2010

Manjri Varu PGPM0911021

2009-2011

BAJAJ AUTO LTD

International

Academy

of

Management

amp

Entrepreneurship

2 | P a g e

Bajaj Auto Ltd A

JOURNEY FROM

ldquoHAMARA BAJAJrdquo

TO

ldquoDISTINCTLY AHEADrdquo

EXECUTIVE SUMMARY

The Bajaj Group was founded in 1926 by Jamnalal Bajaj and now consists of 27 companies In 1945 Jamnalal Bajaj had formed Ms 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 100000 vehicles in a single year In another nine years Bajaj Auto could produce 500000 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 companys 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 405 Under the leadership of Rahul Bajaj the turnover of Bajaj Auto has gone up from Rs72 million to Rs4616 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 AsiaThe company has a network of 498 dealers and over 1500 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

3 | P a g e

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 815 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

4 | P a g e

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 RampD 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 worlds fourth largest manufacturer of two-wheelers and Indias second largest two wheeler manufacturer and the worlds 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$15 billion

Bajaj Auto came into existence on November 29 1945 as Ms 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 100000th vehicle In 1977 it managed to produce and sell 100000 vehicles in a single financial year In 1985 it started producing at Waluj in Aurangabad In 1986 it managed to produce and sell 500000 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

2 | P a g e

Bajaj Auto Ltd A

JOURNEY FROM

ldquoHAMARA BAJAJrdquo

TO

ldquoDISTINCTLY AHEADrdquo

EXECUTIVE SUMMARY

The Bajaj Group was founded in 1926 by Jamnalal Bajaj and now consists of 27 companies In 1945 Jamnalal Bajaj had formed Ms 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 100000 vehicles in a single year In another nine years Bajaj Auto could produce 500000 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 companys 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 405 Under the leadership of Rahul Bajaj the turnover of Bajaj Auto has gone up from Rs72 million to Rs4616 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 AsiaThe company has a network of 498 dealers and over 1500 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

3 | P a g e

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 815 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

4 | P a g e

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 RampD 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 worlds fourth largest manufacturer of two-wheelers and Indias second largest two wheeler manufacturer and the worlds 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$15 billion

Bajaj Auto came into existence on November 29 1945 as Ms 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 100000th vehicle In 1977 it managed to produce and sell 100000 vehicles in a single financial year In 1985 it started producing at Waluj in Aurangabad In 1986 it managed to produce and sell 500000 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

3 | P a g e

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 815 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

4 | P a g e

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 RampD 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 worlds fourth largest manufacturer of two-wheelers and Indias second largest two wheeler manufacturer and the worlds 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$15 billion

Bajaj Auto came into existence on November 29 1945 as Ms 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 100000th vehicle In 1977 it managed to produce and sell 100000 vehicles in a single financial year In 1985 it started producing at Waluj in Aurangabad In 1986 it managed to produce and sell 500000 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

4 | P a g e

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 RampD 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 worlds fourth largest manufacturer of two-wheelers and Indias second largest two wheeler manufacturer and the worlds 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$15 billion

Bajaj Auto came into existence on November 29 1945 as Ms 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 100000th vehicle In 1977 it managed to produce and sell 100000 vehicles in a single financial year In 1985 it started producing at Waluj in Aurangabad In 1986 it managed to produce and sell 500000 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

5 | P a g e

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 Bajajs technology partner Kawasaki Heavy Industries has helped the company bring a number of bikes to the Indian market -- including the Kawasaki Bajaj Eliminator -- Indias first heavy cruiser Nearly 3 million units of Bajajs products are annually distributed to more than 50 countries Bajaj Auto was founded in 1945

6 | P a g e

BACKWARD ANALYSIS

Founded in 1926 at the height of Indias 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 Rs72 million to Rs4616 billion (USD 936 million)its product portfolio has expanded from one to and the brand has found a global market He is one of Indias 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 Indias largest exporter of two and three wheelers 196710 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 654 billion a record in the history of the company The gross operating profit stands at Rs 93 billion again a record The profits after tax of the BAL are close to Rs 77 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

7 | P a g e

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 amp Development)

Eric Vas President (New Projects)

C P Tripathi Vice President (Corporate)

Kevin Dlsquosa Vice President (Finance)

K Srinivas Vice President (Human Resources)

N H Hingorani Vice President (Commercial)

S Ravikumar Vice President (Business Development)

8 | P a g e

QUICK FACTS

Founder Jamnalal Bajaj Year of Establishment 1926 Industry Automotive - Two amp 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 amp Head Office Akurdi Pune - 411035 India Tel +(91)-(20)-27472851 Fax +(91)-(20)-27473398

Awards amp 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 30 AUTOMOBILE BRANDS OF INDIA

4Ps Power Brand Awards

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 up to 125cc - 2008

NDTV Profit Car India and 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

9 | P a g e

and Bike India Awards

Pulsar 220 DTS-Fi IMOTY Award-Indian Motorcycle of the Year 2007

All Auto Mags-Overdrive 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

Customer Satisfaction Study 2005

TNS Automotive

Bajaj Discover DTS-i Bike of the Year 2005 Overdrive Bajaj Discover DTS-i Indigenous Design of

the Year Overdrive

Bajaj Wind 125 Bike of the Year 2004 Business Standard Motoring

Bajaj Wind 125 Two Wheeler of the Year 2004

CNBC AUTOCAR AUTOAWARDS 2004

Bajaj Pulsar DTS-i Bike of the Year 2004 ICICI Bank Overdrive Awards 2004

DTS-i Technology Auto Tech of the Year 2004

ICICI Bank Overdrive Awards 2004

BAJAJ AUTO Bike Maker of the Year 2004

ICICI Bank Overdrive Awards 2004

Bajaj Boxer AT KTEC BBC World Wheels Award for Best Two Wheeler under Rs30000-

BBC World Wheels

Bajaj Pulsar 150 DTS-i BBC World Wheels Award for Best Two Wheeler between Rs45000- to Rs55000

BBC World Wheels

Bajaj Pulsar 180 DTS-i BBC World Wheels Award for Best Two Wheeler between Rs55000 -to Rs70000-

BBC World Wheels

Bajaj Pulsar 180 DTS-i BBC World Wheels BBC World Wheels

10 | P a g e

Viewers Choice Two Wheeler of Year 2003

Bajaj Pulsar Motorcycle Total Customer Satisfaction Study 2003

NFO Automotive

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 the Year2002

Overdrive

Bajaj Eliminator Bike of the Year 2002 Overdrive Bajaj Eliminator Most Exciting Bike of

the Year2001 Overdrive

GROUP OF COMPANIES

Bajaj Auto Ltd

Bajaj Holdings amp 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

6 | P a g e

BACKWARD ANALYSIS

Founded in 1926 at the height of Indias 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 Rs72 million to Rs4616 billion (USD 936 million)its product portfolio has expanded from one to and the brand has found a global market He is one of Indias 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 Indias largest exporter of two and three wheelers 196710 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 654 billion a record in the history of the company The gross operating profit stands at Rs 93 billion again a record The profits after tax of the BAL are close to Rs 77 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

7 | P a g e

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 amp Development)

Eric Vas President (New Projects)

C P Tripathi Vice President (Corporate)

Kevin Dlsquosa Vice President (Finance)

K Srinivas Vice President (Human Resources)

N H Hingorani Vice President (Commercial)

S Ravikumar Vice President (Business Development)

8 | P a g e

QUICK FACTS

Founder Jamnalal Bajaj Year of Establishment 1926 Industry Automotive - Two amp 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 amp Head Office Akurdi Pune - 411035 India Tel +(91)-(20)-27472851 Fax +(91)-(20)-27473398

Awards amp 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 30 AUTOMOBILE BRANDS OF INDIA

4Ps Power Brand Awards

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 up to 125cc - 2008

NDTV Profit Car India and 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

9 | P a g e

and Bike India Awards

Pulsar 220 DTS-Fi IMOTY Award-Indian Motorcycle of the Year 2007

All Auto Mags-Overdrive 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

Customer Satisfaction Study 2005

TNS Automotive

Bajaj Discover DTS-i Bike of the Year 2005 Overdrive Bajaj Discover DTS-i Indigenous Design of

the Year Overdrive

Bajaj Wind 125 Bike of the Year 2004 Business Standard Motoring

Bajaj Wind 125 Two Wheeler of the Year 2004

CNBC AUTOCAR AUTOAWARDS 2004

Bajaj Pulsar DTS-i Bike of the Year 2004 ICICI Bank Overdrive Awards 2004

DTS-i Technology Auto Tech of the Year 2004

ICICI Bank Overdrive Awards 2004

BAJAJ AUTO Bike Maker of the Year 2004

ICICI Bank Overdrive Awards 2004

Bajaj Boxer AT KTEC BBC World Wheels Award for Best Two Wheeler under Rs30000-

BBC World Wheels

Bajaj Pulsar 150 DTS-i BBC World Wheels Award for Best Two Wheeler between Rs45000- to Rs55000

BBC World Wheels

Bajaj Pulsar 180 DTS-i BBC World Wheels Award for Best Two Wheeler between Rs55000 -to Rs70000-

BBC World Wheels

Bajaj Pulsar 180 DTS-i BBC World Wheels BBC World Wheels

10 | P a g e

Viewers Choice Two Wheeler of Year 2003

Bajaj Pulsar Motorcycle Total Customer Satisfaction Study 2003

NFO Automotive

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 the Year2002

Overdrive

Bajaj Eliminator Bike of the Year 2002 Overdrive Bajaj Eliminator Most Exciting Bike of

the Year2001 Overdrive

GROUP OF COMPANIES

Bajaj Auto Ltd

Bajaj Holdings amp 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

7 | P a g e

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 amp Development)

Eric Vas President (New Projects)

C P Tripathi Vice President (Corporate)

Kevin Dlsquosa Vice President (Finance)

K Srinivas Vice President (Human Resources)

N H Hingorani Vice President (Commercial)

S Ravikumar Vice President (Business Development)

8 | P a g e

QUICK FACTS

Founder Jamnalal Bajaj Year of Establishment 1926 Industry Automotive - Two amp 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 amp Head Office Akurdi Pune - 411035 India Tel +(91)-(20)-27472851 Fax +(91)-(20)-27473398

Awards amp 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 30 AUTOMOBILE BRANDS OF INDIA

4Ps Power Brand Awards

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 up to 125cc - 2008

NDTV Profit Car India and 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

9 | P a g e

and Bike India Awards

Pulsar 220 DTS-Fi IMOTY Award-Indian Motorcycle of the Year 2007

All Auto Mags-Overdrive 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

Customer Satisfaction Study 2005

TNS Automotive

Bajaj Discover DTS-i Bike of the Year 2005 Overdrive Bajaj Discover DTS-i Indigenous Design of

the Year Overdrive

Bajaj Wind 125 Bike of the Year 2004 Business Standard Motoring

Bajaj Wind 125 Two Wheeler of the Year 2004

CNBC AUTOCAR AUTOAWARDS 2004

Bajaj Pulsar DTS-i Bike of the Year 2004 ICICI Bank Overdrive Awards 2004

DTS-i Technology Auto Tech of the Year 2004

ICICI Bank Overdrive Awards 2004

BAJAJ AUTO Bike Maker of the Year 2004

ICICI Bank Overdrive Awards 2004

Bajaj Boxer AT KTEC BBC World Wheels Award for Best Two Wheeler under Rs30000-

BBC World Wheels

Bajaj Pulsar 150 DTS-i BBC World Wheels Award for Best Two Wheeler between Rs45000- to Rs55000

BBC World Wheels

Bajaj Pulsar 180 DTS-i BBC World Wheels Award for Best Two Wheeler between Rs55000 -to Rs70000-

BBC World Wheels

Bajaj Pulsar 180 DTS-i BBC World Wheels BBC World Wheels

10 | P a g e

Viewers Choice Two Wheeler of Year 2003

Bajaj Pulsar Motorcycle Total Customer Satisfaction Study 2003

NFO Automotive

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 the Year2002

Overdrive

Bajaj Eliminator Bike of the Year 2002 Overdrive Bajaj Eliminator Most Exciting Bike of

the Year2001 Overdrive

GROUP OF COMPANIES

Bajaj Auto Ltd

Bajaj Holdings amp 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

8 | P a g e

QUICK FACTS

Founder Jamnalal Bajaj Year of Establishment 1926 Industry Automotive - Two amp 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 amp Head Office Akurdi Pune - 411035 India Tel +(91)-(20)-27472851 Fax +(91)-(20)-27473398

Awards amp 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 30 AUTOMOBILE BRANDS OF INDIA

