Upload
vishnu0751
View
122
Download
5
Tags:
Embed Size (px)
DESCRIPTION
Bjaj Auto Finance
Citation preview
INDEX
Chapter NAME PAGE NO
1 Company history
Origins
Completion in 1990
End of licence raj
New toola in 1990
3
4
4
5
6
2 Product profile and financial
performance
Motorcycles
Three wheelers
Overall performance
Financial analysis
8
9
10
12
14
3
Strategic analysis
Mission vision and values
Logo
Swot
Porter five forces model
Managerial style
18
19
20
21
23
24
25
26
1
Business streategy
Other strategic issue
4 Supply chain analysis
Value chain
Subsidiary
Spare part division
27
28
30
31
5 CORPORATE SOCIAL
RESPONSIBILITY
32
6 THE FUTURE AND
RECOMMENDATIONS
36
7 BIBLIOGRAPHY 41
CHAPTER ONE
COMPANY HISTORY
ORIGINS
COMPETITION IN 1980
END OF LICENSE RAJ
NEW TOOLS OF 1990’S
PRODUCT REVAMP IN 2000’S
2
3
BAJAJ FINANCE HISRORY
Bajaj Auto Finance Ltd. (BAFL) was incorporated as a Private Limited
Company on 25th March, 1987. It became a deemed Public Limited
Company by virtue of Section 43(A) of the Companies Act, 1956 w.e.f.,
20th October, 1987.
Initially BAFL was promoted by erstwhile Bajaj Auto Limited and Bajaj
Auto Holdings Limited. Bajaj Auto Limited is the largest manufacturer of
two and three wheelers in the country and Bajaj Auto Holdings Limited is an
investment company and is a wholly owned subsidiary company of Bajaj
Holdings & Investment Limited. As per the Scheme of Demerger of
erstwhile Bajaj Auto Limited, the shareholding of Bajaj Auto Limited in
BAFL has been vested with Bajaj Finserv Limited.
BAFL is an NBFC registered with RBI and authorised to accept public
deposits. Consequent to the re-classification of NBFCs by RBI, BAFL has
been re-classified as an “Asset Finance Company (Deposit Taking)”.
BAFL is engaged primarily in the business of financing of two wheelers,
consumer durables, personal computers, personal loans etc.
BAFL made a Public Issue of Equity Shares in 1994 and its Equity Shares
are listed on Bombay Stock Exchange Limited and National Stock Exchange
of India Limited.
4
BAFL made a Preferential Issue of Equity Shares to the Promoters and a few
foreign corporate bodies and also warrants to the Promoters in 2006.
BAFL made a Rights Issue of Equity Shares and Non-Convertible
Debentures with detachable warrants to the existing shareholders in 2006-
07.
The present Paid-up Capital of the Company is Rs.365,960,760/-
BAFL has its headquarters at Pune and has more than 50 branches spread
across the country
ABOUT BAJAJ FINANCE
Bajaj Auto Finance Limited was incorporated on March 25, 1987 as Bajaj
Auto Finance Private Limited got converted into a public limited Company
w.e.f. September 24, 1988
The company is registered with the RBI as a Non Banking Finance
Company (NBFC) with effect from March 5, 1998
The Company primarily deals in the financing consumer durables, personal
and small business loans, loan against property, loan against shares
The Company achieved its highest ever disbursals of Rs.26,313 million
under its various financing schemes, during the year 2006-2007
Network of over 6,000 Bajaj Auto and consumer durable dealerships and
over 50 branch offices throughout the country to handle all the requirements
of our customers
5
Trust and loyalty of over 40 lakh satisfied customers across the country
Highest Credit Rating of FAAA/Stable from CRISIL for Fixed Deposits
P1+ rating from CRISIL for Short-Term Debt Programme
AA+/Stable from CRISIL and LAA+ from ICRA for Long-Term Debt
Programme
CERDIT RATINGS:
Highest Credit Rating of FAAA/Stable from CRISIL for Fixed Deposits
P1+ rating from CRISIL for Short-Term Debt Programme
6
AA+/Stable from CRISIL and LAA+ from ICRA for Long-Term Debt
Programme
MANAGEMENT TEAM:
RAJEEV JAIN: CEO
Rajeev JAIN is a Management graduate by profession and has 15 years of
experience in consumer lending industry. He comes with an experience of
managing diverse consumer lending business viz. auto loans, durable loans,
personal loans and credit cards. In his previous assignments he has worked for
over four years with GE and eight years with American Express. He Joins Bajaj
Auto Finance Ltd from AIG, where He was Deputy CEO of its consumer finance
business.
DEEPAK GUPTA (CHIEF HR)
Deepak has an overall experience of 19 years in Financial Services, ITES and
Manufacturing industry. Deepak has strength in areas like Strategy & Structure,
7
People Policies, Employee relations, Talent management, Employee engagement,
Performance measurement practices, Compensation, Rewards and Training &
Development.
Deepak joins us from SREI Infrastructure finance, where he was Group Sr. Vice
President and Head of Human Resources. He was responsible for organization
development, and HR effectiveness across the employee eco cycle i.e. spanning
across Talent attraction, Performance Management, Compensation, Rewards &
variable pay, Policies, Employee services, Leadership development and
Productivity.
Prior to that, he worked with Company like CRISIL, ENAM Financial, CEAT
Financial Services and Reliance Industries Limited.
Deepak will be responsible for driving People strategy for the organization and in
making Bajaj Finance an employer of Choice. He will also be responsible for the
Administration function in the company
DEEPAK REDDY: HEAD OF PERSONAL AND SMALL BUSINESS LOANS
8
Deepak is a management graduate with over 14 years of experience in
distributing Financial Services & Consumer Durables. He joins us from American
Express, where he held various positions in its Personal Loans & Consumer Card
businesses over the last 9 years. He was Director - Sales (Consumer Cards) in his
previous assignment there. Prior to American Express, Deepak has worked with
Standard Chartered in Auto Loans business and also with Onida distributing
durables for the first four years of his career.
DEVANG MODY: BUSINESS HEAD SALES FINANCE, CROSS SELL AND
INSURANCE
Devang is a Chartered Accountant by education and has experience in consulting
and financial services. He joins us from AIG, where he worked as Vice President –
Business Development & CRM, Consumer Finance Business. Prior to that, he
worked with GE Money for over 8 years in various assignments in Six Sigma, Sales
Finance, Cross Sell and Personal Loans. Earlier, he has spent 5 years in consulting
with firms like E&Y. Sales Finance is a strategic and high growth business for Bajaj
Finance. Devang is responsible for profitably growing our leadership position in
Sales finance.
