Strategic Management Bajaj Auto | Manan Gupta Roll No.

17

INDEX
Sr No.
1
2
3
4
5
6
7
8
9
10
11
12
13

Particulars
Company Profile
Nature and Objectives
Culture and Values
Organizational Structure and Objectives
Mission and Vision
SWOT Analysis
Market Spend and Marketing
Business Strategies and Issues
Mergers and Acquisitions
Corporate Restructuring of Bajaj Auto
Analysis and Recommendations
Conclusion
Bibliography

COMPANY PROFILE

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Bajaj Auto Ltd is one of the leading two & three wheeler manufacturers in India. The
company is well known for their R&D, product development, process engineering and lowcost manufacturing skills. The company is the largest exported of two and three-wheelers in
the country with exports forming 18% of its total sales. The company has two subsidiaries,
namely Bajaj Auto International Holdings BV and PT Bajaj Indonesia. The company was
incorporated on April 30, 2007 as a wholly owned subsidiary of erstwhile Bajaj Auto Ltd (the
holding company) with the name Bajaj Investment & Holding Ltd. The company received the
certificate of commencement of business on May 7, 2007. The holding company operated in
the segments, such as automotive, insurance and investment, and others. Considering the
growth opportunities in the auto, wind-energy, insurance and finance sectors, the holding
company de-merged their activities into three separate entities, each of which can focus on
their core businesses and strengthen competencies.
The auto business of the holding company along with all assets and liabilities pertaining
thereto including investments in PT Bajaj Auto Indonesia and in a few vendor companies
transferred to Bajaj Investment & Holding Ltd. In addition a total of Rs 15,000 million in
cash and cash equivalents also transferred to Bajaj Investment & Holding Ltd. As the part of
the scheme, Bajaj Holdings and Investment Ltd were renamed as Bajaj Auto Ltd. The
appointed date of this de-merger was closing hours of business on March 31, 2007. In April
9, 2007, the company inaugurated their green field plant at Pantnagar in Uttarakhand.
In the first year of operations, the plant produced over 275,000 vehicles. The company's
vehicle assembly plant at Akurdi was shut down from September 3, 2007 due to higher cost
of production. In November 2007, Bajaj Auto International Holdings BV, a wholly owned
subsidiary company acquired 14.51% equity stake in KTM Power Sports AG of Austria,
Europe's second largest sport motorcycle manufacturer for Rs 345 crore. During the year
2007-08, the company launched XCD 125 DTS-Si and the Three-wheeler Direct Injected
auto rickshaw. During the year 2009-10, the company expanded the production capacity of
Motorised Two & Three Wheelers by 300,000 Nos to 4,260,000 Nos. The company launched
Pulsar 220 F, Pulsar 180 UG, Pulsar 150 UG, Pulsar 135 LS and Discover DTS-si in the
market. During the year 2010-11, the company expanded the production capacity of
Motorised Two & Three Wheelers by 780,000 Nos to 5,040,000 Nos. The company launched
Avenger 220 DTS-i, KTM Duke 125, Discover 150 and Discover 125 in the market. The
company plans to maintain the capacity of two and three-wheelers at the current level of
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5,040,000 numbers per annum during the year ending 31 March 2012. The 4 wheel vehicle
development work is under progress and commercial launch of the first product from this
platform is scheduled for 2012.
Bajaj Auto's has in all three plants, two at Waluj and Chakan in Maharashtra and one plant at
Pant Nagar in Uttranchal, western India.

Waluj Bajaj range of motorcycles and threewheelers

Chakan Bajaj range of motorcycles

Pant Nagar Bajaj range of motorcycles

Achievement Timeline:

1945 On November 29 Bajaj Auto came into existence as Bachraj Trading

Corporation Private Limited.

1948 The company commenced sales in India by importing two and three
wheelers.

1959 Bajaj Auto obtained the licence from the Government of India to manufacture
two and threewheelers.

1960 The company became a public limited company and conducted Bhoomi Poojan
of the Akurdi Plant.

1970 Bajaj Auto rolled out its 100,000th vehicle.

1971 The company introduced its threewheeler goods carrier.

1972 The company introduced Bajaj Chetak.

1975 Bajaj Auto & Maharashtra Scooters entered into a joint venture.

1976 The company introduced Bajaj Super.

1977 Bajaj Auto introduced rear engine autorickshaw and achieved production and
sales of 100,000 vehicles in a single financial year.