4Ps Power Brand Awards

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 up to 125cc - 2008

NDTV Profit Car India and 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

9 | P a g e

and Bike India Awards

Pulsar 220 DTS-Fi IMOTY Award-Indian Motorcycle of the Year 2007

All Auto Mags-Overdrive 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

Customer Satisfaction Study 2005

TNS Automotive

Bajaj Discover DTS-i Bike of the Year 2005 Overdrive Bajaj Discover DTS-i Indigenous Design of

the Year Overdrive

Bajaj Wind 125 Bike of the Year 2004 Business Standard Motoring

Bajaj Wind 125 Two Wheeler of the Year 2004

CNBC AUTOCAR AUTOAWARDS 2004

Bajaj Pulsar DTS-i Bike of the Year 2004 ICICI Bank Overdrive Awards 2004

DTS-i Technology Auto Tech of the Year 2004

ICICI Bank Overdrive Awards 2004

BAJAJ AUTO Bike Maker of the Year 2004

ICICI Bank Overdrive Awards 2004

Bajaj Boxer AT KTEC BBC World Wheels Award for Best Two Wheeler under Rs30000-

BBC World Wheels

Bajaj Pulsar 150 DTS-i BBC World Wheels Award for Best Two Wheeler between Rs45000- to Rs55000

BBC World Wheels

Bajaj Pulsar 180 DTS-i BBC World Wheels Award for Best Two Wheeler between Rs55000 -to Rs70000-

BBC World Wheels

Bajaj Pulsar 180 DTS-i BBC World Wheels BBC World Wheels

10 | P a g e

Viewers Choice Two Wheeler of Year 2003

Bajaj Pulsar Motorcycle Total Customer Satisfaction Study 2003

NFO Automotive

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 the Year2002

Overdrive

Bajaj Eliminator Bike of the Year 2002 Overdrive Bajaj Eliminator Most Exciting Bike of

the Year2001 Overdrive

GROUP OF COMPANIES

Bajaj Auto Ltd

Bajaj Holdings amp 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

9 | P a g e

and Bike India Awards

Pulsar 220 DTS-Fi IMOTY Award-Indian Motorcycle of the Year 2007

All Auto Mags-Overdrive 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

Customer Satisfaction Study 2005

TNS Automotive

Bajaj Discover DTS-i Bike of the Year 2005 Overdrive Bajaj Discover DTS-i Indigenous Design of

the Year Overdrive

Bajaj Wind 125 Bike of the Year 2004 Business Standard Motoring

Bajaj Wind 125 Two Wheeler of the Year 2004

CNBC AUTOCAR AUTOAWARDS 2004

Bajaj Pulsar DTS-i Bike of the Year 2004 ICICI Bank Overdrive Awards 2004

DTS-i Technology Auto Tech of the Year 2004

ICICI Bank Overdrive Awards 2004

BAJAJ AUTO Bike Maker of the Year 2004

ICICI Bank Overdrive Awards 2004

Bajaj Boxer AT KTEC BBC World Wheels Award for Best Two Wheeler under Rs30000-

BBC World Wheels

Bajaj Pulsar 150 DTS-i BBC World Wheels Award for Best Two Wheeler between Rs45000- to Rs55000

BBC World Wheels

Bajaj Pulsar 180 DTS-i BBC World Wheels Award for Best Two Wheeler between Rs55000 -to Rs70000-

BBC World Wheels

Bajaj Pulsar 180 DTS-i BBC World Wheels BBC World Wheels

10 | P a g e

Viewers Choice Two Wheeler of Year 2003

Bajaj Pulsar Motorcycle Total Customer Satisfaction Study 2003

NFO Automotive

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 the Year2002

Overdrive

Bajaj Eliminator Bike of the Year 2002 Overdrive Bajaj Eliminator Most Exciting Bike of

the Year2001 Overdrive

GROUP OF COMPANIES

Bajaj Auto Ltd

Bajaj Holdings amp 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

10 | P a g e

Viewers Choice Two Wheeler of Year 2003

Bajaj Pulsar Motorcycle Total Customer Satisfaction Study 2003

NFO Automotive

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 the Year2002

Overdrive

Bajaj Eliminator Bike of the Year 2002 Overdrive Bajaj Eliminator Most Exciting Bike of

the Year2001 Overdrive

GROUP OF COMPANIES

Bajaj Auto Ltd

Bajaj Holdings amp 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

11 | P a g e

Shekhar Holdings Pvt Ltd

Madhur Securities Pvt Ltd

Niraj Holdings Pvt Ltd

Shishir Holdings Pvt Ltd Kamalnayan Investments amp 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 amp Co Pvt Ltd

The Hindustan Housing Co Ltd

MISSION AND VISION STATEMENT

MISSION Focus on value based manufacturing Fostering team work amp enhancing the capability of the team Continual Improvement Total elimination of wastes Pollution free amp 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 countrylsquos largest automobile company

12 | P a g e

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

13 | P a g e

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

Indias 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

RampD 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 RampD 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 10000 from its current 13000 odd levels

14 | P a g e

Interestingly the countrylsquos 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

ldquoHAMARA BAJAJrdquo

Ad campaign helped Bajaj position CHETAK

ldquoA geared model-scooter occupying near iconic statusrdquo

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

15 | P a g e

company has lived too long on nostalgia holding on to anything from the past is a sign of weakness

Change in Communication Strategy

ldquoINSPIRING CONFIDENCErdquo

Bajaj Launched a series of motorcycle in an attempt to capture market shareIn 2001 BAL showed slice of life situationslsquo of new age IndialsquoAnalyst felt that by 2004 BALlsquos image had undergone considerable change But In spite of changing its focus amp strategy from scooters to motorcycles BAL - MD felt that

bull Like Volkswagen Beetle the product (Bajaj Chetak) had lost its relevance

bull We believe it is not good enough to be better it is important to be distinctrdquo

bull

This Lead to the strategy ofhelliphelliphelliphellip

HAMARA BAJAJ

INSPIRING

CONFIDENCE

DISTINCTLY

AHEAD

16 | P a g e

ldquoDISTINCTLY AHEADrdquo

BAL announced new corporate strategy in mid 2007 Its USP ndash Styling amp Technology Bajaj repositioned itself ndash aggressive amp fast-paced Their new strategy Distinctly Aheadlsquo focused on 3-core values

Innovation Speed amp Perfection

The ad featured pay-off line

ldquoAlag Andaaz Alag hai Khoj Rakhe Aage Hamari Sochrdquo

Bajaj launched Bajaj Pulsar ndash flagship brand- based on this strategy

BCG MATRIX FOR BAJAJ

17 | P a g e

SWOT ANALYSIS

STRENGTH High economies of scale High economies of

scope Legacy of brand name Widespread distribution

network

WEAKNESS Hasnt 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

OPPORTUNITIES The growing gearless

trendy scooters and scooterette market

Can use the existing RampD 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 ndash 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

18 | P a g e

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 industrylsquos overall sales of two wheelers grew by 12 per cent from 757 million to 847 million units Motorcycles sales grew by 14 per cent from 62 million to 71 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 Autolsquos sale of motorcycles by volume grew by 244 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 335 per cent in 2006-07 compared to 308 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

19 | P a g e

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 (ge 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 Aheadlsquo

20 | P a g e

- 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 Autolsquos 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 40000 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 Autolsquos 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 Companylsquos momentum in this growing segment Bajaj Auto will demonstrate what Distinctly Aheadlsquo 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 companylsquos motorcycle sales (numbers) it contributes less than a quarter of the Companylsquos revenues Hence

21 | 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 Companylsquos 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-thrulsquos have shrunk during 2006-07 Sale of geared scooter for the industry has fallen by 47 per cent from 198600 in 2005-06 to 104000 in 2006-07 The un-geared segment has registered a growth of 11 per cent from 791676 in 2005-06 to 878829 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 2700 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 CNGLPG vehicles 2006-07 saw the addition of a number of cities including Hyderabad Bangalore Chennai Lucknow Kanpur Agra Kolkata Gurgaon Faridabad and Ghaziabad Bajaj Autolsquos 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

22 | 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 Aheadlsquo 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

23 | P a g e

MARKET SHARE

2

15

9

470

Mkt share 3-wheelers 2008-09

Atul Auto

Bajaj Auto

Bajaj tempo

MampM

Piaggio vehicles

39

19

17

25

Mkt share ScooterScooterette 2008-

09

Bajaj Auto

HMS

TVS

Others

0

2000000

4000000

6000000

FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03

scootersscooterette moped motorcyclestep-throus

24

6

188

44

Mkt share MotorcycleStepthrous

2008-09

Bajaj Auto

Hero Honda

TVS

Yam aha

24 | P a g e

COMPETITORS

Last Price Market

Cap

(Rs cr)

Sales

Turnover

Net Profit Total

Assets

Hero

Honda

170025 3395187 1235688 128176 387924

Bajaj Auto

171235 2477488 881036 65648 343969

TVS

Motor

6590 156541 373667 3108 171911

LML

955 7830 16777 -5162 -2648

Kinetic

Motor

2515 5300 1570 9761 -518

Bajaj Auto Vs Hero Honda

Comparison

Attributes Bajaj Auto

Hero Honda

PE Ratio 3174 2575

EPS

4539 6418

NET PROFIT MARGIN() 740

1030

LAST DIVIDEND ()

220

1000

RETURN ON AVG EQUITY

3892

3372

GROSS PROFIT MARGIN()

1106

1275

25 | 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 mdash Probiking mdash 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 Autolsquos distribution strategy says Bajaj Auto vice-president (business amp 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 30000 BYK is positioned as a stylish bike targeted at the entry-level audiencelsquo Ogilvy amp 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

26 | 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 ageIndia Analysts felt that by 2004 BALs 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 BALs 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 for3 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 Sochand a background

13 | P a g e

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

Indias 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

RampD 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 RampD 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 10000 from its current 13000 odd levels

14 | P a g e

Interestingly the countrylsquos 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

ldquoHAMARA BAJAJrdquo

Ad campaign helped Bajaj position CHETAK

ldquoA geared model-scooter occupying near iconic statusrdquo

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

15 | P a g e

company has lived too long on nostalgia holding on to anything from the past is a sign of weakness

Change in Communication Strategy

ldquoINSPIRING CONFIDENCErdquo

Bajaj Launched a series of motorcycle in an attempt to capture market shareIn 2001 BAL showed slice of life situationslsquo of new age IndialsquoAnalyst felt that by 2004 BALlsquos image had undergone considerable change But In spite of changing its focus amp strategy from scooters to motorcycles BAL - MD felt that

bull Like Volkswagen Beetle the product (Bajaj Chetak) had lost its relevance

bull We believe it is not good enough to be better it is important to be distinctrdquo

bull

This Lead to the strategy ofhelliphelliphelliphellip

HAMARA BAJAJ

INSPIRING

CONFIDENCE

DISTINCTLY

AHEAD

16 | P a g e

ldquoDISTINCTLY AHEADrdquo

BAL announced new corporate strategy in mid 2007 Its USP ndash Styling amp Technology Bajaj repositioned itself ndash aggressive amp fast-paced Their new strategy Distinctly Aheadlsquo focused on 3-core values

Innovation Speed amp Perfection

The ad featured pay-off line

ldquoAlag Andaaz Alag hai Khoj Rakhe Aage Hamari Sochrdquo

Bajaj launched Bajaj Pulsar ndash flagship brand- based on this strategy

BCG MATRIX FOR BAJAJ

17 | P a g e

SWOT ANALYSIS

STRENGTH High economies of scale High economies of

scope Legacy of brand name Widespread distribution

network

WEAKNESS Hasnt 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

OPPORTUNITIES The growing gearless

trendy scooters and scooterette market

Can use the existing RampD 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 ndash 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

18 | P a g e

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 industrylsquos overall sales of two wheelers grew by 12 per cent from 757 million to 847 million units Motorcycles sales grew by 14 per cent from 62 million to 71 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 Autolsquos sale of motorcycles by volume grew by 244 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 335 per cent in 2006-07 compared to 308 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

19 | P a g e

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 (ge 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 Aheadlsquo

20 | P a g e

- 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 Autolsquos 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 40000 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 Autolsquos 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 Companylsquos momentum in this growing segment Bajaj Auto will demonstrate what Distinctly Aheadlsquo 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 companylsquos motorcycle sales (numbers) it contributes less than a quarter of the Companylsquos revenues Hence

21 | 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 Companylsquos 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-thrulsquos have shrunk during 2006-07 Sale of geared scooter for the industry has fallen by 47 per cent from 198600 in 2005-06 to 104000 in 2006-07 The un-geared segment has registered a growth of 11 per cent from 791676 in 2005-06 to 878829 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 2700 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 CNGLPG vehicles 2006-07 saw the addition of a number of cities including Hyderabad Bangalore Chennai Lucknow Kanpur Agra Kolkata Gurgaon Faridabad and Ghaziabad Bajaj Autolsquos 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