9
PANKAJ THADANI: CHIEF FINANCIAL OFFICER
Pankaj joined BAFL in 2006 and has an experience of 24 years in financing,
financial accounting, cost accounting, tax and systems. He is a Mathematics
Graduate and is a Chartered Accountant by profession. He joined BAFL from an
equity research company called Corporate Database. His previous assignments
were with Bajaj Auto Limited, Eischer and Mico Bosch.
RAKESH BHATT: CHIEF INFORMATION OFFICER
Rakesh has an overall experience of 16 years in finance & technology industry. He
has played several leadership roles encompassing CIO responsibilities, IT product
management and delivery. Rakesh joins us from AIG Consumer Finance (India)
where he was Vice President and Head – Technology. Prior to that, he worked with
10
3i Infotech Ltd for 5 years with assignments in IT product management and
development, product marketing and pre-sales support. Earlier, he had worked for
Reliance Industries and GE Money.
VIVEK LIKHITE: CHIEF CREDIT AND OPERATIONS
Vivek joined BAFL in 2007. He is a Chartered Financial Analyst and holds a Cost
Accountant degree from ICWAI. He has an experience of 20 years in strategic
planning, process management, operations management, accounts, funds
management, budgeting and MIS. He has worked with Larsen & Turbo Ltd for
eight years. His last assignment was with TATA Motor Finance before joining
BAFL.
GURUMEET KAUR: CHIEF RISK OFFICER
11
Gurmeet is a management graduate with over 16 years of experience in financial
services and airline industry. She joins us from Future Money where she was the
Chief Risk Officer and is credited for successful implementation of Risk policies
and underwriting structure for Consumer Durables, Personal and Business loans
and Loan against properties, implementation of state of art loan origination,
repayment management and collections system. In her role as Chief Risk Officer at
Bajaj Finance, Gurmeet is responsible for creating a proactive risk policy
framework, strengthening our existing collections strategy, strengthening the
existing loan origination platform, creating a world class data warehouse &
analytics platform and reinforcing our fraud control strategy.
CODE OF CONDUCT:
CODE OF CONDUCT FOR DIRECTORS AND MEMBERS OF SENIOR
MANAGEMENT
Preface
This code of conduct shall apply to the Directors and members of the Senior
Management of Bajaj Auto Finance Limited (referred to hereinafter as BAFL or
the Company).
For this code, members of the Senior Management (hereinafter referred to as
`Senior Managers’) shall mean those personnel of the Company, who are members
of the core management team, but shall exclude the Managing / Whole-time
Directors.
Directors and Senior Managers shall observe the highest standards of ethical
conduct and integrity and shall work to the best of their ability and judgement.
Directors and Senior Managers shall be governed by the rules and regulations of
12
the Company as are made applicable to them from time to time.
Directors and Senior Managers shall affirm compliance with this code on an
annual basis as at the end of each financial year.
Code of conduct :
1. Directors and Senior Managers shall ensure that they use the Company’s
assets, properties and services for official purposes only or as per the terms
of appointment.
2. Directors and Senior Managers shall not receive directly or indirectly any
benefit from the Company’s business associates, which is intended or can be
perceived as being given to gain favour for dealing with the Company.
3. Directors and Senior Managers shall ensure the security of all confidential
information available to them in the course of their duties.
4. No Director or Senior Manager, other than the designated spokespersons
shall engage with any member of press and media in matters concerning the
Company. In such cases, they should direct the request to the designated
spokespersons.
5. Directors and Senior Managers shall not engage in any material business
relationship or activity, which conflicts with their duties towards the
Company.
6. Senior Managers shall not, without the prior approval of the Managing
Director of the Company, accept employment or a position of responsibility
with any organisation for remuneration or otherwise. In case of Whole-time
Directors, such prior approval must be obtained from the Board of Directors
of the Company.
13
7. Directors and Senior Managers shall declare information about their
relatives (spouse, children and parents) employed in the Company.
PRODUCTS:
BUSINESS LOANS
CONSUMER DURABLE LOANS
IT PRODUCT LOANS
LOAN AGAINST PROPERTY
LOAN AGAINST SHARES
TWO WHEELER LOANS
INSURANCE SERVICES
14
Business Loans
Features
Our Business Loans are unsecured loan which can be availed for your business use
without providing security or guarantors. Business Loans could be taken for your
business expansion, consolidating liability, repaying existing loans or any other
immediate business requirement.
Bajaj Finance Business loans are offered from Rs.3 lacs to Rs.30 lacs which can be
repaid in 12 - 36 monthly installments. Bajaj Finance Business Loans comes with
the following unique features:
1. Free Personal Accident Insurance of up to Rs 5 lacs
2. Prompt Repayment Benefits
3. No Foreclosure Charges
Benefits
Only Bajaj Finance Business Loans comes with the following exclusive benefits:
1. Free Personal Accident Insurance of up to Rs 5 lacs - In case of untoward
incident you would be covered with a personal accident insurance up to Rs 5
lacs.
15
2. Prompt Repayment Benefit - You get refund of 50% of the processing fee
charged if you clear all your monthly installment on time.
3. Nil Foreclosure Charges -If you want to repay your loan, please go ahead,
we do not charge any foreclosure charges if the loan is closed after repaying
6 monthly installments.
Eligibility
Entities – Partnerships, Private limited and closely held limited companies.
Documents
Professionals Businessmen
Application form Yes Yes
1 Photograph Yes Yes
Identity Details Yes Yes
Residence Details Yes Yes
Signature
verification from
Bank
Yes Yes
Degree
Certificate &
Certificate of
Practice
Yes No
Repayment No* Yes
16
Track record
Income Details IT Returns & Balance
Sheet & P/L Account
statement for the last 2
years
IT Returns & Balance
Sheet & P/L Account
statement for the last 2
years
Bank Account
StatementsFor the last 6 months For the last 6 months
Processing Fees 2% of the loan amount Prepayment Charges
6% of the principal outstanding amount if the loan is closed within 6 months
5% of the principal outstanding amount if the loan is closed after 6 months
EMI bounce charges Rs 500 for every bounce Penal Interest 2.15% p.m
Consumer Durable Loans
Features
Bajaj Finance, the sole organized financier in the market offering Consumer
Durable loans offers you Dreams on EMI, with 0% finance options also available.
CD loans are EMI loans for Consumer Durable items like Washing Machines,
Refrigerators, Color TV's, LCD's etc. These CD loans come at a very reasonable
price, with a very simple process. You can just walk into one of our Dealer partner
showrooms and avail of this facility for the item of your choice. Loans are
available for amounts more than Rs.7500. Multiple Credit programs are also
available to suit your fitment.
17
Benefits
1. 0% finance options available (for select schemes).
