated.
(i) Current Ratio.

Analysis:-Current ratio is higher in 2009 as compared to 2008. There

is decreased all current assets except other receivables which increased
in 2009. The net current assets increased by Rs.238.62 cr. in 2009 and
at same time current liabilities increased by Rs.200.9 cr. in 2009. It
means Bajaj Auto Ltd., has sufficient current assets to pay current
liabilities. Short term solvency of the company is satisfactory.

(ii) Acid Test Ratio.

Analysis:-We have seen that the company had a higher current ratio in
2009 and was able to meet its short term obligations as compared to
2008. Where as the quick ratio identifies the role played by the
inventories in this context. Therefore the ratio shows that in year 2009 it
has increased as compared to 2008 due to the fact that the quick assets
is increased by Rs.164.14 cr. only and current liabilities have increased
by Rs.583.12 cr. The company is able to meet its short term obligations.

34 | P a g e
(iii) Debt Equity Ratio

Analysis:-
This ratio says that both year 2008 and 2009 as same. In 2009 increased
debt by Rs.236 cr. That is increased in Debenture, Long Term loan,
Redeemable Preference shares. And equity means Equity share capita,
Preference shares other than redeemable, Reserves and surplus, Losses
and Fictitious assets increased by Rs.282.1 cr. in 2009 tear.

(iv) Inventory Turnover Ratio.

Analysis:-
The inventory turnover ratio in the year 2008 was 28.19 which indicate
that 28.19 times in a year the inventory of the firm is converted into
receivables or cash. However, in 2009, the inventory turnover ratio
slightly decreased to 27.47. This was due to the fact that the Bajaj Auto
Ltd. in 2009 invested more then 0.72 times the inventory in 2008.

(v) Fixed assets Turnover.

35 | P a g e
Analysis:-
According to the calculations above the productivity of fixed assets in
year 2009 is not better than it was in previous years. In 2008, it was
1.79% and now it has been slightly decreased to 1.51%. This change was
brought about by decreased in total sales by Rs.126.98 cr., where as the
fixed assets increased only by Rs.845.84 cr.

Recent News on Bajaj Auto

Bajaj-Renault-Nissan to drive small car (ULC)

Bajaj Auto has redrafted its bike strategy for this fiscal that will see the
Pulsar and Discover act as the key growth drivers. The script goes
according to plan, it has have set ourselves a target of 200,000 units
from both brands by March 2010. Bajaj Auto and the Renault-Nissan
Alliance to build the car code- named ULC with wholesale price range
starting from 2500 USD. All this is part of a renewed thrust by the
company to focus on two key requirements of the market which, over the
years, have pretty much remained constant for either fuel-efficient
commuter bikes or sporty, powerful products. The Discover has now
been positioned to fulfill the former need in a segment where Hero
Honda reigns supreme while the Pulsar has established itself in the
sporty slot, with monthly sales of over 40,000 units.

Bajaj Auto Ltd has announced that the company may launch a small car
in the year 2010 in India. The second largest two wheeler maker in India
will enter the small car segment in partnership with French car giant
Renault and Nissan. The small car prototype was unveiled today and the
company wants to promote the vehicle as economical and affordable car.

36 | P a g e
The Bajaj Auto‘s car will be expensive as it will meet safety and emission
norms. The standard version will come with an air conditioner.
Bajaj Auto Ltd = 50 per cent
Bajaj Auto, which is yet to sign a joint venture agreement with its
partners, Renault and Nissan. The ULC project was conceived as a three-
way alliance where Bajaj would hold 50 per cent equity.
Renault = 25 per cent
The ULC project was conceived as a three-way alliance where Renault
would hold 25 per cent equity.
Nissan = 25 per cent
The ULC project was conceived as a three-way alliance where Nissaan
would hold 25 per cent equity.