22 | 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 Aheadlsquo 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

23 | P a g e

MARKET SHARE

2

15

9

470

Mkt share 3-wheelers 2008-09

Atul Auto

Bajaj Auto

Bajaj tempo

MampM

Piaggio vehicles

39

19

17

25

Mkt share ScooterScooterette 2008-

09

Bajaj Auto

HMS

TVS

Others

0

2000000

4000000

6000000

FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03

scootersscooterette moped motorcyclestep-throus

24

6

188

44

Mkt share MotorcycleStepthrous

2008-09

Bajaj Auto

Hero Honda

TVS

Yam aha

24 | P a g e

COMPETITORS

Last Price Market

Cap

(Rs cr)

Sales

Turnover

Net Profit Total

Assets

Hero

Honda

170025 3395187 1235688 128176 387924

Bajaj Auto

171235 2477488 881036 65648 343969

TVS

Motor

6590 156541 373667 3108 171911

LML

955 7830 16777 -5162 -2648

Kinetic

Motor

2515 5300 1570 9761 -518

Bajaj Auto Vs Hero Honda

Comparison

Attributes Bajaj Auto

Hero Honda

PE Ratio 3174 2575

EPS

4539 6418

NET PROFIT MARGIN() 740

1030

LAST DIVIDEND ()

220

1000

RETURN ON AVG EQUITY

3892

3372

GROSS PROFIT MARGIN()

1106

1275

25 | 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 mdash Probiking mdash 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 Autolsquos distribution strategy says Bajaj Auto vice-president (business amp 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 30000 BYK is positioned as a stylish bike targeted at the entry-level audiencelsquo Ogilvy amp 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

26 | 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 ageIndia Analysts felt that by 2004 BALs 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 BALs 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 for3 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 Sochand a background

14 | P a g e

Interestingly the countrylsquos 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

ldquoHAMARA BAJAJrdquo

Ad campaign helped Bajaj position CHETAK

ldquoA geared model-scooter occupying near iconic statusrdquo

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

15 | P a g e

company has lived too long on nostalgia holding on to anything from the past is a sign of weakness

Change in Communication Strategy

ldquoINSPIRING CONFIDENCErdquo

Bajaj Launched a series of motorcycle in an attempt to capture market shareIn 2001 BAL showed slice of life situationslsquo of new age IndialsquoAnalyst felt that by 2004 BALlsquos image had undergone considerable change But In spite of changing its focus amp strategy from scooters to motorcycles BAL - MD felt that

bull Like Volkswagen Beetle the product (Bajaj Chetak) had lost its relevance

bull We believe it is not good enough to be better it is important to be distinctrdquo

bull

This Lead to the strategy ofhelliphelliphelliphellip

HAMARA BAJAJ

INSPIRING

CONFIDENCE

DISTINCTLY

AHEAD

16 | P a g e

ldquoDISTINCTLY AHEADrdquo

BAL announced new corporate strategy in mid 2007 Its USP ndash Styling amp Technology Bajaj repositioned itself ndash aggressive amp fast-paced Their new strategy Distinctly Aheadlsquo focused on 3-core values

Innovation Speed amp Perfection

The ad featured pay-off line

ldquoAlag Andaaz Alag hai Khoj Rakhe Aage Hamari Sochrdquo

Bajaj launched Bajaj Pulsar ndash flagship brand- based on this strategy

BCG MATRIX FOR BAJAJ

17 | P a g e

SWOT ANALYSIS

STRENGTH High economies of scale High economies of

scope Legacy of brand name Widespread distribution

network

WEAKNESS Hasnt 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

OPPORTUNITIES The growing gearless

trendy scooters and scooterette market

Can use the existing RampD 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 ndash 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

18 | P a g e

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 industrylsquos overall sales of two wheelers grew by 12 per cent from 757 million to 847 million units Motorcycles sales grew by 14 per cent from 62 million to 71 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 Autolsquos sale of motorcycles by volume grew by 244 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 335 per cent in 2006-07 compared to 308 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

19 | P a g e

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 (ge 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 Aheadlsquo

20 | P a g e

- 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 Autolsquos 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 40000 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 Autolsquos 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 Companylsquos momentum in this growing segment Bajaj Auto will demonstrate what Distinctly Aheadlsquo 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 companylsquos motorcycle sales (numbers) it contributes less than a quarter of the Companylsquos revenues Hence

21 | 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 Companylsquos 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-thrulsquos have shrunk during 2006-07 Sale of geared scooter for the industry has fallen by 47 per cent from 198600 in 2005-06 to 104000 in 2006-07 The un-geared segment has registered a growth of 11 per cent from 791676 in 2005-06 to 878829 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 2700 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 CNGLPG vehicles 2006-07 saw the addition of a number of cities including Hyderabad Bangalore Chennai Lucknow Kanpur Agra Kolkata Gurgaon Faridabad and Ghaziabad Bajaj Autolsquos 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

22 | 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 Aheadlsquo 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

23 | P a g e

MARKET SHARE

2

15

9

470

Mkt share 3-wheelers 2008-09

Atul Auto

Bajaj Auto

Bajaj tempo

MampM

Piaggio vehicles

39

19

17

25

Mkt share ScooterScooterette 2008-

09

Bajaj Auto

HMS

TVS

Others

0

2000000

4000000

6000000

FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03

scootersscooterette moped motorcyclestep-throus

24

6

188

44

Mkt share MotorcycleStepthrous

2008-09

Bajaj Auto

Hero Honda

TVS

Yam aha

24 | P a g e

COMPETITORS

Last Price Market

Cap

(Rs cr)

Sales

Turnover

Net Profit Total

Assets

Hero

Honda

170025 3395187 1235688 128176 387924

Bajaj Auto

171235 2477488 881036 65648 343969

TVS

Motor

6590 156541 373667 3108 171911

LML

955 7830 16777 -5162 -2648

Kinetic

Motor

2515 5300 1570 9761 -518

Bajaj Auto Vs Hero Honda

Comparison

Attributes Bajaj Auto

Hero Honda

PE Ratio 3174 2575

EPS

4539 6418

NET PROFIT MARGIN() 740

1030

LAST DIVIDEND ()

220

1000

RETURN ON AVG EQUITY

3892

3372

GROSS PROFIT MARGIN()

1106

1275

25 | 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 mdash Probiking mdash 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 Autolsquos distribution strategy says Bajaj Auto vice-president (business amp 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 30000 BYK is positioned as a stylish bike targeted at the entry-level audiencelsquo Ogilvy amp 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

26 | 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 ageIndia Analysts felt that by 2004 BALs 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 BALs 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 for3 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 Sochand a background

15 | P a g e

company has lived too long on nostalgia holding on to anything from the past is a sign of weakness

Change in Communication Strategy

ldquoINSPIRING CONFIDENCErdquo

Bajaj Launched a series of motorcycle in an attempt to capture market shareIn 2001 BAL showed slice of life situationslsquo of new age IndialsquoAnalyst felt that by 2004 BALlsquos image had undergone considerable change But In spite of changing its focus amp strategy from scooters to motorcycles BAL - MD felt that

bull Like Volkswagen Beetle the product (Bajaj Chetak) had lost its relevance

bull We believe it is not good enough to be better it is important to be distinctrdquo

bull

This Lead to the strategy ofhelliphelliphelliphellip

HAMARA BAJAJ

INSPIRING

CONFIDENCE

DISTINCTLY

AHEAD

16 | P a g e

ldquoDISTINCTLY AHEADrdquo

BAL announced new corporate strategy in mid 2007 Its USP ndash Styling amp Technology Bajaj repositioned itself ndash aggressive amp fast-paced Their new strategy Distinctly Aheadlsquo focused on 3-core values

Innovation Speed amp Perfection

The ad featured pay-off line

ldquoAlag Andaaz Alag hai Khoj Rakhe Aage Hamari Sochrdquo

Bajaj launched Bajaj Pulsar ndash flagship brand- based on this strategy

BCG MATRIX FOR BAJAJ

17 | P a g e

SWOT ANALYSIS

STRENGTH High economies of scale High economies of

scope Legacy of brand name Widespread distribution

network

WEAKNESS Hasnt 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

OPPORTUNITIES The growing gearless

trendy scooters and scooterette market

Can use the existing RampD 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 ndash 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

18 | P a g e

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 industrylsquos overall sales of two wheelers grew by 12 per cent from 757 million to 847 million units Motorcycles sales grew by 14 per cent from 62 million to 71 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 Autolsquos sale of motorcycles by volume grew by 244 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 335 per cent in 2006-07 compared to 308 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

19 | P a g e

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 (ge 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 Aheadlsquo

20 | P a g e

- 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 Autolsquos 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 40000 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 Autolsquos 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 Companylsquos momentum in this growing segment Bajaj Auto will demonstrate what Distinctly Aheadlsquo 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 companylsquos motorcycle sales (numbers) it contributes less than a quarter of the Companylsquos revenues Hence

21 | 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 Companylsquos 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-thrulsquos have shrunk during 2006-07 Sale of geared scooter for the industry has fallen by 47 per cent from 198600 in 2005-06 to 104000 in 2006-07 The un-geared segment has registered a growth of 11 per cent from 791676 in 2005-06 to 878829 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 2700 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 CNGLPG vehicles 2006-07 saw the addition of a number of cities including Hyderabad Bangalore Chennai Lucknow Kanpur Agra Kolkata Gurgaon Faridabad and Ghaziabad Bajaj Autolsquos 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

22 | 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 Aheadlsquo 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

23 | P a g e

MARKET SHARE

2

15

9

470

Mkt share 3-wheelers 2008-09

Atul Auto

Bajaj Auto

Bajaj tempo

MampM

Piaggio vehicles

39

19

17

25

Mkt share ScooterScooterette 2008-

09

Bajaj Auto

HMS

TVS

Others

0

2000000

4000000

6000000

FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03

scootersscooterette moped motorcyclestep-throus

24

6

188

44

Mkt share MotorcycleStepthrous

2008-09

Bajaj Auto

Hero Honda

TVS

Yam aha

24 | P a g e

COMPETITORS

Last Price Market

Cap

(Rs cr)

Sales

Turnover

Net Profit Total

Assets

Hero

Honda

170025 3395187 1235688 128176 387924

Bajaj Auto

171235 2477488 881036 65648 343969

TVS

Motor

6590 156541 373667 3108 171911

LML

955 7830 16777 -5162 -2648

Kinetic

Motor

2515 5300 1570 9761 -518

Bajaj Auto Vs Hero Honda

Comparison

Attributes Bajaj Auto

Hero Honda

PE Ratio 3174 2575

EPS

4539 6418

NET PROFIT MARGIN() 740

1030

LAST DIVIDEND ()

220

1000

RETURN ON AVG EQUITY

3892

3372

GROSS PROFIT MARGIN()

1106

1275

25 | 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 mdash Probiking mdash 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 Autolsquos distribution strategy says Bajaj Auto vice-president (business amp 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 30000 BYK is positioned as a stylish bike targeted at the entry-level audiencelsquo Ogilvy amp 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

26 | 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 ageIndia Analysts felt that by 2004 BALs 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 BALs 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 for3 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 Sochand a background

16 | P a g e

ldquoDISTINCTLY AHEADrdquo

BAL announced new corporate strategy in mid 2007 Its USP ndash Styling amp Technology Bajaj repositioned itself ndash aggressive amp fast-paced Their new strategy Distinctly Aheadlsquo focused on 3-core values

Innovation Speed amp Perfection

The ad featured pay-off line

ldquoAlag Andaaz Alag hai Khoj Rakhe Aage Hamari Sochrdquo

Bajaj launched Bajaj Pulsar ndash flagship brand- based on this strategy

BCG MATRIX FOR BAJAJ

17 | P a g e

SWOT ANALYSIS

STRENGTH High economies of scale High economies of

scope Legacy of brand name Widespread distribution

network

WEAKNESS Hasnt 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

OPPORTUNITIES The growing gearless

trendy scooters and scooterette market

Can use the existing RampD 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 ndash 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

18 | P a g e

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 industrylsquos overall sales of two wheelers grew by 12 per cent from 757 million to 847 million units Motorcycles sales grew by 14 per cent from 62 million to 71 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 Autolsquos sale of motorcycles by volume grew by 244 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 335 per cent in 2006-07 compared to 308 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

19 | P a g e

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 (ge 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 Aheadlsquo

20 | P a g e

- 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 Autolsquos 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 40000 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 Autolsquos 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 Companylsquos momentum in this growing segment Bajaj Auto will demonstrate what Distinctly Aheadlsquo 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 companylsquos motorcycle sales (numbers) it contributes less than a quarter of the Companylsquos revenues Hence