2. Simple process with minimum documentation.
3. On the spot approvals with fastest processing.
4. Flexible repayment options.
5. ECS clearing, reducing hassle of arranging cheques.
6. Extended Warranty available.
Eligibility
If you are a Salaried person your age should be between
o 21 years to 60 years.
If you are Self Employed your age should be between
o 21 years to 65 years.
18
Documents
SalariedSelf
Employed
Id Proof Y Y
Residence Proof Y Y
3 Cheques Y Y
Credit Program Specific Documents (Any 1 of the following):
1. Credit Card front side photocopy Y Y
2. Visiting Card & Employee Id proof Y N
3. Photocopy of RC book (Not applicable for
vehicles registered after 2004 & commercial cars)Y Y
4. PPF Account Statement. Y N
5. Bajaj Finance existing loan Repayment Y Y
19
Schedule (subject to not later than 18 months old)
6. Any other Bank/NBFC Repayment Schedule Y Y
7. Latest Original Post Paid mobile bill Y Y
8. Insurance Premium Receipt Y Y
9. Salary Slip Y N
FEES & CHARGES:
As per schemes selected by Customer
IT Product Loans
Features
Bajaj Finance, the sole organized financier in the market offering IT Product loans,
offers your Dream Desktop/Laptop on EMI, with 0% options also available. These
IT Product loans come at a very reasonable price, with a very simple process. You
can just walk into one of our Dealer partner showrooms and avail of this facility
20
for the item of your choice. PC loans are available up to 100% of the product price.
Loans are available for amounts above Rs. 20000.
Benefits
1. 0% finance options available (for select schemes).
2. Simple process with minimum documentation.
3. On the spot approvals with fastest processing.
4. Flexible repayment options.
5. ECS clearing, reducing hassle of arranging cheques.
6. Extended Warranty available.
Eligibility
If you are a Salaried person your age should be between
o 21 years to 60 years.
If you are Self Employed your age should be between
o 21 years to 65 years.
Documents
SalariedSelf
Employed
Id Proof Y Y
Residence Proof Y Y
21
3 Cheques Y Y
Credit Program Specific Documents (Any 1 of the following):
1. Credit Card front side photocopy Y Y
2. Visiting Card & Emp. Id proof Y N
3. Photocopy of RC book (Not applicable for
vehicles registered after 2004 & commercial cars)Y Y
5. Bajaj Finance existing loan Repayment
Schedule (subject to not later than 18 months old)Y Y
6. Any other Bank/NBFC Repayment Schedule Y Y
9. Salary Slip Y N
Loan against Property:
Features
Loan Against Property is a Loan facility which a person or an entity avails by
keeping property as a collateral.
Bajaj Finance offers Loan Against Property for all your business and personal
needs - whether you need money for your business expansion, working capital,
loan consolidation, marriage in the family, children’s education or any other need
you may have.
22
The loans are available up to Rs.12.5 Crores and can be paid back over a
comfortable term up to 15 years.
We offer you a wide range of products to choose from:
1. Loan Against Residential Property
2. Loan Against Commercial Property
3. Loan for Purchase of Commercial Property
4. Loan Against Plot
5. Lease Rental Discounting
To meet the needs of all our customer we bring you a complete suite of programs
that are tailor made to your requirements, you can avail a loan under any of the
following programs:
Normal Income Program: You can avail loan basis your financial
statements.
Debt Consolidator: If you have multiple loans running and want to
consolidate to one single EMI this has been designed just for you. There is
also a flexibility of availing additional loan under this program.
Alternate Income Program: You can avail of loans upto Rs. 1 Crore under
our Low LTV and Banking programs, which have been designed specifically
to meet your requirements in a quick and hassle free manner.
Benefits
23
Only Bajaj Finance Loan Against Property comes with the following exclusive
benefits:
Nil Prepayment Charges – You have the flexibility of partially or
completely repaying your loan at any point of time!
We do not levy any charges on partial (1 EMI or more) or complete closure
of your loan after repayment of 6 monthly installments.
Prompt Repayment Reward – You will be rewarded for repaying your
loan in time!
We pay you 1% of the Equated Monthly Installment (EMI) paid in the first
12 months subject to timely clearance and no defaults. This amount shall be
sent to you as a token of appreciation from Bajaj Finance at the end of the
13th month.
Free Personal Accident Insurance – You are given a completely free
Personal Accident Coverage!
In case of untowards incident you would be covered with a personal accident
insurance upto Rs. 10 Lacs.
Best in class Insurance Schemes: You can avail attractive Insurance
packages at a very competitive premium!
o Group Suraksha from Bajaj Allianz
Non Medical Loan & Life Insurance up to Rs. 70 Lacs
Level term Plan, which means you are covered for the complete
amount despite reduction/ prepayment of loan amount
Coverage for the complete tenor of the loan to a maximum of
30 Yrs
24
o Home Safe Plus from ICICI Lombard
Non Medical Insurance up to Rs. 3 Crores
Provides coverage against accidental death, permanent or total
disability, diagnosis of critical illness and loss of job*
Coverage for 5 years
Transparency and Flexibility - You are given the details of all the charges
upfront. A no surprises in future promise from Bajaj Finance awaits you!
Bajaj Finance believes in complete transparency and flexibility for its
customers. To ensure that you are aware upfront of every charge that you
might have to incur over the term of 15 years we have taken the following
steps:
o You are issued a sanction letter and a copy of loan documentation for
your records.
o You are issued a welcome letter which is exclusively designed and
customized for you. It is sent to you within a week of the loan
disbursal giving you complete details of your loan, repayment
schedule and comprehensive details on Insurance along with a tariff
card detailing all applicable charges and benefits available as a
customer.
o You have the option to make a prepayment in part or full at your
convenience without any charges
o And a special gift for a special customer!
25
RE-PRICING POLICY
The prevalent Bajaj FRR is 17% effective 1st Dec 2008. Bajaj FRR is the
benchmark reference rate of BAFL Loan against Property and is determined based
on the prevalent market conditions and the cost of funds of BAFL. As the cost of
funds reduces/ increases, Bajaj FRR may reduce/ increase.
Any revision in this rate would impact the interest rate on the floating interest
rate loans. Re pricing would be done only for the loans booked under the floating
rate scheme. For the loans which have been booked under the fixed rate scheme
there will be no changes done for the fixed rate period.
The increase/ decrease in the Interest rate will by default increase/decrease
the loan tenor.
In case of increase in interest rate, if you want to retain your existing EMI/
Tenor, you will have an option of making a part pre payment and keeping your
EMI/ Tenor at the same level. No additional charges would be levied on the part
pre payment.