1981 Bajaj Auto launched Bajaj M50.

1984 On January 19, the foundation stone laid for the new plant at Waluj,
Aurangabad.

1985 On November 5, the Waluj plant inaugurated by the erstwhile President of

India, Giani Zail Singh. The company commenced production at Waluj, Aurangabad
in a record time of 16 months.

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1986 The Bajaj M80 and the Kawasaki Bajaj KB100 motorcycles were introduced.
The company produced and sold 500,000 vehicles in a single financial year.

1990 The Bajaj Sunny was introduced.

1991 The company introduced Kawasaki Bajaj 4S Champion.

1994 It launched Bajaj Classic.

1995 On November 29, Bajaj Auto turned into a 50year old company. It signed
agreements with Kubota of Japan for the development of diesel engines for three
wheelers and with Tokyo R&D for ungeared scooter and moped development. The
Bajaj Super Excel is introduced while Bajaj celebrated its ten millionth vehicle. The
same year one million vehicles were produced and sold by company in that financial
year.

1997 The Kawasaki Bajaj Boxer and the RE diesel Autorickshaw are introduced.

1998 The company commenced production at Chakan plant. It rolled out Kawasaki
Bajaj Caliber from its Waluj plant. Bajaj Auto launched Legend, India's first four
stroke scooter from Akurdi plant. The same year Spirit was launched.

1999 Caliber motorcycle notched up 100,000 sales in record time of 12 months.

2000 The company launched Bajaj Saffire.

2001 Bajaj Auto launched its latest offering in the premium bike segment 'Pulsar'.
The same year Eliminator was launched.

2003 Bajaj Pulsar DTSi was launched. The company sold 107,115 motorcycles in a
month. The company launched Bajaj Wind 125, The World Bike in India. It launched
its Caliber115 'Hoodibabaa!' in the executive motorcycle segment.

2004 Bajaj Discover DTSI, new Bajaj Chetak 4stroke with wonder gear and Bajaj
CT100 were launched. Bajaj unveiled new brand identity, new symbol, logo and
brandline.

2005 Bajaj Discover, Bajaj Avenger DTSI and Bajaj Wave DTSI were introduced.

2006 Bajaj Platina was launched.

2007 RE GDi autorickshaw, Bajaj XCD 125 DTSSi, Bajaj Pulsar 220 DTSFi, 200
cc Pulsar DTSI and Bajaj Kristal DTSi were launched. The company also
underwent through revamping of its organisational structure.

2008 Bajaj Platina 125 DTSSi was launched.

2009 Bajaj Pulsar 150 & 180 upgrade and Bajaj XCD 135 DTSSi were launched

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2010 Bajaj Auto launched a 135 cc Pulsar, priced at Rs 51,000, pushing the Pulsar
brand into the mass segment.

2011 April, Bajaj Records its best year ever of 2010.

2011Bajaj

Auto

tiesup

with

SBI

for

inventory

finance

to

dealers

2012 Bajaj Auto tied up with Japan?s Kawasaki in Indonesia

To Sum it up in a table Bajaj Auto has the following details:

Founder

Jamnalal Bajaj

Year of Establishment

1926

Industry

Automotive - Two & Three Wheelers

Business Group

The Bajaj Group

Listings & its codes

BSE - Code: 500490; NSE - Code: BAJAJAUTO

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

COMPANY NATURE AND OBJECTIVES

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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.
To produce the catalogue products to cater to the changing market requirements.
Bajaj AutoLimited 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. 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. Thus main goal
being to catapult Bajaj Auto as the countrys largest automobile company

CULTURES AND VALUES

BRAND IDENTITY
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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.

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:

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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.

ORGANIZATIONAL STRUCTURE OF BAJAJ AUTO

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

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Two-wheeler business unit

Commercial vehicles business unit
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-organization,
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. Interestingly, the countrys
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.

MISSION AND VISION OF BAJAJ AUTO

Our Vision
To be the leader in our chosen business area, create an organisation that all our constituents
are proud to be associated with, set benchmarks that will become the standard for others to
emulate and through ethical business practices create wealth for our stakeholders. Thus to
attain World Class Excellency by demonstrating Value added products to customers.