21 | 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 Companylsquos 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-thrulsquos have shrunk during 2006-07 Sale of geared scooter for the industry has fallen by 47 per cent from 198600 in 2005-06 to 104000 in 2006-07 The un-geared segment has registered a growth of 11 per cent from 791676 in 2005-06 to 878829 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 2700 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 CNGLPG vehicles 2006-07 saw the addition of a number of cities including Hyderabad Bangalore Chennai Lucknow Kanpur Agra Kolkata Gurgaon Faridabad and Ghaziabad Bajaj Autolsquos 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

22 | 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 Aheadlsquo 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

23 | P a g e

MARKET SHARE

2

15

9

470

Mkt share 3-wheelers 2008-09

Atul Auto

Bajaj Auto

Bajaj tempo

MampM

Piaggio vehicles

39

19

17

25

Mkt share ScooterScooterette 2008-

09

Bajaj Auto

HMS

TVS

Others

0

2000000

4000000

6000000

FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03

scootersscooterette moped motorcyclestep-throus

24

6

188

44

Mkt share MotorcycleStepthrous

2008-09

Bajaj Auto

Hero Honda

TVS

Yam aha

24 | P a g e

COMPETITORS

Last Price Market

Cap

(Rs cr)

Sales

Turnover

Net Profit Total

Assets

Hero

Honda

170025 3395187 1235688 128176 387924

Bajaj Auto

171235 2477488 881036 65648 343969

TVS

Motor

6590 156541 373667 3108 171911

LML

955 7830 16777 -5162 -2648

Kinetic

Motor

2515 5300 1570 9761 -518

Bajaj Auto Vs Hero Honda

Comparison

Attributes Bajaj Auto

Hero Honda

PE Ratio 3174 2575

EPS

4539 6418

NET PROFIT MARGIN() 740

1030

LAST DIVIDEND ()

220

1000

RETURN ON AVG EQUITY

3892

3372

GROSS PROFIT MARGIN()

1106

1275

25 | 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 mdash Probiking mdash 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 Autolsquos distribution strategy says Bajaj Auto vice-president (business amp 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 30000 BYK is positioned as a stylish bike targeted at the entry-level audiencelsquo Ogilvy amp 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

26 | 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 ageIndia Analysts felt that by 2004 BALs 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 BALs 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 for3 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 Sochand a background

17 | P a g e

SWOT ANALYSIS

STRENGTH High economies of scale High economies of

scope Legacy of brand name Widespread distribution

network

WEAKNESS Hasnt 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

OPPORTUNITIES The growing gearless

trendy scooters and scooterette market

Can use the existing RampD 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 ndash 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

18 | P a g e

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 industrylsquos overall sales of two wheelers grew by 12 per cent from 757 million to 847 million units Motorcycles sales grew by 14 per cent from 62 million to 71 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 Autolsquos sale of motorcycles by volume grew by 244 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 335 per cent in 2006-07 compared to 308 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

19 | P a g e

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 (ge 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 Aheadlsquo

20 | P a g e

- 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 Autolsquos 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 40000 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 Autolsquos 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 Companylsquos momentum in this growing segment Bajaj Auto will demonstrate what Distinctly Aheadlsquo 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 companylsquos motorcycle sales (numbers) it contributes less than a quarter of the Companylsquos revenues Hence

21 | 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 Companylsquos 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-thrulsquos have shrunk during 2006-07 Sale of geared scooter for the industry has fallen by 47 per cent from 198600 in 2005-06 to 104000 in 2006-07 The un-geared segment has registered a growth of 11 per cent from 791676 in 2005-06 to 878829 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 2700 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 CNGLPG vehicles 2006-07 saw the addition of a number of cities including Hyderabad Bangalore Chennai Lucknow Kanpur Agra Kolkata Gurgaon Faridabad and Ghaziabad Bajaj Autolsquos 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

22 | 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 Aheadlsquo 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

23 | P a g e

MARKET SHARE

2

15

9

470

Mkt share 3-wheelers 2008-09

Atul Auto

Bajaj Auto

Bajaj tempo

MampM

Piaggio vehicles

39

19

17

25

Mkt share ScooterScooterette 2008-

09

Bajaj Auto

HMS

TVS

Others

0

2000000

4000000

6000000

FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03

scootersscooterette moped motorcyclestep-throus

24

6

188

44

Mkt share MotorcycleStepthrous

2008-09

Bajaj Auto

Hero Honda

TVS

Yam aha

24 | P a g e

COMPETITORS

Last Price Market

Cap

(Rs cr)

Sales

Turnover

Net Profit Total

Assets

Hero

Honda

170025 3395187 1235688 128176 387924

Bajaj Auto

171235 2477488 881036 65648 343969

TVS

Motor

6590 156541 373667 3108 171911

LML

955 7830 16777 -5162 -2648

Kinetic

Motor

2515 5300 1570 9761 -518

Bajaj Auto Vs Hero Honda

Comparison

Attributes Bajaj Auto

Hero Honda

PE Ratio 3174 2575

EPS

4539 6418

NET PROFIT MARGIN() 740

1030

LAST DIVIDEND ()

220

1000

RETURN ON AVG EQUITY

3892

3372

GROSS PROFIT MARGIN()

1106

1275

25 | 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 mdash Probiking mdash 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 Autolsquos distribution strategy says Bajaj Auto vice-president (business amp 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 30000 BYK is positioned as a stylish bike targeted at the entry-level audiencelsquo Ogilvy amp 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

26 | 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 ageIndia Analysts felt that by 2004 BALs 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 BALs 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 for3 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 Sochand a background

18 | P a g e

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 industrylsquos overall sales of two wheelers grew by 12 per cent from 757 million to 847 million units Motorcycles sales grew by 14 per cent from 62 million to 71 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 Autolsquos sale of motorcycles by volume grew by 244 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 335 per cent in 2006-07 compared to 308 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

19 | P a g e

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 (ge 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 Aheadlsquo

20 | P a g e

- 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 Autolsquos 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 40000 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 Autolsquos 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 Companylsquos momentum in this growing segment Bajaj Auto will demonstrate what Distinctly Aheadlsquo 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 companylsquos motorcycle sales (numbers) it contributes less than a quarter of the Companylsquos revenues Hence

21 | 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 Companylsquos 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-thrulsquos have shrunk during 2006-07 Sale of geared scooter for the industry has fallen by 47 per cent from 198600 in 2005-06 to 104000 in 2006-07 The un-geared segment has registered a growth of 11 per cent from 791676 in 2005-06 to 878829 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 2700 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 CNGLPG vehicles 2006-07 saw the addition of a number of cities including Hyderabad Bangalore Chennai Lucknow Kanpur Agra Kolkata Gurgaon Faridabad and Ghaziabad Bajaj Autolsquos 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

22 | 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 Aheadlsquo 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

23 | P a g e

MARKET SHARE

2

15

9

470

Mkt share 3-wheelers 2008-09

Atul Auto

Bajaj Auto

Bajaj tempo

MampM

Piaggio vehicles

39

19

17

25

Mkt share ScooterScooterette 2008-

09

Bajaj Auto

HMS

TVS

Others

0

2000000

4000000

6000000

FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03

scootersscooterette moped motorcyclestep-throus

24

6

188

44

Mkt share MotorcycleStepthrous

2008-09

Bajaj Auto

Hero Honda

TVS

Yam aha

24 | P a g e

COMPETITORS

Last Price Market

Cap

(Rs cr)

Sales

Turnover

Net Profit Total

Assets

Hero

Honda

170025 3395187 1235688 128176 387924

Bajaj Auto

171235 2477488 881036 65648 343969

TVS

Motor

6590 156541 373667 3108 171911

LML

955 7830 16777 -5162 -2648

Kinetic

Motor

2515 5300 1570 9761 -518

Bajaj Auto Vs Hero Honda

Comparison

Attributes Bajaj Auto

Hero Honda

PE Ratio 3174 2575

EPS

4539 6418

NET PROFIT MARGIN() 740

1030

LAST DIVIDEND ()

220

1000

RETURN ON AVG EQUITY

3892

3372

GROSS PROFIT MARGIN()

1106

1275

25 | 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 mdash Probiking mdash 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 Autolsquos distribution strategy says Bajaj Auto vice-president (business amp 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 30000 BYK is positioned as a stylish bike targeted at the entry-level audiencelsquo Ogilvy amp 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

26 | 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 ageIndia Analysts felt that by 2004 BALs 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 BALs 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 for3 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 Sochand a background

19 | P a g e

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 (ge 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 Aheadlsquo

20 | P a g e

- 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 Autolsquos 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 40000 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 Autolsquos 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 Companylsquos momentum in this growing segment Bajaj Auto will demonstrate what Distinctly Aheadlsquo 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 companylsquos motorcycle sales (numbers) it contributes less than a quarter of the Companylsquos revenues Hence

21 | 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 Companylsquos 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-thrulsquos have shrunk during 2006-07 Sale of geared scooter for the industry has fallen by 47 per cent from 198600 in 2005-06 to 104000 in 2006-07 The un-geared segment has registered a growth of 11 per cent from 791676 in 2005-06 to 878829 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 2700 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 CNGLPG vehicles 2006-07 saw the addition of a number of cities including Hyderabad Bangalore Chennai Lucknow Kanpur Agra Kolkata Gurgaon Faridabad and Ghaziabad Bajaj Autolsquos 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

22 | 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 Aheadlsquo 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

23 | P a g e

MARKET SHARE

2

15

9

470

Mkt share 3-wheelers 2008-09

Atul Auto

Bajaj Auto

Bajaj tempo

MampM

Piaggio vehicles

39

19

17

25

Mkt share ScooterScooterette 2008-

09

Bajaj Auto

HMS

TVS

Others

0

2000000

4000000

6000000

FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03

scootersscooterette moped motorcyclestep-throus

24

6

188

44

Mkt share MotorcycleStepthrous

2008-09

Bajaj Auto

Hero Honda

TVS

Yam aha

24 | P a g e

COMPETITORS

Last Price Market

Cap

(Rs cr)

Sales

Turnover

Net Profit Total

Assets

Hero

Honda

170025 3395187 1235688 128176 387924

Bajaj Auto

171235 2477488 881036 65648 343969

TVS

Motor

6590 156541 373667 3108 171911

LML

955 7830 16777 -5162 -2648

Kinetic

Motor

2515 5300 1570 9761 -518

Bajaj Auto Vs Hero Honda

Comparison

Attributes Bajaj Auto

Hero Honda

PE Ratio 3174 2575

EPS

4539 6418

NET PROFIT MARGIN() 740

1030

LAST DIVIDEND ()

220

1000

RETURN ON AVG EQUITY

3892

3372

GROSS PROFIT MARGIN()

1106

1275

25 | 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 mdash Probiking mdash 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 Autolsquos distribution strategy says Bajaj Auto vice-president (business amp 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 30000 BYK is positioned as a stylish bike targeted at the entry-level audiencelsquo Ogilvy amp 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

26 | 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 ageIndia Analysts felt that by 2004 BALs 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 BALs 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 for3 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 Sochand a background

20 | P a g e

- 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 Autolsquos 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 40000 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 Autolsquos 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 Companylsquos momentum in this growing segment Bajaj Auto will demonstrate what Distinctly Aheadlsquo 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 companylsquos motorcycle sales (numbers) it contributes less than a quarter of the Companylsquos revenues Hence

21 | 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 Companylsquos 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-thrulsquos have shrunk during 2006-07 Sale of geared scooter for the industry has fallen by 47 per cent from 198600 in 2005-06 to 104000 in 2006-07 The un-geared segment has registered a growth of 11 per cent from 791676 in 2005-06 to 878829 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 2700 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 CNGLPG vehicles 2006-07 saw the addition of a number of cities including Hyderabad Bangalore Chennai Lucknow Kanpur Agra Kolkata Gurgaon Faridabad and Ghaziabad Bajaj Autolsquos 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

22 | 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 Aheadlsquo 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

23 | P a g e

MARKET SHARE

2

15

9

470

Mkt share 3-wheelers 2008-09

Atul Auto

Bajaj Auto

Bajaj tempo

MampM

Piaggio vehicles

39

19

17

25

Mkt share ScooterScooterette 2008-

09

Bajaj Auto

HMS

TVS

Others

0

2000000

4000000

6000000

FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03

scootersscooterette moped motorcyclestep-throus

24

6

188

44

Mkt share MotorcycleStepthrous

2008-09

Bajaj Auto

Hero Honda

TVS

Yam aha

24 | P a g e

COMPETITORS

Last Price Market

Cap

(Rs cr)