The communication on the changes (Increase/ decrease) in the rate of
interest would be sent by mail
Personal Loans
Features
26
Our Personal Loans are the cash loan which can be availed for your own personal
use without providing security or guarantors. Personal Loans could be taken for
renovation of your home, marriage in the family, a holiday with your family, your
child's education, medical expenses or any other emergencies. Bajaj Finance
Personal loans are offered from Rs. 3 lacs to Rs. 30 lacs which can be repaid in 12
- 60 monthly installments. Bajaj Finance Personal Loans comes with the following
unique features:
1. Free Personal Accident Insurance of upto Rs 5 lacs
2. Prompt Repayment Benefits
3. No Foreclosure Charges
Benefits
Only Bajaj Finance Personal Loans comes with the following exclusive benefits:
1. Free Personal Accident Insurance of up to Rs 5 lacs - In case of untoward
incident you would be covered with a personal accident insurance up to Rs 5
lacs.
2. Prompt Repayment Benefit - You get refund of 50% of the processing fee
charged if you clear all your monthly installment on time.
3. Nil Foreclosure Charges -If you want to repay your loan, please go ahead,
we do not charge any foreclosure charges if the loan is closed after repaying
6 monthly installments as per repayment schedule.
Eligibility
Salaried person
27
o Individuals working in the approved list of companies
Self Employed
o Businessmen ( Traders, Small Manufactures etc)
o Professionals ( Doctors (MBBS , MD , BDS , MDS only) & Chartered
Accountants only)
Documents
Salaried
IndividualProfessionals Businessmen
Application
formYes Yes Yes
1 Photograph Yes Yes Yes
Identity
DetailsYes Yes Yes
Residence
DetailsYes Yes Yes
Signature
verification
from Bank
Yes Yes Yes
Degree
Certificate &
Certificate of
No Yes No
28
Practice
Repayment
Track recordNo* No* Yes
Income
Details
Latest payslip &
Form 16 (Form
16 required only
when applying
under holiday
finance)
IT Returns &
Balance Sheet &
P/L Account
statement for the
last 2 years
IT Returns &
Balance Sheet &
P/L Account
statement for the
last 2 years
Bank Account
Statements
For the last 3
months
For the last 6
months
For the last 6
months
leProcessing Fees2% of the loan amount
Prepayment Charges
6% of the principal outstanding amount if the loan is closed within 6 months
5% of the principal outstanding amount if the loan is closed after 6 months
EMI bounce charges
Rs 500 for every bounce
Penal Interest
29
2.15% p.m
Two Wheeler Loans
Bajaj Auto Finance Ltd offers attractive loans for purchase of new Bajaj
vehicles.
Bajaj Finance executives are available at most of the Bajaj Auto dealerships
to offer finance schemes to suit the requirements of individuals.
Bajaj Finance is the only finance company to offer a unique Extended
Warranty on the two wheelers financed by it.
Bajaj Finance also finances Bajaj three wheelers.
Insurance Services
Bajaj Auto Finance Limited (BAFL) has tied up with Bajaj Allianz Life (part of
Bajaj Group), to offer a rich bouquet of world class life insurance products to suit
the financial needs of all segments of buyers through different stages of their lives.
With its successful track record and its highly acclaimed standing, Bajaj Allianz
Life Insurance Company (BALIC) prides on serving over 8 million Indian
customers. BAFL shares BALIC's philosophy of providing insurance solutions
relevant to the customer's needs.
30
Employment fell from about 23,000 in 1995-96 (the year Bajaj suffered a two-
month strike at its Waluj factory) to 17,000 in 1999-2000. The company planned to
lay off another 2,000 workers in the short term and another 3,000 in the following
three to four years.
Principal Subsidiaries: Bajaj Auto Finance Ltd.; Bajaj Auto Holdings Ltd.; Bajaj
Electricals Ltd.; Bajaj Hindustan Ltd.; Maharashtra Scooters Ltd.; Mukand Ltd.
Principal Competitors: Honda Motor Co., Ltd.; Suzuki Motor Corporation; Piaggio SpA.
Balance Sheet of Bajaj Auto------------------- in Rs. Cr. -------------------
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
12 mths 12 mths 12 mths 12 mths 12 mths
Sources Of Funds
Total Share Capital 101.18 101.18 144.68 144.68 144.68
Equity Share Capital 101.18 101.18 144.68 144.68 144.68
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 4,669.55 5,433.14 1,442.91 1,725.01 2,783.66
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Networth 4,770.73 5,534.32 1,587.59 1,869.69 2,928.34
31
Secured Loans 0.02 22.46 6.95 0.00 12.98
Unsecured Loans 1,467.13 1,602.97 1,327.39 1,570.00 1,325.60
Total Debt 1,467.15 1,625.43 1,334.34 1,570.00 1,338.58
Total Liabilities 6,237.88 7,159.75 2,921.93 3,439.69 4,266.92
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
12 mths 12 mths 12 mths 12 mths 12 mths
Application Of Funds
Gross Block 2,894.22 3,178.54 2,994.68 3,350.20 3,379.25
Less: Accum. Depreciation 1,761.22 1,904.94 1,726.07 1,807.91 1,899.66
Net Block 1,133.00 1,273.60 1,268.61 1,542.29 1,479.59
Capital Work in Progress 43.33 107.62 34.74 106.48 120.84
Investments 5,856.97 6,447.53 1,857.14 1,808.52 4,051.52
Inventories 272.93 309.70 349.61 338.84 446.21
Sundry Debtors 301.55 529.83 275.31 358.65 272.84
Cash and Bank Balance 80.84 62.16 54.74 135.68 100.20
Total Current Assets 655.32 901.69 679.66 833.17 819.25
Loans and Advances 2,282.98 2,925.24 1,099.68 1,567.09 2,291.29
Fixed Deposits 1.25 21.32 1.33 1.19 1.21
32
Total CA, Loans & Advances 2,939.55 3,848.25 1,780.67 2,401.45 3,111.75
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 1,419.08 1,683.46 1,185.19 1,378.20 2,218.06
Provisions 2,315.89 2,833.79 834.04 1,224.15 2,248.72
Total CL & Provisions 3,734.97 4,517.25 2,019.23 2,602.35 4,466.78
Net Current Assets -795.42 -669.00 -238.56 -200.90 -1,355.03
Miscellaneous Expenses 0.00 0.00 0.00 183.30 0.00
Total Assets 6,237.88 7,159.75 2,921.93 3,439.69 4,266.92
Contingent Liabilities 719.06 811.66 1,129.29 924.96 818.25
Book Value (Rs) 471.49 546.96 109.73 129.23 202.40
33
Chapter 2
PRODUCT PROFILE AND FINANCIAL PERFORMANCE
Motorcycles
Three wheelers
Overall performance of the company
Financial ratio analysis
34
Products
Motorcycles
Two-wheeler sales of Indian players are dominated by the domestic market and,
within it, by motorcycles. After growing at a sharp clip from the late 1990s,
motorcycle sales witnessed a 7.8% drop in volume in 2007-08, due to falling
domestic demand as a result of rising interest rates and many private sector banks
reducing their retail lending exposures. 2008-09 saw a modest increase in
motorcycle sales of 4%, driven largely by growth in cash sales. Even so, sales of
motorcycles (both domestic and exports) in 2008-09 has been lower than what it
was in 2006-07, before the slowdown hit this sector. Chart A depicts the data from
1998-99.