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Our Mission
To transform Bajaj Hindusthan Sugar ltd. into a dynamic and vibrant business entity where
growth is an ethos and the long-term value creation for our stakeholders is the paramount
objective. This transformation is based on 5 factors which make the company :

Focus on value based manufacturing

Fostering team work & enhancing the capability of the team

Continual Improvement

Total elimination of wastes

Pollution free & safe environment

SWOT ANALYSIS

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STRENGTHS

Highly experienced management.

Extensive R & D focus.

High performance products across all categories.

Number one position in exports.

Collaboration with BAFL for financing.

High economies of scale and scope.

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)
Legacy of brand name.
Widespread distribution network

WEAKNESS

Strong cash base but hasn't been invested efficiently.

Not a strong international brand despite high export volumes.

Distribution network is not as strong and extensive as Hero Honda.

Hasn't employed the excess cash for long.

Centralized paternalistic management style. Not a global player in spite of huge

volumes.
No collaboration with any of the foreign players.
Hasn't employed the excess cash for long.
Still has no established brand to match Hero Honda's Splendor in commuter segment.

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OPPORTUNITIES

Rising disposable income.

Increase first time in motorbike buyers

Decline in interest rate for two wheeler financing.

Shift from entry level motorbikes to performance oriented bikes

Inadequate public transportation infrastructure.

Low operating cost.

The growing gearlesstrendy scooters andscooterette market.

Can use the existingR&D capabilities fornew models.
Can invest and grow thelife style segments.

THREATS

Imitation of designs and technological

Innovations by competitors is easy

Foreign players coming in India, especially

Low cost Chinese motorbikes manufacturers

Declining margins due to increasing Competition

The competition catches-up any new innovation inno time.

Threat of cheap importedmotorcycles from China.
Tough competition faced by foreign as well asdomestic players.
The competition catches-up any new innovation in no time.
Threat of cheap imported motorcycles from China

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MARKET SPEND AND MARKERING BY BAJAJ AUTO

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 year2008-09.
This may be due to the fact that in the last 2 years: Bajaj sales from the export market
increased by 31% whereas the domestic sales 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.
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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.

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.

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BUSINESS STRATEGIES OF BAJAJ AUTO

The case discusses the business strategy of Bajaj Auto Limited (Bajaj Auto), a leading Indian
manufacturer of two wheelers. Bajaj Auto, which sold two wheelers in India since 1945, was
the market leader in the Indian two wheeler industry till late 1990s. However, the company
failed to visualize the structural changes happening in the Indian two wheeler industry since
the early 1990s. After the Indian economy was liberalized in 1991, foreign players entered the
Indian two wheeler industry with their innovative products and sophisticated technology. In
spite of rising competition, Bajaj Auto neither upgraded its scooter models, nor focused on
the rapidly growing motorcycle segment.
In late 2001, Bajaj Auto initiated a transformation process in an effort to transform its image
from being a scooter manufacturer to a motorcycle company. At the same time, the company
continued its efforts to revive the geared scooter market. The company continued to invest
time and resources in the geared scooter segment even till the early 2000s when the sales of
geared scooters were negligible as compared to the gearless scooters. Bajaj Auto also failed
to introduce innovative products in the rapidly growing gearless scooter market. The
company lost its leadership status in the scooters segment to Honda Motorcycles and Scooter
India (HMSI). The case examines how Bajaj Auto became a follower both in the scooter and
motorcycle segment from being the market leader in the Indian two wheeler industry.
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.