Sales

Turnover

Net Profit Total

Assets

Hero

Honda

170025 3395187 1235688 128176 387924

Bajaj Auto

171235 2477488 881036 65648 343969

TVS

Motor

6590 156541 373667 3108 171911

LML

955 7830 16777 -5162 -2648

Kinetic

Motor

2515 5300 1570 9761 -518

Bajaj Auto Vs Hero Honda

Comparison

Attributes Bajaj Auto

Hero Honda

PE Ratio 3174 2575

EPS

4539 6418

NET PROFIT MARGIN() 740

1030

LAST DIVIDEND ()

220

1000

RETURN ON AVG EQUITY

3892

3372

GROSS PROFIT MARGIN()

1106

1275

25 | 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 mdash Probiking mdash 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 Autolsquos distribution strategy says Bajaj Auto vice-president (business amp 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 30000 BYK is positioned as a stylish bike targeted at the entry-level audiencelsquo Ogilvy amp 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

26 | 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 ageIndia Analysts felt that by 2004 BALs 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 BALs 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 for3 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 Sochand a background

21 | 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 Companylsquos 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-thrulsquos have shrunk during 2006-07 Sale of geared scooter for the industry has fallen by 47 per cent from 198600 in 2005-06 to 104000 in 2006-07 The un-geared segment has registered a growth of 11 per cent from 791676 in 2005-06 to 878829 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 2700 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 CNGLPG vehicles 2006-07 saw the addition of a number of cities including Hyderabad Bangalore Chennai Lucknow Kanpur Agra Kolkata Gurgaon Faridabad and Ghaziabad Bajaj Autolsquos 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

22 | 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 Aheadlsquo 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

23 | P a g e

MARKET SHARE

2

15

9

470

Mkt share 3-wheelers 2008-09

Atul Auto

Bajaj Auto

Bajaj tempo

MampM

Piaggio vehicles

39

19

17

25

Mkt share ScooterScooterette 2008-

09

Bajaj Auto

HMS

TVS

Others

0

2000000

4000000

6000000

FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03

scootersscooterette moped motorcyclestep-throus

24

6

188

44

Mkt share MotorcycleStepthrous

2008-09

Bajaj Auto

Hero Honda

TVS

Yam aha

24 | P a g e

COMPETITORS

Last Price Market

Cap

(Rs cr)

Sales

Turnover

Net Profit Total

Assets

Hero

Honda

170025 3395187 1235688 128176 387924

Bajaj Auto

171235 2477488 881036 65648 343969

TVS

Motor

6590 156541 373667 3108 171911

LML

955 7830 16777 -5162 -2648

Kinetic

Motor

2515 5300 1570 9761 -518

Bajaj Auto Vs Hero Honda

Comparison

Attributes Bajaj Auto

Hero Honda

PE Ratio 3174 2575

EPS

4539 6418

NET PROFIT MARGIN() 740

1030

LAST DIVIDEND ()

220

1000

RETURN ON AVG EQUITY

3892

3372

GROSS PROFIT MARGIN()

1106

1275

25 | 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 mdash Probiking mdash 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 Autolsquos distribution strategy says Bajaj Auto vice-president (business amp 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 30000 BYK is positioned as a stylish bike targeted at the entry-level audiencelsquo Ogilvy amp 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

26 | 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 ageIndia Analysts felt that by 2004 BALs 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 BALs 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 for3 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 Sochand a background

22 | 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 Aheadlsquo 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

23 | P a g e

MARKET SHARE

2

15

9

470

Mkt share 3-wheelers 2008-09

Atul Auto

Bajaj Auto

Bajaj tempo

MampM

Piaggio vehicles

39

19

17

25

Mkt share ScooterScooterette 2008-

09

Bajaj Auto

HMS

TVS

Others

0

2000000

4000000

6000000

FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03

scootersscooterette moped motorcyclestep-throus

24

6

188

44

Mkt share MotorcycleStepthrous

2008-09

Bajaj Auto

Hero Honda

TVS

Yam aha

24 | P a g e

COMPETITORS

Last Price Market

Cap

(Rs cr)

Sales

Turnover

Net Profit Total

Assets

Hero

Honda

170025 3395187 1235688 128176 387924

Bajaj Auto

171235 2477488 881036 65648 343969

TVS

Motor

6590 156541 373667 3108 171911

LML

955 7830 16777 -5162 -2648

Kinetic

Motor

2515 5300 1570 9761 -518

Bajaj Auto Vs Hero Honda

Comparison

Attributes Bajaj Auto

Hero Honda

PE Ratio 3174 2575

EPS

4539 6418

NET PROFIT MARGIN() 740

1030

LAST DIVIDEND ()

220

1000

RETURN ON AVG EQUITY

3892

3372

GROSS PROFIT MARGIN()

1106

1275

25 | 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 mdash Probiking mdash 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 Autolsquos distribution strategy says Bajaj Auto vice-president (business amp 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 30000 BYK is positioned as a stylish bike targeted at the entry-level audiencelsquo Ogilvy amp 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

26 | 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 ageIndia Analysts felt that by 2004 BALs 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 BALs 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 for3 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 Sochand a background

23 | P a g e

MARKET SHARE

2

15

9

470

Mkt share 3-wheelers 2008-09

Atul Auto

Bajaj Auto

Bajaj tempo

MampM

Piaggio vehicles

39

19

17

25

Mkt share ScooterScooterette 2008-

09

Bajaj Auto

HMS

TVS

Others

0

2000000

4000000

6000000

FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03

scootersscooterette moped motorcyclestep-throus

24

6

188

44

Mkt share MotorcycleStepthrous

2008-09

Bajaj Auto

Hero Honda

TVS

Yam aha

24 | P a g e

COMPETITORS

Last Price Market

Cap

(Rs cr)

Sales

Turnover

Net Profit Total

Assets

Hero

Honda

170025 3395187 1235688 128176 387924

Bajaj Auto

171235 2477488 881036 65648 343969

TVS

Motor

6590 156541 373667 3108 171911

LML

955 7830 16777 -5162 -2648

Kinetic

Motor

2515 5300 1570 9761 -518

Bajaj Auto Vs Hero Honda

Comparison

Attributes Bajaj Auto

Hero Honda

PE Ratio 3174 2575

EPS

4539 6418

NET PROFIT MARGIN() 740

1030

LAST DIVIDEND ()

220

1000

RETURN ON AVG EQUITY

3892

3372

GROSS PROFIT MARGIN()

1106

1275

25 | 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 mdash Probiking mdash 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 Autolsquos distribution strategy says Bajaj Auto vice-president (business amp 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 30000 BYK is positioned as a stylish bike targeted at the entry-level audiencelsquo Ogilvy amp 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

26 | 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 ageIndia Analysts felt that by 2004 BALs 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 BALs 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 for3 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 Sochand a background

24 | P a g e

COMPETITORS

Last Price Market

Cap

(Rs cr)

Sales

Turnover

Net Profit Total

Assets

Hero

Honda

170025 3395187 1235688 128176 387924

Bajaj Auto

171235 2477488 881036 65648 343969

TVS

Motor

6590 156541 373667 3108 171911

LML

955 7830 16777 -5162 -2648

Kinetic

Motor

2515 5300 1570 9761 -518

Bajaj Auto Vs Hero Honda

Comparison

Attributes Bajaj Auto

Hero Honda

PE Ratio 3174 2575

EPS

4539 6418

NET PROFIT MARGIN() 740

1030

LAST DIVIDEND ()

220

1000

RETURN ON AVG EQUITY

3892

3372

GROSS PROFIT MARGIN()

1106

1275

25 | 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 mdash Probiking mdash 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 Autolsquos distribution strategy says Bajaj Auto vice-president (business amp 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 30000 BYK is positioned as a stylish bike targeted at the entry-level audiencelsquo Ogilvy amp 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

26 | 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 ageIndia Analysts felt that by 2004 BALs 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 BALs 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 for3 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 Sochand a background

25 | 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 mdash Probiking mdash 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 Autolsquos distribution strategy says Bajaj Auto vice-president (business amp 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 30000 BYK is positioned as a stylish bike targeted at the entry-level audiencelsquo Ogilvy amp 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

26 | 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 ageIndia Analysts felt that by 2004 BALs 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 BALs 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 for3 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 Sochand a background

26 | 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 ageIndia Analysts felt that by 2004 BALs 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 BALs 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 for3 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 Sochand a background

27 | 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 Autos 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 100000 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 60000 units each month

Discover on track

The Discover is on track with its targeted monthly numbers of 100000 units This has been spurred largely by the new 100cc version which is doing over 70000 units a month with the Discover 135 making up the balance

Bajaj Autos 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 companys 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

28 | 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 Autos point of view the commuter and sporty segments are the backbone of Indias 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

29 | 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 amp expenditure costs as a percentage of sales

30 | P a g e

From the above graph it can clearly make out that Bajaj Auto relies more on its salesamp 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 Indialsquos largest exporter of two and three wheelers During 2008-09 the company exported 772519 two and three-wheelers recording a growth of 25 percent over 2007-08Exports 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

31 | 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 7000 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 ie 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

32 | 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 ndash Bajaj Auto has a consolidated base of 180 vendors supplying components to all Bajaj Autolsquos 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 amp 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 amp 70 of Bajaj Autolsquos 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 amp Spain

Dealers- Bajaj Auto has a network of 422 dealers and over 1300 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 amp rural areas During the financial year 2007-08 the company extended BASS (Bajaj Auto Service Standard) to standardize the workshops of 250 dealers amp 50 authorized service centers These programmers included a uniform

33 | P a g e

external amp internal look This initiative has improved work hygiene promoted consistent amp better service quality amp 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

34 | 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 Rs23862 cr in 2009 and at same time current liabilities increased by Rs2009 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 Rs16414 cr only and current liabilities have increased by Rs58312 cr The company is able to meet its short term obligations

35 | 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 Rs236 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 Rs2821 cr in 2009 tear

(iv) Inventory Turnover Ratio

Analysis- The inventory turnover ratio in the year 2008 was 2819 which indicate that 2819 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 2747 This was due to the fact that the Bajaj Auto Ltd in 2009 invested more then 072 times the inventory in 2008 (v) Fixed assets Turnover

36 | 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 179 and now it has been slightly decreased to 151 This change was brought about by decreased in total sales by Rs12698 cr where as the fixed assets increased only by Rs84584 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 200000 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 40000 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

37 | P a g e

The Bajaj Autolsquos 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 Autolsquos RampD 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 Rs1 03686 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 amp towns

38 | 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 150 lakh and Rs 2 lakh in India Till the mid of this year four models of Kawasaki Ninja 250lsquo sports roadster ER-6nlsquo super sports bike bdquoNinja ZX6R‟ Ninjalsquo model is the most popular model in US Europe and Japan Bollywood star John Abrahamlsquo 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 10500 rpm Its 6-speed transmission makes it a versatile performer Kawasaki is Bajajlsquos 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

39 | 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 worldlsquos 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 itlsquos 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

40 | P a g e

41 | P a g e

42 | P a g e

Recommendations

The impression of Bajaj in the minds of the public is that it is a moped amp athree-wheeler company amp it is a very orthodox amp unhappening image in the minds of the youth It should use a powerful brand ambassador amp individual whom the youth can relate with It should aggressively market itself as a motorcycle company amp move

from its traditional mindset (Rahul Bajaj had once stated that he had only one department in his company the dispatch department amp that he did not require a marketing department)

Bajaj should aggressively push sales of higher margin products amp launch new products in niche segments

Bajaj should also try amp push for tie-ups amp Joint Ventures in foreign market amp try amp increase its export base (Eg Tata Motors tie-up with Rover for marketing of India amp Joint Venture with Senegal government for manufacturing trucks amp commercial vehicles)

Bajaj should look for possible mergers amp acquisitions (Eg Maharashtra Scooters) amp try amp improve its distribution network amp provide it with products in niche segments amp help increase production capacity amp provide economies of scale

Increase its dealer network to tap rural growing markets by going in for tie-ups amp offering better margins to dealers

The key to Bajaj real success lies in Research amp development How it is able to use value analysis amp value engineering by adding new features to its existing product line amp how it is able to come out with new product for different niche markets Analysis of different alternatives like outsourcing inhouse purchase amp tie-up should be evaluated

BIBLIOGRAPHY

WWWGOOGLECOM WWWBAJAJAUTOCOM WWWDOCSTOCCOM WWWMONEYCONTROLCOM

28 | 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 Autos point of view the commuter and sporty segments are the backbone of Indias 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

29 | 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 amp expenditure costs as a percentage of sales

30 | P a g e

From the above graph it can clearly make out that Bajaj Auto relies more on its salesamp 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 Indialsquos largest exporter of two and three wheelers During 2008-09 the company exported 772519 two and three-wheelers recording a growth of 25 percent over 2007-08Exports 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