Chart A: Sales of two-wheelers (million units)
35
Despite the slight uptick in the industry’s sales volume, Bajaj Auto did not
maintain volume growth, for reasons that will be discussed below. From 1.66
million motorcycles in 2007-08, the company’s domestic sales fell by23% to 1.28
million units in 2008-09. Some of this was compensated by a 31% increase in
exports to 631,383 units. But it was not enough Consequently, Bajaj Auto’s market
share (domestic and exports, combined) fell from 32.7% in 2007-08 to 28% in
2008-09. Table 1 gives the data.
36
Table 1: Motorcycle sales, domestic and exports (in numbers)
Year ended
31 March
Sales (nos.
Millions)
Sales
growth
BAL (nos.
Millions)
BAL’s
growth
BAL’s
market
share
2003 3.757 31.3% 0.868 32.3% 23.1%
2004 4.317 14.9% 1.024 17.9% 23.7%
2005 5.218 20.9% 1.450 41.6% 27.8%
2006 6.201 18.8% 1.912 31.9% 30.8%
2007 7.100 14.5% 2.379 24.4% 33.5%
2008 6.544 (7.8%) 2.140 (10.1%) 32.7%
2009 6.806 4.0% 1.908 (10.8%) 28.0%
Source: SIAM and Company data
37
Motorcycles: Domestic Sales for the Industry
The company classifies motorcycles into three segments, based on consumer
categories and approximate price points. These are:
Motorcycles of Bajaj can be categorized as:
SEGMENT OF
BIKES
FEATURES BAL
PRODUCTS
COMPETITORS
PRODUCTS
Entry segment: 100 cc
motorcycles at
Rs.35, 000.
the Platina. The
segment accounted
for 34% in India in
2008-09
Hero Honda
Passion Plus
Executive segment: comprises 100 cc
to 135 cc
motorcycles,
priced between
Rs.40, 000 to
Rs.50, 000.
In this segment
with two brands:
XCD and
Discover.
HERO HONDA
CBZ Extreme and
Splendour
Performance
segment:
These are sleek,
high performance,
flagship brand, the
Pulsar, and our HEO HONDA
38
with price points
in excess of
Rs.50, 000.
cruiser, the
Avenger. BAL
dominate this
space, with a
domestic market
share in excess of
47%.
Karizma and Hunk
39
Three-wheelers
The company’s domestic sales of three-wheelers in 2008-09 were 12% lower
compared to the previous year, and stood at 135,473 units. Export demand grew at
2% to 139,056 units (see Table 2 above). However that was not sufficient to
prevent a decline in the company’s total three-wheeler sales — which fell by 5.4%
to 274,529 units in 2008-09. Given that total industry sales shrank by 1.6% in
2008-09 over the previous year, while Bajaj Auto’s fell by 5.4%, the company’s
market share dropped by 2.3 percentage points to 55.1%. At this market share
however, Bajaj Auto remains the leading three-wheeler player in India.
Table gives the data.
Passenger vehicle sales: 2007-08 2008-09 Rate of growth
Industry sales 375,180 415,411 10.7%
Bajaj Auto sales 263,598 264,332 0.3%
Bajaj Auto market share 70.3% 63.6% (6.7%)
Goods carriers
Industry sales 130,826 82,382 (37.0%)
Bajaj Auto sales 26,714 10,197 (61.8%)
Bajaj Auto market share 20.4% 12.4% (8.0%)
Total 3-wheelers:
Industry sales 506,006 497,793 (1.6%)
Bajaj Auto sales 290,312 274,529 (5.4%)
Bajaj Auto market share 57.4% 55.1% (2.3%)
Source: SIAM and Company data.
40
Overall Performance of the company:
Financials: (Rs. In Million )
2008-09 2007-08
Net sales & other income 89,323 91,688
Gross profit before
exceptional items,
interest & depreciation 13,140 14,162
Total Sales:
2008-09 2007-08 (Nos.) (Nos.)
Motorcycles 1,907,853 2,139,779
Other two-wheelers 11,772 21,316
Total Two wheelers 1,919,625 2,161,095
Three wheelers 274,529 290,312
Total 2 & 3 wheelers 2,194,154 2,451,407
Of the above, exports were
Two wheelers 633,463 482,026
Three wheelers 139,056 136,315
Total Exports 772,519 618,341
41
42
FINANCIAL ANALYSIS OF BAJAJ AUTO
(A) 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.
Current Assets = Debtors + Cash/Bank + Marketable Non Trade Investments +
Stock + Loans & Advances + Prepaid Expenses.
Current Liability = Creditors + Bank Overdraft + O/S Expenses. The ideal ratio is
2:1
Analysis:-Current ratio is higher in 2009 as compared to 2008. There is decreased
all current assets except other receivables which increased in 2009. The net current
assets increased by Rs.238.62 cr. in 2009 and at same time current liabilities
increased by Rs.200.9 cr. in 2009. It means Bajaj Auto Ltd., has sufficient current
assets to pay current liabilities. Short term solvency of the company is satisfactory.
43
Year Current Assets
(Rs. In cr.)
Current Liabilities
(Rs. In cr.)
Current Ratio
2008 1780.67 2019.29 0.88 times.
2009 2401.45 2602.35 0.92 times.
(B)Management Efficiency ratio’s
This ratio finds how efficient the management is in their decision-making &
utilization of the production capacity & other resources.
(i) Inventory Turnover Ratio.
Year Sales Turnover
(Rs. in cr.)
Inventory
(Rs. in cr.)
Inventory Turnover Ratio
2008 9856.66 349.61 28.19
2009 9310.24 338.84 27.47
Analysis:-
44
The inventory turnover ratio in the year 2008 was 28.19 which indicate that 28.19
times in a year the inventory of the firm is converted into receivables or cash.
However, in 2009, the inventory turnover ratio slightly decreased to 27.47. This
was due to the fact that the Bajaj Auto Ltd. in 2009 invested more then 0.72 times
the inventory in 2008.