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FMCG Business Model
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 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.
Research & Development Model
Bajaj Auto has a huge, extensive and very well-equipped Research and Development wing
geared to meet two critical organizational goals: development of exciting new products that
anticipate and meet emerging customer needs in India and abroad, and development of ecofriendly automobile technologies. While the manpower strength of the R&D represents a
cross-section of in-depth design and engineering expertise, the company has also been
investing heavily in the latest, sophisticated technologies to scale down product development
lifecycles and enhance testing capabilities. Bajaj R&D enjoys access to the specialized
expertise of leading international design and automobile engineering companies working in
specific areas.
Based on their own brand of globalization, they have built their distribution network over 60
countries worldwide and multiplied the exports from 1% of total turnover in Fiscal 1989-90
to over 5% in Fiscal 1996-97.
The countries where their products have a large market are USA, Argentina, Colombia, Peru,
Bangladesh, Sri Lanka, Italy, Sweden, Germany, Iran and Egypt. Bajaj leads Colombia with
65% of the scooter market, in Uruguay with 30% of the motorcycle market and in
Bangladesh with 95% of the three-wheeler market. Several new models are being developed
specifically for global markets and with these the company will progressively endeavor to
establish its presence in Europe too.
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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.
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. Of the two-wheeler exports, close
to 90 per cent were motorcycles. Bajaj has identified certain key markets, which hold
potential. Its first overseas office established at the Jebel Ali free trade zone has been the
focal point for exports to middle Africa and the Saharan nations. Egypt and Iran also continue
to be strong markets for Bajaj. The other market, which would be a focus area, is South
America, where the company feels it is fairly well represented in most countries, except in
Brazil, the largest market. The company recently participated in a large auto exhibition in
Brazil and found good consumer acceptance to products like Pulsar and Wind 125.
The other focus area is the ASEAN nations, which constitute the third biggest consumer of
two-wheelers. The biggest among them is Indonesia, where Bajaj distributors are looking to
introduce eco-friendly four-stroke auto rickshaws. But two-wheeler market requires great
deal of effort from BAL. Everybody is there with Honda leading the show. There's Suzuki,
Kawasaki and some Korean and Chinese models. BAL should look at the right product mix
for two-wheelers. Bajaj's Pulsar model has taken off well there. It also wants to develop a
new step-through model for the Indonesian market, but for now it will create a base there
with its motorcycle models.
Bajaj has also made a beginning by selling bikes in the Philippines branded in the name of its
technical partner, Kawasaki. The two signed an MoU in February. Kawasaki, a large multiproduct conglomerate, only makes high-end bikes and does not have sub-200cc models.
Kawasaki is marketing the new model, Wind 125, developed by both companies, in the
Philippines. The Bajaj-developed models, Caliber and Byk, which is a fuel-efficient bike, are
also being distributed by Kawasaki.

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STARTEGIC ISSUES
1. 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.
2. Delisting worry: What is worrying is that there is an idea to delist the
investment company (also an indirect indication that it would be listed
initially). This would be closing the valve of equitable ownership
distribution.
3. There is a hint of a buyback of shares of the investment company as this is the only way it
can be delisted. The company would not be short of cash to put through such a buyback.
Factors such as low valuation, low trading interest and the need to provide shareholders may
be cited as plausible reasons for the buyback.
4. 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.
5. 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.

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MERGERS AND ACQUISITIONS BY BAJAJ AUTO

Tempo Firodia: Bajaj Auto bought a controlling stake in the Tempo Firodia Company,
renaming it "Bajaj Tempo". Germany's Daimler-Benz, a long-time collaborator with Firodia
because of their ownership of the original Tempo works in Germany, owned 16% of Bajaj
Tempo. Daimler sold their stake back to the Firodia group in 2001, meaning that they once
again held a controlling interest, with BAL retaining 24% of the shares. It was agreed that
Bajaj Tempo would gradually phase out the use of the "Tempo" brand name, as it still
belonged to Mercedes-Benz. The name of the company was changed to Force Motors in
May 2005, dropping "Bajaj" as well as "Tempo", over the objections of Bajaj Auto with
whom the company shares a long history as well as a compound wall.
KTM Power Sports AG: In November 2007, Bajaj Auto acquired 14.5% stake
in KTM Power Sports AG (holding company of KTM Sport motorcycles AG). The two
companies have signed a cooperation deal, by which KTM will provide the know-how for
joint development of the water-cooled four-stroke 125 and 250 cc engines, and Bajaj will take
over the distribution of KTM products in India and some other Southeast Asian nations. As
on 31 March 2013, Bajaj Auto held 47.96% stake in the company.
However the demerger of Bajaj Auto Ltd into three corporate entitiesBajaj Finserv Ltd
(BFL), Bajaj Auto Ltd (BAL), and Bajaj Holdings and Investment Ltd (BHIL)was
completed with the shares listing on 26 May 2008.

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BAJAJ AUTOS 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%).
However Bajaj Fights Back, as 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.
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 company has lived too long on
nostalgia holding on to anything from the past is a sign of weakness.

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Then there came a change in the Communication Strategy of Bajaj Auto.

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, BALs 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 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 Pulsarflagship brand- based on this strategy.