31 | 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 7000 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 ie 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

32 | 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 ndash Bajaj Auto has a consolidated base of 180 vendors supplying components to all Bajaj Autolsquos 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 amp 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 amp 70 of Bajaj Autolsquos 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 amp Spain

Dealers- Bajaj Auto has a network of 422 dealers and over 1300 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 amp rural areas During the financial year 2007-08 the company extended BASS (Bajaj Auto Service Standard) to standardize the workshops of 250 dealers amp 50 authorized service centers These programmers included a uniform

33 | P a g e

external amp internal look This initiative has improved work hygiene promoted consistent amp better service quality amp 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

34 | 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 Rs23862 cr in 2009 and at same time current liabilities increased by Rs2009 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 Rs16414 cr only and current liabilities have increased by Rs58312 cr The company is able to meet its short term obligations

35 | 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 Rs236 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 Rs2821 cr in 2009 tear

(iv) Inventory Turnover Ratio

Analysis- The inventory turnover ratio in the year 2008 was 2819 which indicate that 2819 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 2747 This was due to the fact that the Bajaj Auto Ltd in 2009 invested more then 072 times the inventory in 2008 (v) Fixed assets Turnover

36 | 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 179 and now it has been slightly decreased to 151 This change was brought about by decreased in total sales by Rs12698 cr where as the fixed assets increased only by Rs84584 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 200000 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 40000 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

37 | P a g e

The Bajaj Autolsquos 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 Autolsquos RampD 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 Rs1 03686 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 amp towns

38 | 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 150 lakh and Rs 2 lakh in India Till the mid of this year four models of Kawasaki Ninja 250lsquo sports roadster ER-6nlsquo super sports bike bdquoNinja ZX6R‟ Ninjalsquo model is the most popular model in US Europe and Japan Bollywood star John Abrahamlsquo 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 10500 rpm Its 6-speed transmission makes it a versatile performer Kawasaki is Bajajlsquos 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

39 | 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 worldlsquos 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 itlsquos 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

40 | P a g e

41 | P a g e

42 | P a g e

Recommendations

The impression of Bajaj in the minds of the public is that it is a moped amp athree-wheeler company amp it is a very orthodox amp unhappening image in the minds of the youth It should use a powerful brand ambassador amp individual whom the youth can relate with It should aggressively market itself as a motorcycle company amp move

from its traditional mindset (Rahul Bajaj had once stated that he had only one department in his company the dispatch department amp that he did not require a marketing department)

Bajaj should aggressively push sales of higher margin products amp launch new products in niche segments

Bajaj should also try amp push for tie-ups amp Joint Ventures in foreign market amp try amp increase its export base (Eg Tata Motors tie-up with Rover for marketing of India amp Joint Venture with Senegal government for manufacturing trucks amp commercial vehicles)

Bajaj should look for possible mergers amp acquisitions (Eg Maharashtra Scooters) amp try amp improve its distribution network amp provide it with products in niche segments amp help increase production capacity amp provide economies of scale

Increase its dealer network to tap rural growing markets by going in for tie-ups amp offering better margins to dealers

The key to Bajaj real success lies in Research amp development How it is able to use value analysis amp value engineering by adding new features to its existing product line amp how it is able to come out with new product for different niche markets Analysis of different alternatives like outsourcing inhouse purchase amp tie-up should be evaluated

BIBLIOGRAPHY

WWWGOOGLECOM WWWBAJAJAUTOCOM WWWDOCSTOCCOM WWWMONEYCONTROLCOM

29 | 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 amp expenditure costs as a percentage of sales

30 | P a g e

From the above graph it can clearly make out that Bajaj Auto relies more on its salesamp 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 Indialsquos largest exporter of two and three wheelers During 2008-09 the company exported 772519 two and three-wheelers recording a growth of 25 percent over 2007-08Exports 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

31 | 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 7000 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 ie 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

32 | 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 ndash Bajaj Auto has a consolidated base of 180 vendors supplying components to all Bajaj Autolsquos 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 amp 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 amp 70 of Bajaj Autolsquos 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 amp Spain

Dealers- Bajaj Auto has a network of 422 dealers and over 1300 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 amp rural areas During the financial year 2007-08 the company extended BASS (Bajaj Auto Service Standard) to standardize the workshops of 250 dealers amp 50 authorized service centers These programmers included a uniform

33 | P a g e

external amp internal look This initiative has improved work hygiene promoted consistent amp better service quality amp 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

34 | 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 Rs23862 cr in 2009 and at same time current liabilities increased by Rs2009 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 Rs16414 cr only and current liabilities have increased by Rs58312 cr The company is able to meet its short term obligations

35 | 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 Rs236 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 Rs2821 cr in 2009 tear

(iv) Inventory Turnover Ratio

Analysis- The inventory turnover ratio in the year 2008 was 2819 which indicate that 2819 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 2747 This was due to the fact that the Bajaj Auto Ltd in 2009 invested more then 072 times the inventory in 2008 (v) Fixed assets Turnover

36 | 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 179 and now it has been slightly decreased to 151 This change was brought about by decreased in total sales by Rs12698 cr where as the fixed assets increased only by Rs84584 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 200000 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 40000 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

37 | P a g e

The Bajaj Autolsquos 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 Autolsquos RampD 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 Rs1 03686 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 amp towns

38 | 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 150 lakh and Rs 2 lakh in India Till the mid of this year four models of Kawasaki Ninja 250lsquo sports roadster ER-6nlsquo super sports bike bdquoNinja ZX6R‟ Ninjalsquo model is the most popular model in US Europe and Japan Bollywood star John Abrahamlsquo 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 10500 rpm Its 6-speed transmission makes it a versatile performer Kawasaki is Bajajlsquos 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

39 | 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 worldlsquos 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 itlsquos 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

40 | P a g e

41 | P a g e

42 | P a g e

Recommendations

The impression of Bajaj in the minds of the public is that it is a moped amp athree-wheeler company amp it is a very orthodox amp unhappening image in the minds of the youth It should use a powerful brand ambassador amp individual whom the youth can relate with It should aggressively market itself as a motorcycle company amp move

from its traditional mindset (Rahul Bajaj had once stated that he had only one department in his company the dispatch department amp that he did not require a marketing department)

Bajaj should aggressively push sales of higher margin products amp launch new products in niche segments

Bajaj should also try amp push for tie-ups amp Joint Ventures in foreign market amp try amp increase its export base (Eg Tata Motors tie-up with Rover for marketing of India amp Joint Venture with Senegal government for manufacturing trucks amp commercial vehicles)

Bajaj should look for possible mergers amp acquisitions (Eg Maharashtra Scooters) amp try amp improve its distribution network amp provide it with products in niche segments amp help increase production capacity amp provide economies of scale

Increase its dealer network to tap rural growing markets by going in for tie-ups amp offering better margins to dealers

The key to Bajaj real success lies in Research amp development How it is able to use value analysis amp value engineering by adding new features to its existing product line amp how it is able to come out with new product for different niche markets Analysis of different alternatives like outsourcing inhouse purchase amp tie-up should be evaluated

BIBLIOGRAPHY

WWWGOOGLECOM WWWBAJAJAUTOCOM WWWDOCSTOCCOM WWWMONEYCONTROLCOM

30 | P a g e

From the above graph it can clearly make out that Bajaj Auto relies more on its salesamp 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 Indialsquos largest exporter of two and three wheelers During 2008-09 the company exported 772519 two and three-wheelers recording a growth of 25 percent over 2007-08Exports 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

31 | 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 7000 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 ie 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

32 | 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 ndash Bajaj Auto has a consolidated base of 180 vendors supplying components to all Bajaj Autolsquos 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 amp 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 amp 70 of Bajaj Autolsquos 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 amp Spain

Dealers- Bajaj Auto has a network of 422 dealers and over 1300 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 amp rural areas During the financial year 2007-08 the company extended BASS (Bajaj Auto Service Standard) to standardize the workshops of 250 dealers amp 50 authorized service centers These programmers included a uniform

33 | P a g e

external amp internal look This initiative has improved work hygiene promoted consistent amp better service quality amp 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

34 | 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 Rs23862 cr in 2009 and at same time current liabilities increased by Rs2009 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 Rs16414 cr only and current liabilities have increased by Rs58312 cr The company is able to meet its short term obligations

35 | 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 Rs236 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 Rs2821 cr in 2009 tear

(iv) Inventory Turnover Ratio

Analysis- The inventory turnover ratio in the year 2008 was 2819 which indicate that 2819 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 2747 This was due to the fact that the Bajaj Auto Ltd in 2009 invested more then 072 times the inventory in 2008 (v) Fixed assets Turnover

36 | 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 179 and now it has been slightly decreased to 151 This change was brought about by decreased in total sales by Rs12698 cr where as the fixed assets increased only by Rs84584 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 200000 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 40000 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

37 | P a g e

The Bajaj Autolsquos 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 Autolsquos RampD 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 Rs1 03686 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 amp towns

38 | 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 150 lakh and Rs 2 lakh in India Till the mid of this year four models of Kawasaki Ninja 250lsquo sports roadster ER-6nlsquo super sports bike bdquoNinja ZX6R‟ Ninjalsquo model is the most popular model in US Europe and Japan Bollywood star John Abrahamlsquo 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 10500 rpm Its 6-speed transmission makes it a versatile performer Kawasaki is Bajajlsquos 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

39 | 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 worldlsquos 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 itlsquos 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

40 | P a g e

41 | P a g e

42 | P a g e

Recommendations

The impression of Bajaj in the minds of the public is that it is a moped amp athree-wheeler company amp it is a very orthodox amp unhappening image in the minds of the youth It should use a powerful brand ambassador amp individual whom the youth can relate with It should aggressively market itself as a motorcycle company amp move

from its traditional mindset (Rahul Bajaj had once stated that he had only one department in his company the dispatch department amp that he did not require a marketing department)

Bajaj should aggressively push sales of higher margin products amp launch new products in niche segments

Bajaj should also try amp push for tie-ups amp Joint Ventures in foreign market amp try amp increase its export base (Eg Tata Motors tie-up with Rover for marketing of India amp Joint Venture with Senegal government for manufacturing trucks amp commercial vehicles)

Bajaj should look for possible mergers amp acquisitions (Eg Maharashtra Scooters) amp try amp improve its distribution network amp provide it with products in niche segments amp help increase production capacity amp provide economies of scale

Increase its dealer network to tap rural growing markets by going in for tie-ups amp offering better margins to dealers

The key to Bajaj real success lies in Research amp development How it is able to use value analysis amp value engineering by adding new features to its existing product line amp how it is able to come out with new product for different niche markets Analysis of different alternatives like outsourcing inhouse purchase amp tie-up should be evaluated

BIBLIOGRAPHY

WWWGOOGLECOM WWWBAJAJAUTOCOM WWWDOCSTOCCOM WWWMONEYCONTROLCOM

31 | 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 7000 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 ie 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

32 | 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 ndash Bajaj Auto has a consolidated base of 180 vendors supplying components to all Bajaj Autolsquos 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 amp 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 amp 70 of Bajaj Autolsquos 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 amp Spain

Dealers- Bajaj Auto has a network of 422 dealers and over 1300 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 amp rural areas During the financial year 2007-08 the company extended BASS (Bajaj Auto Service Standard) to standardize the workshops of 250 dealers amp 50 authorized service centers These programmers included a uniform

33 | P a g e

external amp internal look This initiative has improved work hygiene promoted consistent amp better service quality amp 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

34 | 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 Rs23862 cr in 2009 and at same time current liabilities increased by Rs2009 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 Rs16414 cr only and current liabilities have increased by Rs58312 cr The company is able to meet its short term obligations

35 | 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 Rs236 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 Rs2821 cr in 2009 tear

(iv) Inventory Turnover Ratio

Analysis- The inventory turnover ratio in the year 2008 was 2819 which indicate that 2819 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 2747 This was due to the fact that the Bajaj Auto Ltd in 2009 invested more then 072 times the inventory in 2008 (v) Fixed assets Turnover

36 | 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 179 and now it has been slightly decreased to 151 This change was brought about by decreased in total sales by Rs12698 cr where as the fixed assets increased only by Rs84584 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 200000 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 40000 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

37 | P a g e

The Bajaj Autolsquos 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 Autolsquos RampD 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 Rs1 03686 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 amp towns

38 | 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 150 lakh and Rs 2 lakh in India Till the mid of this year four models of Kawasaki Ninja 250lsquo sports roadster ER-6nlsquo super sports bike bdquoNinja ZX6R‟ Ninjalsquo model is the most popular model in US Europe and Japan Bollywood star John Abrahamlsquo 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 10500 rpm Its 6-speed transmission makes it a versatile performer Kawasaki is Bajajlsquos 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