(C)PROFITABILITY RATIO
Gross Profit Ratio
Year NPAT
(Rs. in
cr.)
Net sales
(Rs. in
cr.)
Profit Margin
2008 755.95 8827.15 8.56 %
2009 656.48 8700.17 7.55 %
Analysis:-
45
The profit margin has decreased from 8.56% in 2008, to 7.55% in 2009. According
to the figures, company has been successful in decreasing their Sales by Rs.126.98
cr. in 2009 but the increases in net income available common stock holders was
111% which leaded to a decrease in the profit margin.
(D)Market Value Ratio.
Price Earning Ratio.
Year Price Per Share
(Rs. in cr.)
Earning Per Share
(Rs. in cr.)
PER
2008 10 52.25 0.19
2009 10 45.37 0.22
Analysis:-
It can be seen from calculations that in year 2009 the ratio is more than doubled
from 0.19 to 0.22. This was due to the fact that the price per share over the year has
same with Rs.10 per share where as book value per share increased by just
Rs.109.73 to Rs.129.23.
46
CHAPTER THREE
STRATEGIC ANALYSIS
a) Vision mission and values
b) Logo
c) SWOT Analysis
d) Porter’s five Forces Model Analysis
e) Managerial style
f) Business strategies
g) Other strategic issues
47
VISION MISSION AND VALUES
Bajaj doesn't have a straight vision or mission statement. They define it in terms of
brand identity, brand essence (derived from mission) and brand values.
Our Brand Identity
Our 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 we do must always reinforce the distinctiveness and the power of
our brand.
We can do this by living our brand essence and by continuously seeking to
enhance our customers’ experience.
In doing so, we ensure a special place for ourselves in the hearts and the
minds of our customers.
Our Brand Essence
Our Brand Essence is the soul of our brand.
48
Our brand essence encapsulates our mission at Bajaj.
It is the singular representation of our terms of endearment with our
customers.
It provides the basis on which we grow profitably in the market.
Our 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 our customers.
By challenging the given. By exploring the unknown and thereby stretching
ourselves towards tomorrow, today.
Our Brand Values
We live our brand by its values of Learning, Innovation, Perfection, Speed and
Transparency.
Bajaj will constantly inspire confidence through excitement engineering.
Learning
Learning is how we ensure proactivity. It is a value that embraces
knowledge as the platform for building well informed, reasoned, and
decisive actions.
Innovation
Innovation is how we create the future. It is a value that provokes us to reach
beyond the obvious in pursuit of that which exceeds the ordinary.
49
Perfection
Perfection is how we set new standards.It is a value that exhibits our
determination to excel by endeavoring to establish new benchmarks all the
time.
Speed
Speed is how we convey clear conviction. It is a value that keeps us sharply
responsive, mirroring our commitment towards our goals and processes.
Transparency
Transparency is how we characterise ourselves. It is a value that makes us
worthy of credibility through integrity, of trust through sensitivity and of
loyalty through interdependence.
LOGO of BAJAJ:
INITIAL LOGO (upto
2004)
CHANGED LOGO (upto
2007)
LATEST LOGO (since
2007)
Hexagonal blue and white
logo
Completely blue logo to
signify modernity and
dynamism
To stress the leadership
position of the brand in
the market
50
51
SWOT Analysis:
Let's analyze the position of Bajaj in the current market set-up, evaluating its
strengths, weaknesses, threats and opportunities available.
Strengths:
Highly experienced management.
Product design and development capabilities.
Extensive R & D focus.
Widespread distribution network.
High performance products across all categories.
High export to domestic sales ratio.
Great financial support network (For financing the automobile)
High economies of scale.
High economies of scope.
52
Weaknesses:
Hasn't employed the excess cash for long.
Still has no established brand to match Hero Honda's Splendor in commuter
segment.
Not a global player in spite of huge volumes.
Not a globally recognizable brand (unlike the JV partner Kawasaki)
Threats:
The competition catches-up any new innovation in no time.
Threat of cheap imported motorcycles from China.
Margins getting squeezed from both the directions (Price as well as Cost)
TATA Ace is a serious competition for the three-wheeler cargo segment.
Opportunities:
53
Double-digit growth in two-wheeler market.
Untapped market above 180 cc in motorcycles.
More maturity and movement towards higher-end motorcycles.
The growing gearless trendy scooters and scooterette market.
Growing world demand for entry-level motorcycles especially in emerging
markets.
54
Porter’s Five Forces Analysis:
Supplier Bargaining Power: Suppliers of auto components are
55
fragmented and are extremely critical for this industry since most of the
component work is outsourced. Proper supply chain management is a costly yet
critical need.
Buyer's Bargaining Power: Buyers in automobile market have more choice
to choose from and the increasing competition is driving the bargaining power
of customers uphill. With more models to choose from in almost all categories,
the market forces have empowered the buyers to a large extent.
Industry Rivalry: The industry rivalry is extremely high with any product
being matched in a few months by competitor. This instinct of the industry is
primarily driven by the technical capabilities acquired over years of gestation
under the technical collaboration with international players.
Substitutes: There is no perfect substitute to this industry. Also, if there is
any substitute to a two-wheeler, Bajaj has presence in it. Cars, which again are a
mode of transport, do never directly compete or come in consideration while
selecting a two-wheeler, cycles do never even compete with the low entry level
moped for even this choice comes at a comparatively higher economic
potential.
Managerial Style:
Off late Bajaj Auto Limited, India’s premier automotive company, has
emphasised a lot on organizational restructuring for the Auto business.
With this restructuring, the existing business roles and responsibilities
56
at the company has been strengthened and enhanced to ensure greater
operational empowerment and effective management.
The five pillars of this new structure (Strategic units) are R&D,
Engineering, Two Wheeler Business Unit, and Commercial Vehicles
Business Unit & International Business Unit. These pillars will be
supported by functions of Finance, MIS, HR, Business Development
and Commercial.
Pradeep Srivastava, who was VP-Engineering prior to restructuring,
will now be President- Engineering. As per the reorganized structure
the company will have three CEO’s. S. Sridhar, currently, VP, Mktg. &
Sales Two-Wheelers, will now head the Two Wheeler Business Unit as
CEO with manufacturing operations at Waluj and Akurdi also reporting
to him. RC Maheshwari has joined Bajaj Auto as CEO Commercial
Vehicles. The company is in the process of identifying a CEO for its
International Business. The three CEO’s will be responsible for Top
line, Business Growth & profitability of their respective businesses.
Abraham Joseph will continue to lead Research & Development.