Bajaj Auto, which is yet to sign a joint venture agreement with its
partners, Renault and Nissan. The ULC project was conceived as a three-
way alliance where Bajaj would hold 50 per cent equity with Renault and
Nissan accounting for 25 per cent each. Bajaj-Renault-Nissan will miss
its 2011 deadline on its ultra-low-cost car project. Bajaj Auto managing
director Rajiv Bajaj has ordered that the work done so far on the project
be scrapped and has demanded major modifications on design,
positioning and other details, according to a person familiar with the
development.
Bajaj Auto Launches RE600 Cargo Vehicle
Bajaj Auto‘s R&D team has created this unique product to deliver the
highest mileage and lowest operating costs in the commercial 3-wheeler
category. RE600 offers best in class mileage which is at least 5 km per
liter of diesel more than other vehicles. It has a robust solid construction
and comes at an attractive price point which makes for the lowest cost of
ownership. RE600 is priced at Rs.1, 03,686. The RE 600 is being
launched phase wise across the country from September 2009 onwards.
Advantage of RE600:
 The RE 600 is specially conceived and developed for cargo
movement in
congested cities & towns.

37 | P a g e
  It has the lowest turning radius for high maneuverability even on
narrow roads, has twin front suspension.
 A spacious cabin for comfortable long hrs of drive.
 It has high torque for quick pick-up even with heavy loads and has
ease of frequent and quick start-stop cycles.
 Making it the best suited vehicle for in-city operations. The RE 600
has thus created a new category in the small commercial vehicle
segment.
Bajaj Auto to launch Kawasaki Ninja:
The Ninja 250R is considered to be an entry-level sports bike
manufactured by
Japanese two-wheeler maker Kawasaki. The motorcycle would be priced
between Rs 1.50 lakh and Rs 2 lakh in India. Till the mid of this year,
four models of Kawasaki ‗Ninja 250‘, sports roadster ‗ER-6n‘, super
sports bike „Ninja ZX6R‟.
‗Ninja‘ model is the most popular model in US, Europe and Japan.
Bollywood star John Abraham‘ had used this bike showing some
unbelieving stunts in super-duper hit movie Dhoom. Since then these
bikes became the dream bikes for many sports bike lovers.

Ninja-250 is a very powerful bike containing an eight-valve DOHC,

liquid-cooled 250cc fuel injection engine that develops 30bhp of peak
power with attached a six-speed gearbox. It generates 30 PS at 10,500
rpm. Its 6-speed transmission makes it a versatile performer.

Kawasaki is Bajaj‘s reliable technical partner since mid 80s and

promised to assist Bajaj in all technical aspects with providing the
necessary service training and parts back-up while Bajaj auto will handle
the distribution and marketing department.

38 | P a g e
Bajaj to stop scooter production, focus on motorcycles

The jingle promised that it would stay with us for today and tomorrow as
a Strong Symbol of a Strong India, and two generations grew up
humming the tune. But finally when the India of the license-permit raj
gets to take its seat at the global high table, the Scoters that got us there
is fading away.

Bajaj Auto announced on Wednesday that it is exiting the scooter

segment altogether, bringing the curtains down on its iconic product
line. The company had stopped making the Chetak, once the world‘s
largest selling scooter, almost three years ago, and according to its MD
Rajeev Bajaj, it will stop production of its non-starter Kristal series by
end of the current fiscal.

―This is a definite watershed moment, because it‘s almost like detaching

ourselves from what constitutes middle class India, and the set of values
that constituted middle class India,‖ says Santosh Desai, MD and CEO of
Future Brands and a marketing and advertising expert.

39 | P a g e
40 | P a g e
41 | P a g e
Recommendations

The impression of Bajaj in the minds of the public is that it is a moped &
athree-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.
 Increase its dealer network to tap rural growing markets by going in
for tie-ups & offering better margins to dealers.
 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, inhouse, purchase & tie-up should be
evaluated.

BIBLIOGRAPHY

WWW.GOOGLE.COM
WWW.BAJAJAUTO.COM
WWW.DOCSTOC.COM
WWW.MONEYCONTROL.COM

42 | P a g e