39 | 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 worldlsquos 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 itlsquos 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

40 | P a g e

41 | P a g e

42 | P a g e

Recommendations

The impression of Bajaj in the minds of the public is that it is a moped amp athree-wheeler company amp it is a very orthodox amp unhappening image in the minds of the youth It should use a powerful brand ambassador amp individual whom the youth can relate with It should aggressively market itself as a motorcycle company amp move

from its traditional mindset (Rahul Bajaj had once stated that he had only one department in his company the dispatch department amp that he did not require a marketing department)

Bajaj should aggressively push sales of higher margin products amp launch new products in niche segments

Bajaj should also try amp push for tie-ups amp Joint Ventures in foreign market amp try amp increase its export base (Eg Tata Motors tie-up with Rover for marketing of India amp Joint Venture with Senegal government for manufacturing trucks amp commercial vehicles)

Bajaj should look for possible mergers amp acquisitions (Eg Maharashtra Scooters) amp try amp improve its distribution network amp provide it with products in niche segments amp help increase production capacity amp provide economies of scale

Increase its dealer network to tap rural growing markets by going in for tie-ups amp offering better margins to dealers

The key to Bajaj real success lies in Research amp development How it is able to use value analysis amp value engineering by adding new features to its existing product line amp how it is able to come out with new product for different niche markets Analysis of different alternatives like outsourcing inhouse purchase amp tie-up should be evaluated

BIBLIOGRAPHY

WWWGOOGLECOM WWWBAJAJAUTOCOM WWWDOCSTOCCOM WWWMONEYCONTROLCOM

32 | 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 ndash Bajaj Auto has a consolidated base of 180 vendors supplying components to all Bajaj Autolsquos 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 amp 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 amp 70 of Bajaj Autolsquos 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 amp Spain

Dealers- Bajaj Auto has a network of 422 dealers and over 1300 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 amp rural areas During the financial year 2007-08 the company extended BASS (Bajaj Auto Service Standard) to standardize the workshops of 250 dealers amp 50 authorized service centers These programmers included a uniform

33 | P a g e

external amp internal look This initiative has improved work hygiene promoted consistent amp better service quality amp 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

34 | 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 Rs23862 cr in 2009 and at same time current liabilities increased by Rs2009 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 Rs16414 cr only and current liabilities have increased by Rs58312 cr The company is able to meet its short term obligations

35 | 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 Rs236 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 Rs2821 cr in 2009 tear

(iv) Inventory Turnover Ratio

Analysis- The inventory turnover ratio in the year 2008 was 2819 which indicate that 2819 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 2747 This was due to the fact that the Bajaj Auto Ltd in 2009 invested more then 072 times the inventory in 2008 (v) Fixed assets Turnover

36 | 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 179 and now it has been slightly decreased to 151 This change was brought about by decreased in total sales by Rs12698 cr where as the fixed assets increased only by Rs84584 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 200000 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 40000 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

37 | P a g e

The Bajaj Autolsquos 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 Autolsquos RampD 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 Rs1 03686 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 amp towns

38 | 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 150 lakh and Rs 2 lakh in India Till the mid of this year four models of Kawasaki Ninja 250lsquo sports roadster ER-6nlsquo super sports bike bdquoNinja ZX6R‟ Ninjalsquo model is the most popular model in US Europe and Japan Bollywood star John Abrahamlsquo 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 10500 rpm Its 6-speed transmission makes it a versatile performer Kawasaki is Bajajlsquos 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

39 | 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 worldlsquos 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 itlsquos 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

40 | P a g e

41 | P a g e

42 | P a g e

Recommendations

The impression of Bajaj in the minds of the public is that it is a moped amp athree-wheeler company amp it is a very orthodox amp unhappening image in the minds of the youth It should use a powerful brand ambassador amp individual whom the youth can relate with It should aggressively market itself as a motorcycle company amp move

from its traditional mindset (Rahul Bajaj had once stated that he had only one department in his company the dispatch department amp that he did not require a marketing department)

Bajaj should aggressively push sales of higher margin products amp launch new products in niche segments

Bajaj should also try amp push for tie-ups amp Joint Ventures in foreign market amp try amp increase its export base (Eg Tata Motors tie-up with Rover for marketing of India amp Joint Venture with Senegal government for manufacturing trucks amp commercial vehicles)

Bajaj should look for possible mergers amp acquisitions (Eg Maharashtra Scooters) amp try amp improve its distribution network amp provide it with products in niche segments amp help increase production capacity amp provide economies of scale

Increase its dealer network to tap rural growing markets by going in for tie-ups amp offering better margins to dealers

The key to Bajaj real success lies in Research amp development How it is able to use value analysis amp value engineering by adding new features to its existing product line amp how it is able to come out with new product for different niche markets Analysis of different alternatives like outsourcing inhouse purchase amp tie-up should be evaluated

BIBLIOGRAPHY

WWWGOOGLECOM WWWBAJAJAUTOCOM WWWDOCSTOCCOM WWWMONEYCONTROLCOM

33 | P a g e

external amp internal look This initiative has improved work hygiene promoted consistent amp better service quality amp 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

34 | 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 Rs23862 cr in 2009 and at same time current liabilities increased by Rs2009 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 Rs16414 cr only and current liabilities have increased by Rs58312 cr The company is able to meet its short term obligations

35 | 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 Rs236 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 Rs2821 cr in 2009 tear

(iv) Inventory Turnover Ratio

Analysis- The inventory turnover ratio in the year 2008 was 2819 which indicate that 2819 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 2747 This was due to the fact that the Bajaj Auto Ltd in 2009 invested more then 072 times the inventory in 2008 (v) Fixed assets Turnover

36 | 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 179 and now it has been slightly decreased to 151 This change was brought about by decreased in total sales by Rs12698 cr where as the fixed assets increased only by Rs84584 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 200000 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 40000 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

37 | P a g e

The Bajaj Autolsquos 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 Autolsquos RampD 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 Rs1 03686 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 amp towns

38 | 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 150 lakh and Rs 2 lakh in India Till the mid of this year four models of Kawasaki Ninja 250lsquo sports roadster ER-6nlsquo super sports bike bdquoNinja ZX6R‟ Ninjalsquo model is the most popular model in US Europe and Japan Bollywood star John Abrahamlsquo 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 10500 rpm Its 6-speed transmission makes it a versatile performer Kawasaki is Bajajlsquos 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

39 | 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 worldlsquos 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 itlsquos 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

40 | P a g e

41 | P a g e

42 | P a g e

Recommendations

The impression of Bajaj in the minds of the public is that it is a moped amp athree-wheeler company amp it is a very orthodox amp unhappening image in the minds of the youth It should use a powerful brand ambassador amp individual whom the youth can relate with It should aggressively market itself as a motorcycle company amp move

from its traditional mindset (Rahul Bajaj had once stated that he had only one department in his company the dispatch department amp that he did not require a marketing department)

Bajaj should aggressively push sales of higher margin products amp launch new products in niche segments

Bajaj should also try amp push for tie-ups amp Joint Ventures in foreign market amp try amp increase its export base (Eg Tata Motors tie-up with Rover for marketing of India amp Joint Venture with Senegal government for manufacturing trucks amp commercial vehicles)

Bajaj should look for possible mergers amp acquisitions (Eg Maharashtra Scooters) amp try amp improve its distribution network amp provide it with products in niche segments amp help increase production capacity amp provide economies of scale

Increase its dealer network to tap rural growing markets by going in for tie-ups amp offering better margins to dealers

The key to Bajaj real success lies in Research amp development How it is able to use value analysis amp value engineering by adding new features to its existing product line amp how it is able to come out with new product for different niche markets Analysis of different alternatives like outsourcing inhouse purchase amp tie-up should be evaluated

BIBLIOGRAPHY

WWWGOOGLECOM WWWBAJAJAUTOCOM WWWDOCSTOCCOM WWWMONEYCONTROLCOM

34 | 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 Rs23862 cr in 2009 and at same time current liabilities increased by Rs2009 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 Rs16414 cr only and current liabilities have increased by Rs58312 cr The company is able to meet its short term obligations

35 | 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 Rs236 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 Rs2821 cr in 2009 tear

(iv) Inventory Turnover Ratio

Analysis- The inventory turnover ratio in the year 2008 was 2819 which indicate that 2819 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 2747 This was due to the fact that the Bajaj Auto Ltd in 2009 invested more then 072 times the inventory in 2008 (v) Fixed assets Turnover

36 | 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 179 and now it has been slightly decreased to 151 This change was brought about by decreased in total sales by Rs12698 cr where as the fixed assets increased only by Rs84584 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 200000 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 40000 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

37 | P a g e

The Bajaj Autolsquos 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 Autolsquos RampD 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 Rs1 03686 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 amp towns

38 | 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 150 lakh and Rs 2 lakh in India Till the mid of this year four models of Kawasaki Ninja 250lsquo sports roadster ER-6nlsquo super sports bike bdquoNinja ZX6R‟ Ninjalsquo model is the most popular model in US Europe and Japan Bollywood star John Abrahamlsquo 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 10500 rpm Its 6-speed transmission makes it a versatile performer Kawasaki is Bajajlsquos 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

39 | 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 worldlsquos 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 itlsquos 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

40 | P a g e

41 | P a g e

42 | P a g e

Recommendations

The impression of Bajaj in the minds of the public is that it is a moped amp athree-wheeler company amp it is a very orthodox amp unhappening image in the minds of the youth It should use a powerful brand ambassador amp individual whom the youth can relate with It should aggressively market itself as a motorcycle company amp move

from its traditional mindset (Rahul Bajaj had once stated that he had only one department in his company the dispatch department amp that he did not require a marketing department)

Bajaj should aggressively push sales of higher margin products amp launch new products in niche segments

Bajaj should also try amp push for tie-ups amp Joint Ventures in foreign market amp try amp increase its export base (Eg Tata Motors tie-up with Rover for marketing of India amp Joint Venture with Senegal government for manufacturing trucks amp commercial vehicles)

Bajaj should look for possible mergers amp acquisitions (Eg Maharashtra Scooters) amp try amp improve its distribution network amp provide it with products in niche segments amp help increase production capacity amp provide economies of scale

Increase its dealer network to tap rural growing markets by going in for tie-ups amp offering better margins to dealers

The key to Bajaj real success lies in Research amp development How it is able to use value analysis amp value engineering by adding new features to its existing product line amp how it is able to come out with new product for different niche markets Analysis of different alternatives like outsourcing inhouse purchase amp tie-up should be evaluated

BIBLIOGRAPHY

WWWGOOGLECOM WWWBAJAJAUTOCOM WWWDOCSTOCCOM WWWMONEYCONTROLCOM

35 | 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 Rs236 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 Rs2821 cr in 2009 tear

(iv) Inventory Turnover Ratio

Analysis- The inventory turnover ratio in the year 2008 was 2819 which indicate that 2819 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 2747 This was due to the fact that the Bajaj Auto Ltd in 2009 invested more then 072 times the inventory in 2008 (v) Fixed assets Turnover

36 | 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 179 and now it has been slightly decreased to 151 This change was brought about by decreased in total sales by Rs12698 cr where as the fixed assets increased only by Rs84584 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 200000 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 40000 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

37 | P a g e

The Bajaj Autolsquos 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 Autolsquos RampD 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 Rs1 03686 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 amp towns

38 | 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 150 lakh and Rs 2 lakh in India Till the mid of this year four models of Kawasaki Ninja 250lsquo sports roadster ER-6nlsquo super sports bike bdquoNinja ZX6R‟ Ninjalsquo model is the most popular model in US Europe and Japan Bollywood star John Abrahamlsquo 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 10500 rpm Its 6-speed transmission makes it a versatile performer Kawasaki is Bajajlsquos 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

39 | 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 worldlsquos 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 itlsquos 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

40 | P a g e

41 | P a g e

42 | P a g e

Recommendations

The impression of Bajaj in the minds of the public is that it is a moped amp athree-wheeler company amp it is a very orthodox amp unhappening image in the minds of the youth It should use a powerful brand ambassador amp individual whom the youth can relate with It should aggressively market itself as a motorcycle company amp move

from its traditional mindset (Rahul Bajaj had once stated that he had only one department in his company the dispatch department amp that he did not require a marketing department)

Bajaj should aggressively push sales of higher margin products amp launch new products in niche segments

Bajaj should also try amp push for tie-ups amp Joint Ventures in foreign market amp try amp increase its export base (Eg Tata Motors tie-up with Rover for marketing of India amp Joint Venture with Senegal government for manufacturing trucks amp commercial vehicles)

Bajaj should look for possible mergers amp acquisitions (Eg Maharashtra Scooters) amp try amp improve its distribution network amp provide it with products in niche segments amp help increase production capacity amp provide economies of scale