Business Stratergies:
Marketing Strategies:
The focus of BAL off late has been on providing the best of the class models at
competitive prices. Most of the Bajaj models come loaded with the latest features
within the price band acceptable by the market. BAL has been the pioneer in
stretching competition into providing latest features in the price segment by
57
updating the low price bikes with the latest features like disk-brakes, anti-skid
technology and dual suspension, etc.
BAL adopted different marketing strategies for different models, few of them are
discussed below: -
Kawasaki 4S - First attempt by bajaj to make a mark in the motorcycle segment.
The target customer was the father in the family but the target audience of the
commercial was the son in the family. The time at which Kawasaki 4S was
launched Hero Honda was the market leader in fuel-efficient bikes and Yamaha in
the performance bikes.
Boxer - It took the reins from where the Kawasaki 4S left. Target was the rural
population and the price sensitive customer. Boxer marketed as a value for
money bike with great mileage. Larger wheelbase, high ground clearance and high
mileage were the selling factors and it was in direct competition to Hero Honda
Dawn and Suzuki MX100.
Caliber - The focus for the Caliber 115 was youth. And though Bajaj made the bike
look bigger and feel more powerful than its predecessor (characteristics that will
attract the average, 25-plus, executive segment bike buyer), its approach towards
advertising is even more radically different this time around. Bajaj gave the
mandate for the ad campaign to Lowe, picking them from the clique of three
agencies that do promos for the company (the other two being Leo Burnett and
O&M). Going by the initial market response, the campaign was clearly a hit in the
5-10 years age bracket. So, the teaser campaign and the emphasis on the Caliber
58
115 being a `Hoodibabaa' bike placed it as a trendy motorcycle for the college-
goers and the 25 plus executives both at the same time.
Pulsar - Pulsar was launched in direct competition to the Hero Honda's 'CBZ'
model in 150 cc plus segment. The campaign beared innovative punch line of
"Definitely Male" positioning Pulsar to be a masculine-looking model with an
appeal to the performance sensitive customers. The Pulsar went one step ahead
of Hero Honda's 'CBZ' and launched a twin variant of Pulsar with the 180 cc
model. The model was a great success and has already crossed 1 million mark in
sales.
Discover - The same DTSI technology of Pulsar extended to 125 cc Discover was a
great success. With this, Bajaj could realize its success riding on the back of
technological innovation rather than the joint venture way followed by
competitors to gain market share.
BAL now is taking a leaf out of the FMCG business model to take the company to
greater heights.Bajaj has kicked off a project to completely restructure the
company's retail network and create multiple sales channels.
Over the next few months, the company will set-up separate sales channels for
every segment of its business and consumers. Bajaj Auto's entire product
portfolio, from the entry-level to the premium, is being sold by the same dealers.
The restructuring will involve separate dealer networks catering to the urban and
rural markets as well as its three-wheeler and premium bikes segments. Bajaj
Auto also plans to set-up an independent network of dealers for the rural areas.
The needs of financing, selling, distribution and even after-sales service are
59
completely different in the rural areas and do not makes sense for city dealers to
control this. The company also plans to set-up exclusive dealerships for its three-
wheeler products instead of having them sold through an estimated 300 of its
existing dealers.
60
Other Strategic Issues:
Cash is strength: Bajaj Auto has been sitting on a cash pile for over five years now.
Over the next couple of years, competition in the two-wheeler market is set to
intensify. TVS Motors and Hero Honda are on a product expansion binge. To fight
this battle and retain its hard-earned market share in the motorcycle segment,
Bajaj Auto will need its cash muscle. A look at its own story over the past five
years provides valuable insight.
Stake for Kawasaki: Bajaj Auto's attempt to vest the surplus cash in a separate
company may be a prelude to offering a stake to Kawasaki of Japan in the equity
of the automobile company. The latter has been playing an increasingly active
role in Bajaj's recent models, and its brand name is also more visible in Bajaj bikes
than in the past.
Better value proposition: Shareholder interests may be better served if the cash
is retained to pursue growth in a tough market. This would also obviate the need
to fork-out fancy sums as stamp duty to the government for the de-merger. A
combination of a large one-time dividend and a regular buyback program through
the tender route may offer better value. A strategic stake for Kawasaki would only
positively influence the stock's valuation.
Strategies for the Overseas Markets:
Bajaj Auto looks at external markets primarily with three strategies: -
61
1) A market where all BAL need to do is distribute through CKD or CBU routes.
2) Markets where BAL need to create new products.
3) Markets where BAL need to enter with existing products and probably with a
good distributor or a production facility or a joint venture.
Earlier, most of the products that Bajaj exported were scooters and some
motorcycles. However, in its target markets, like in India, the shift was towards
motorcycles. With the expansion in Bajaj's own range to almost five-six platforms
of motorcycles, it had a better offering to export, also the reason for its stronger
showing. For the last fiscal, 60 per cent of its exports were two-wheelers and the
rest three-wheelers. Exports to middle Africa and the Saharan nations. Egypt and
Iran also continue to be strong markets for Bajaj.
62
CHAPTER FOUR
SUPPLY CHAIN ANALYSIS
Value chain management
Subsidiaries
Spare part division
63
Value Chain Management
Vendors – Bajaj Auto has a consolidated base of 180 vendors supplying
components to all Bajaj Auto’s plants. A large number of vendors are located
either near Pune or Aurangabad. Those that are far are encouraged to tie up with
third party logistics providers, who along with local vendors supply multiple
deliveries daily to Chakan & Waluj plant. Bajaj Auto has extended the TPM (Total
Preventive Maintenance) to vendor as well. Around 60% by value of Bajaj vehicle
is outsourced. Virtually no components are imported & 70% of Bajaj Auto’s
requirements are sourced from within the state of Maharashtra. To improve quality,
Bajaj Auto has also begun actively assisting its suppliers in finalizing joint
ventures with counterparts in Japan, Italy, Taiwan & Spain.
Key suppliers :
Bajaj auto has approximately 198 suppliers for their raw materials.
Some of the key suppliers are :-
JBM - Frames
MRF & Dunlop – tires
Minda - locks & ignition system
Reinder – headlamps & lights
Endurance – brakes, clutch & Cast wheel
64
Varroc – Plastic parts & Digital Meter
Max auto components – ignition system and switches
Silco cable – wires and cables
Makino industry – Brake shoes . Brake lining, clutch center
Inder auto industries- Chambers, Gaskets, Cylinder Piston kit.