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A FEW REMARKABLE CHANGES IN THEIR SYSTEMS

Bajaj Auto to launch Kawasaki Ninja:
The Ninja 250R is considered to be an entry-level sports bike manufactured by Japanese twowheeler 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
ER6n, 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.Ninja250 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 10,500rpm. Its 6-speed transmission makes it a versatile performer.
Kawasaki is Bajajs reliable technical partner since mid 80s and promised to assist Bajaj in

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all technical aspects with providing thenecessary service training and parts back-up while
Bajaj auto will handlethe distribution and marketing department.
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 worlds 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 its 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.

CORPORATE RESTRUCTURING OF BAJAJ AUTO

India's biggest sports biker maker Bajaj Auto has lost market share over the past 15 months.
In fact, from being the strong number two to Hero's number one position, Bajaj has since
been overtaken by both Honda and TVS in monthly sales. Now as it fights to regain market
share, it is seeing traction for its products, and will therefore have to expand capacity at its
Chakan

plant.

Bajaj currently makes motorcycles at three locations. The plant in Waluj makes the Platina,
CT100 and Discover as well as the Boxer for exports. Pantnagar is the location for the Platina
and Discover family, too. And it is at Chakan that its high displacement and also high-margin
products are made, namely the Pulsar range, Avenger, Kawasaki Ninja and KTM brand bikes.
Again, the production focus here too is a mix of export and domestic sales.
The reason Bajaj is considering the move to a higher production output, despite seeing a
decline in demand last year, is because it is now armed with a new range of products. The
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Pulsar family has now got the NS, AS and RS series - besides the existing 135 cc, 150 cc, 180
cc, and 220 cc Pulsars. The AS and RS have now begun to add to the demand that Bajaj is
once again seeing, and so there has been an 8 per cent rise in month-on-month sales since
January

this

year.

In the last quarter of this fiscal Bajaj will also launch the CS 400 - where too it sees a stronger
demand than many believe. The newly launched RS 200 has in fact seen a very strong market
demand, resulting in a supply crunch. When I met Eric Vas, president of Bajaj Auto's
Motorcycle division, he told me the company is well aware of the waiting periods building up
on the RS 200. He said, "Certainly, we do have a slight capacity constraint on the race sport
currently, we have customers who have been waiting for 45 days for that product and
fortunately it is not something unmanageable. We are fairly competent at expanding capacity
so we will hike capacity as the market goes along. Maybe it will take us a month, a month
and a half to ramp up capacities a little bit, more because constraints at vendors rather than
our

end."

So in the short-term Bajaj will realign its production by tweaking the number of shifts and
daily output from Chakan. But that will certainly not tide it over as demand continues to
increase, and the new bikes - AS in particular - gain traction in the domestic and export
markets for Bajaj. Add to that the upcoming CS series and future products, and Bajaj knows it
needs to increase production output - and more so at Chakan which makes the more
sophisticated products. "That is the part of the game. (At) the Chakan plant there is some
discussion about capacity expansion," says Mr Vas and a formal announcement on this could
be expected in the second quarter of the current fiscal. At present Bajaj has the installed
capacity to make close to 51 lakh motorcycles a year (Chakan plant capacity accounts for
approximately 12 lakh units), as compared to Hero MotoCorp's 70 lakh and HMSI's 48 lakh
unit annual capacity.

In a few days from now, a container with 20 quadricycles will reach Turkey, where Bajaj
Auto plans to test market a vehicle it designed and made from scratch in India, and dreamed
of becoming a hit in the home market. The small four-wheeled vehicle has been ready for
some time now, but Bajaj has not been able to sell it in the market it was primarily targeted at.
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Rivals have dragged the company to courts over the car's safety attributes and the matter has
not been decided yet. Fed up with the legal imbroglio, Bajaj Auto decided to export the
quadricycle, starting with Turkey where European Union laws are applicable.

ANALYSIS AND RECOMMENDATION FOR BAJAJ AUTO

Focus on High Margin Products: Around 50% of the two-wheeler consumers buy high
quality products (products of executive and premium segment motorcycles). Margins on
these products are higher. Bajaj Auto should adopt a deliberate strategy of focusing on
executive and premium segment motorcycles and three-wheelers, and is reducing its
dependence on lower-end of motorcycles and scooters segment.

High margin products - Pulsar, Discover, Three-wheelers, Avenger.

Low margin products - Platina, Scooters, Mopeds.