Increase its dealer network to tap rural growing markets by going in for tie-ups amp offering better margins to dealers

The key to Bajaj real success lies in Research amp development How it is able to use value analysis amp value engineering by adding new features to its existing product line amp how it is able to come out with new product for different niche markets Analysis of different alternatives like outsourcing inhouse purchase amp tie-up should be evaluated

BIBLIOGRAPHY

WWWGOOGLECOM WWWBAJAJAUTOCOM WWWDOCSTOCCOM WWWMONEYCONTROLCOM

36 | 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 179 and now it has been slightly decreased to 151 This change was brought about by decreased in total sales by Rs12698 cr where as the fixed assets increased only by Rs84584 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 200000 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 40000 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

37 | P a g e

The Bajaj Autolsquos 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 Autolsquos RampD 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 Rs1 03686 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 amp towns

38 | 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 150 lakh and Rs 2 lakh in India Till the mid of this year four models of Kawasaki Ninja 250lsquo sports roadster ER-6nlsquo super sports bike bdquoNinja ZX6R‟ Ninjalsquo model is the most popular model in US Europe and Japan Bollywood star John Abrahamlsquo 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 10500 rpm Its 6-speed transmission makes it a versatile performer Kawasaki is Bajajlsquos 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

39 | 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 worldlsquos 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 itlsquos 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

40 | P a g e

41 | P a g e

42 | P a g e

Recommendations

The impression of Bajaj in the minds of the public is that it is a moped amp athree-wheeler company amp it is a very orthodox amp unhappening image in the minds of the youth It should use a powerful brand ambassador amp individual whom the youth can relate with It should aggressively market itself as a motorcycle company amp move

from its traditional mindset (Rahul Bajaj had once stated that he had only one department in his company the dispatch department amp that he did not require a marketing department)

Bajaj should aggressively push sales of higher margin products amp launch new products in niche segments

Bajaj should also try amp push for tie-ups amp Joint Ventures in foreign market amp try amp increase its export base (Eg Tata Motors tie-up with Rover for marketing of India amp Joint Venture with Senegal government for manufacturing trucks amp commercial vehicles)

Bajaj should look for possible mergers amp acquisitions (Eg Maharashtra Scooters) amp try amp improve its distribution network amp provide it with products in niche segments amp help increase production capacity amp provide economies of scale

Increase its dealer network to tap rural growing markets by going in for tie-ups amp offering better margins to dealers

The key to Bajaj real success lies in Research amp development How it is able to use value analysis amp value engineering by adding new features to its existing product line amp how it is able to come out with new product for different niche markets Analysis of different alternatives like outsourcing inhouse purchase amp tie-up should be evaluated

BIBLIOGRAPHY

WWWGOOGLECOM WWWBAJAJAUTOCOM WWWDOCSTOCCOM WWWMONEYCONTROLCOM

37 | P a g e

The Bajaj Autolsquos 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 Autolsquos RampD 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 Rs1 03686 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 amp towns

38 | 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 150 lakh and Rs 2 lakh in India Till the mid of this year four models of Kawasaki Ninja 250lsquo sports roadster ER-6nlsquo super sports bike bdquoNinja ZX6R‟ Ninjalsquo model is the most popular model in US Europe and Japan Bollywood star John Abrahamlsquo 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 10500 rpm Its 6-speed transmission makes it a versatile performer Kawasaki is Bajajlsquos 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

39 | 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 worldlsquos 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 itlsquos 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

40 | P a g e

41 | P a g e

42 | P a g e

Recommendations

The impression of Bajaj in the minds of the public is that it is a moped amp athree-wheeler company amp it is a very orthodox amp unhappening image in the minds of the youth It should use a powerful brand ambassador amp individual whom the youth can relate with It should aggressively market itself as a motorcycle company amp move

from its traditional mindset (Rahul Bajaj had once stated that he had only one department in his company the dispatch department amp that he did not require a marketing department)

Bajaj should aggressively push sales of higher margin products amp launch new products in niche segments

Bajaj should also try amp push for tie-ups amp Joint Ventures in foreign market amp try amp increase its export base (Eg Tata Motors tie-up with Rover for marketing of India amp Joint Venture with Senegal government for manufacturing trucks amp commercial vehicles)

Bajaj should look for possible mergers amp acquisitions (Eg Maharashtra Scooters) amp try amp improve its distribution network amp provide it with products in niche segments amp help increase production capacity amp provide economies of scale

Increase its dealer network to tap rural growing markets by going in for tie-ups amp offering better margins to dealers

The key to Bajaj real success lies in Research amp development How it is able to use value analysis amp value engineering by adding new features to its existing product line amp how it is able to come out with new product for different niche markets Analysis of different alternatives like outsourcing inhouse purchase amp tie-up should be evaluated

BIBLIOGRAPHY

WWWGOOGLECOM WWWBAJAJAUTOCOM WWWDOCSTOCCOM WWWMONEYCONTROLCOM

38 | 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 150 lakh and Rs 2 lakh in India Till the mid of this year four models of Kawasaki Ninja 250lsquo sports roadster ER-6nlsquo super sports bike bdquoNinja ZX6R‟ Ninjalsquo model is the most popular model in US Europe and Japan Bollywood star John Abrahamlsquo 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 10500 rpm Its 6-speed transmission makes it a versatile performer Kawasaki is Bajajlsquos 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

39 | 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 worldlsquos 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 itlsquos 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

40 | P a g e

41 | P a g e

42 | P a g e

Recommendations

The impression of Bajaj in the minds of the public is that it is a moped amp athree-wheeler company amp it is a very orthodox amp unhappening image in the minds of the youth It should use a powerful brand ambassador amp individual whom the youth can relate with It should aggressively market itself as a motorcycle company amp move

from its traditional mindset (Rahul Bajaj had once stated that he had only one department in his company the dispatch department amp that he did not require a marketing department)

Bajaj should aggressively push sales of higher margin products amp launch new products in niche segments

Bajaj should also try amp push for tie-ups amp Joint Ventures in foreign market amp try amp increase its export base (Eg Tata Motors tie-up with Rover for marketing of India amp Joint Venture with Senegal government for manufacturing trucks amp commercial vehicles)

Bajaj should look for possible mergers amp acquisitions (Eg Maharashtra Scooters) amp try amp improve its distribution network amp provide it with products in niche segments amp help increase production capacity amp provide economies of scale

Increase its dealer network to tap rural growing markets by going in for tie-ups amp offering better margins to dealers

The key to Bajaj real success lies in Research amp development How it is able to use value analysis amp value engineering by adding new features to its existing product line amp how it is able to come out with new product for different niche markets Analysis of different alternatives like outsourcing inhouse purchase amp tie-up should be evaluated

BIBLIOGRAPHY

WWWGOOGLECOM WWWBAJAJAUTOCOM WWWDOCSTOCCOM WWWMONEYCONTROLCOM

39 | 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 worldlsquos 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 itlsquos 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

40 | P a g e

41 | P a g e

42 | P a g e

Recommendations

The impression of Bajaj in the minds of the public is that it is a moped amp athree-wheeler company amp it is a very orthodox amp unhappening image in the minds of the youth It should use a powerful brand ambassador amp individual whom the youth can relate with It should aggressively market itself as a motorcycle company amp move

from its traditional mindset (Rahul Bajaj had once stated that he had only one department in his company the dispatch department amp that he did not require a marketing department)

Bajaj should aggressively push sales of higher margin products amp launch new products in niche segments

Bajaj should also try amp push for tie-ups amp Joint Ventures in foreign market amp try amp increase its export base (Eg Tata Motors tie-up with Rover for marketing of India amp Joint Venture with Senegal government for manufacturing trucks amp commercial vehicles)

Bajaj should look for possible mergers amp acquisitions (Eg Maharashtra Scooters) amp try amp improve its distribution network amp provide it with products in niche segments amp help increase production capacity amp provide economies of scale

Increase its dealer network to tap rural growing markets by going in for tie-ups amp offering better margins to dealers

The key to Bajaj real success lies in Research amp development How it is able to use value analysis amp value engineering by adding new features to its existing product line amp how it is able to come out with new product for different niche markets Analysis of different alternatives like outsourcing inhouse purchase amp tie-up should be evaluated

BIBLIOGRAPHY

WWWGOOGLECOM WWWBAJAJAUTOCOM WWWDOCSTOCCOM WWWMONEYCONTROLCOM

40 | P a g e

41 | P a g e

42 | P a g e

Recommendations

The impression of Bajaj in the minds of the public is that it is a moped amp athree-wheeler company amp it is a very orthodox amp unhappening image in the minds of the youth It should use a powerful brand ambassador amp individual whom the youth can relate with It should aggressively market itself as a motorcycle company amp move

from its traditional mindset (Rahul Bajaj had once stated that he had only one department in his company the dispatch department amp that he did not require a marketing department)

Bajaj should aggressively push sales of higher margin products amp launch new products in niche segments

Bajaj should also try amp push for tie-ups amp Joint Ventures in foreign market amp try amp increase its export base (Eg Tata Motors tie-up with Rover for marketing of India amp Joint Venture with Senegal government for manufacturing trucks amp commercial vehicles)

Bajaj should look for possible mergers amp acquisitions (Eg Maharashtra Scooters) amp try amp improve its distribution network amp provide it with products in niche segments amp help increase production capacity amp provide economies of scale

Increase its dealer network to tap rural growing markets by going in for tie-ups amp offering better margins to dealers

The key to Bajaj real success lies in Research amp development How it is able to use value analysis amp value engineering by adding new features to its existing product line amp how it is able to come out with new product for different niche markets Analysis of different alternatives like outsourcing inhouse purchase amp tie-up should be evaluated

BIBLIOGRAPHY

WWWGOOGLECOM WWWBAJAJAUTOCOM WWWDOCSTOCCOM WWWMONEYCONTROLCOM

41 | P a g e

42 | P a g e

Recommendations

The impression of Bajaj in the minds of the public is that it is a moped amp athree-wheeler company amp it is a very orthodox amp unhappening image in the minds of the youth It should use a powerful brand ambassador amp individual whom the youth can relate with It should aggressively market itself as a motorcycle company amp move

from its traditional mindset (Rahul Bajaj had once stated that he had only one department in his company the dispatch department amp that he did not require a marketing department)

Bajaj should aggressively push sales of higher margin products amp launch new products in niche segments

Bajaj should also try amp push for tie-ups amp Joint Ventures in foreign market amp try amp increase its export base (Eg Tata Motors tie-up with Rover for marketing of India amp Joint Venture with Senegal government for manufacturing trucks amp commercial vehicles)

Bajaj should look for possible mergers amp acquisitions (Eg Maharashtra Scooters) amp try amp improve its distribution network amp provide it with products in niche segments amp help increase production capacity amp provide economies of scale

Increase its dealer network to tap rural growing markets by going in for tie-ups amp offering better margins to dealers

The key to Bajaj real success lies in Research amp development How it is able to use value analysis amp value engineering by adding new features to its existing product line amp how it is able to come out with new product for different niche markets Analysis of different alternatives like outsourcing inhouse purchase amp tie-up should be evaluated

BIBLIOGRAPHY

WWWGOOGLECOM WWWBAJAJAUTOCOM WWWDOCSTOCCOM WWWMONEYCONTROLCOM

42 | P a g e

Recommendations

The impression of Bajaj in the minds of the public is that it is a moped amp athree-wheeler company amp it is a very orthodox amp unhappening image in the minds of the youth It should use a powerful brand ambassador amp individual whom the youth can relate with It should aggressively market itself as a motorcycle company amp move

from its traditional mindset (Rahul Bajaj had once stated that he had only one department in his company the dispatch department amp that he did not require a marketing department)

Bajaj should aggressively push sales of higher margin products amp launch new products in niche segments

Bajaj should also try amp push for tie-ups amp Joint Ventures in foreign market amp try amp increase its export base (Eg Tata Motors tie-up with Rover for marketing of India amp Joint Venture with Senegal government for manufacturing trucks amp commercial vehicles)

Bajaj should look for possible mergers amp acquisitions (Eg Maharashtra Scooters) amp try amp improve its distribution network amp provide it with products in niche segments amp help increase production capacity amp provide economies of scale

Increase its dealer network to tap rural growing markets by going in for tie-ups amp offering better margins to dealers

The key to Bajaj real success lies in Research amp development How it is able to use value analysis amp value engineering by adding new features to its existing product line amp how it is able to come out with new product for different niche markets Analysis of different alternatives like outsourcing inhouse purchase amp tie-up should be evaluated

BIBLIOGRAPHY

WWWGOOGLECOM WWWBAJAJAUTOCOM WWWDOCSTOCCOM WWWMONEYCONTROLCOM