Now with increasing competition in the economy segment and limited scope from cost saving
measures, it is believed this strategy of focusing on higher margin products would enable the
company in retaining its operating margins.
To sum it up the following are a few useful recommendations:

Company should keep focusing on the fast growing motorcycle

segment.

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In view of the new threat posed by Honda Motors in the scooter

segment, the company needs to review its products line-up and launch

new products to cater the changed demand.

The company needs to take a look at its ungeared scooters offerings

and need to adapt to the latest trends.

The company needs to tap the export market more efficiently as there
is a huge potential to make India as the world's two-wheelers

production base. For this, it needs to look for joint ventures abroad.
It needs to target the young age group more effectively as this group is
extremely trend savvy. The advertising should have a fresh look and
the product should live up to the Gen-X's expectations.

CONCLUSION
Although the avalanche of motorcycles offered Indian consumers a wide variety of models to
choose from, it also resulted in increased pressure on the companies to concentrate on costcuts, technology enhancements and up-gradations and styling. Their margins came under
pressure as marketing costs escalated. The companies were forced to reduce prices and offer
discounts to survive the competition. Moreover, analysts were sceptical about the segment's
ability to maintain the growth rate in the years to come. One of the major assumptions
underlying the motorcycles rush was that if the market was considerably large and was
growing at a constant pace, there was room for a profitable existence for all brands. In 2001,
there were over 30 motorcycle brands in the market. However, with the top five brands
accounting for more than 60% of the market, only 40% of the market was available for all
other new brands put together. Despite the launch of more vehicles, the survival prospects of
many of the individual brands were deemed to be rather bleak.
Further, the growth in the motorcycle segment was dependant on continuing favorable market
conditions. Analysts claimed that to sustain this growth rate, the segment would have to
completely cannibalize the market for scooters and a considerable part of the market for
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scooterettes and mopeds. Considering the fast growing scooterettes segment, with high
demand from female customers, followed by the moderately growing moped segment and the
restructuring in the scooter segment with major national and foreign players reinforcing their
presence, it was unlikely that the entire growth in the two-wheeler sector would be due to
motorcycles.
Analysts also commented that as the two-wheeler industry had grown steadily for eight years,
stages in the product life cycle would apply to the field sooner, rather than later and the
decline stage would invariably come someday. There was little differentiation between the
brands being launched apart from styling as most companies had introduced their four-stroke
vehicles.
With the failure of the joint ventures, the expected introduction of cheaper Chinese brands,
stringent emission norms and threat from major international players, the survival of
indigenous brands looked uncertain. Constrained with the ruling price levels in the market
place, limited infrastructure and lack of technological innovations when compared to their
foreign counterparts, whether the Indian companies would succeed in generating the kind of
volumes needed to sustain in the competitive motorcycle market, remains to be seen.

BIBLIOGRAPHY
WEBSITES
http://www.indiainfoline.com/markets/company/background/company-profile/bajaj-autoltd/28074
http://www.bajajauto.com/bajaj_investor_code_of_conduct.asp
http://www.mbaskool.com/brandguide/automobiles/1131-bajaj-auto-limited.html
http://www.scribd.com/doc/36620832/Swot-Analysis-of-Bajaj#scribd
http://www.surfindia.com/automobile/bajaj-auto-ltd.html
http://profit.ndtv.com/stock/bajaj-auto-ltd_bajaj-auto/reports
http://www.icmrindia.org/casestudies/catalogue/Business%20Strategy/BSTR344.htm
http://www.zigwheels.com/upcoming-launches/bajaj-pulsar-future-plans-explained/18286/
http://www.ukessays.com/essays/economics/swot-analysis-of-bajaj-two-wheeler-industryeconomics-essay.php#ixzz3lWNGqp9X

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JOURNALS
Company Analysis: Bajaj Auto Ltd. - by Ashwin Sedwa
COMPANY PROFILE bajaj auto limited report Published by Ankur Dubey
Bajaj Automotives by Rakesh Agarwal
ARTICLES
Source: New Research Report on Companies and Markets, 2008
Bajaj Auto to launch quadricycle Qute in 16 countries at a price of around $2000 by Satish
John, ET Bureau Sep 25, 2015, 05.53PM IST
Bajaj Auto Plans Capacity Expansion as Pulsar Demand Regains Strength Reported
by Siddharth Vinayak Patankar | June 11, 2015 14:00 (IST)

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