KBX – disk Brakes assembly
Inventory policy-
Bajaj auto maintains seven days inventory . Demand Estimations were based on
Panel Regression, which takes into account bothtime series and cross section
variation in data .All the Mediators are connected with each other through IT
linkage to know exact status of delivery of goods
Manufacturing locations
Akurdi, Pune 411035
This is one of the oldest plant of bajaj auto ltd with production capacity of 0.6
million vehicles/ year. The plant has been closed in order to equip for four wheeler
production
Bajaj Nagar, Waluj Aurangabad 431136
This is second plant with production capacity of 0.86 million/ year .products
manufactured here are Kristal, XCD and platina and commerial GC series
65
Chakan Industrial Area, Chakan , Pune 411501
This is the biggest plant of bajaj auto Production Capacity of 1.2 million/ year ,
Product manufactured here are pulsar and avenger and commercial Ge series
Pantnagar , Uttarakhand
The most advanced plant of bajaj auto .It has Capacity of 0.9 million vehicles per
year . product manufactured here are platina and XCD
Dealers- Bajaj Auto has a network of 422 dealers and over 1,300 authorized
service centers. The company plans to increase the number of dealers to 500 by
this financial year. A large number of these new dealerships are planned in semi-
urban & rural areas.
During the financial year 2007-08, the company extended BASS (Bajaj Auto
Service Standard) to standardize the workshops of 250 dealers & 50 authorized
service centers. These programmers included a uniform external & internal look.
This initiative has improved work hygiene, promoted consistent & better service
quality, & greater productivity. Faster turnaround of serviced vehicles coupled
with higher spare parts sales in converting such workshops into independent profit
centers for the dealers.
66
Value chain of the company
Subsidiaries:
PT. Bajaj Auto Indonesia (PT BAI), was incorporated as a subsidiary company in
Indonesia with an issued, subscribed & paid-up capital of US$ 12.5 million (Rs.562
million) in 2006-07. Bajaj Auto holds 97.5% shares in this company, with balance
being held by a local partner. The subsidiary company has accumulated losses of
Rs. 830.7 million as on 31 March 2009. Through the efforts, which are planned in
the coming years, it is expected that PT BAI will turn around within a reasonable
time.
During the year under review, sales and service network reach have been
xpanded substantially covering the major cities of Jawa, Sumatara, Bali and
Sulawesi islands. Total showroom strength stands at around 63 numbers, covering
46 cities of Indonesia.
67
PT BAI assembles and markets Bajaj Pulsar and Bajaj XCD in Indonesia,
establishing Bajaj as a high quality tech-savvy brand. PT BAI plans to expand its
presence, product range and reach towards becoming a strong player in this
market currently dominated by Japanese 2-wheeler majors.
Bajaj Auto International Holdings BV, Netherlands (BAIHBV) -was incorporated as
a wholly owned subsidiary company in Netherlands with an issued, subscribed
and paid-up capital of Euros 200,000 during 2007-08. Further capital of Euro 98.2
million was invested in this company during the previous year, by way of
premium. It is proposed to make strategic investments in overseas ventures, by
way of equity shares and / or loans and to undertake related activities through
this company.
Spare parts Division:
Automobiles need periodic replacement of parts. Not surprisingly, therefore,
spare parts comprise a profitable business for major automobile manufacturers.
The objectives of spare parts business of Bajaj Auto are to perform an effective
role in supporting new vehicle sales, maintain vehicle goodwill' across different
geographies, makes and consumer groups, and contribute to the bottom-line.
These translate into three goals:
* Make spare parts available to customer at all time.
* Make them affordable.
* Achieve profitable business growth and greater penetration.
68
The company's spare parts business has done well. Domestic sales of spare parts
grew by 17.5% to achieve a revenue of Rs.5.88 billion in 2008-09. And exports
rose by 84% to Rs.1.45 billion. There is huge head room for further growth of this
business. Even today, despite significant expansion of Bajaj Auto's authorised
service network, more than 70% of the services during post-warranty
69
CHAPTER FIVE
CORPORATE SOCIAL RESPONSIBILITIES
Environmental friendly techniques
Community leadership programmes: health education
Other CSR activities
70
CORPORATE SOCIAL RESPONSIBILITY
Cost effective and Environmental strategies:
Conservation of energy:
As a part of continuing efforts to conserve various resources, following steps were
taken to conserve energy:
Electrical energy saving was achieved by installation of localised portable air
compressors at various shops during low production periods, energy efficient
screw compressors by replacing CPT compressors, real timer electrical circuits
installed to switch off electrical equipments during lunch / tea breaks and during
non utilisation of production equipments, fan less cooling towers for AC plants,
high efficiency reflector fittings with electronic ballasts tube lights, use of LED &
CFT street lights, replacement of 350 W air circulators by 180 W air circulators,
150 W MH lamps instead of 250 W HPSV lamps at shop floors, Variable Frequency
Drives VFD) for ASUs in paint shops, washing machine blowers, compressors etc
and rationalisation of pumping hours of main pump as well as booster pump of
pump house. Water saving was achieved by replacement of old under-ground
water pipes with aboveground pipes to avoid water wastage through leakage,
drip irrigation system for gardening, installation of localised fresh water storage
systems, usage of treated water for bin washing and paint shop process, rain
water harvesting and use of bio-chemical additives to reduce frequency of water
change in various paint processes; and LPG saving was achieved by installation of
71
waste heat recovery system for hot water generation used in pre-treatment
process of paint shop, use of reflective coating inside furnaces for better heat
retention, three-wheeler electro-deposition (ED) painting process changed from
Acrylic ED to Cathodic ED, optimisation of loading pattern in CGC and seal quench
furnaces, reduction of hot water temperature for pre-treatment, use of bio- gas
for cooking in canteens, start-up losses in ovens and hot water generation plants
and changed design of paint jigs to reduce jig stripping frequency.
Impact of measures taken:
As a result of the initiatives taken for conservation of energy and natural
resources, the company has effected an overall reduction in consumption as
under:-
72
Investment / savings:
Investment for energy conservation activities: Rs.9.35 million
Saving achieved through above activities: Rs.24.2 million
Community leadership programmes:
During the year, the employees volunteered for blood donation camp at
Deenanath Mangeshkar Hospital, Pune and Dr Susheela Tiwari Hospital,
Pantnagar Fire fighting teams of the company along with vehicles responded to
20 Fire assistance calls from Government Fire Department / other industrial units
outside the factory premises in the larger interests of saving invaluable life and
property.
Community Care:
In line with the commitment to enrich the life of all with whom bajaj deals, it
showes sensitivity to the employees, who opted for voluntary retirement at the
Akurdi Plant. Soon after the Akurdi employees expressed their interest in
accepting the Voluntary Retirement Scheme, the company organised a series of
interactive meetings with leading financial institutions. The officers explained the
need to prudently and safely invest the monies received, considering the various
options available today. The company devised attractive schemes for interested
employees so that they could receive regular monthly payments, in addition to
73
lump sum compensation announced. They were also provided with options of
taking loans at competitive rates of interest.
By these actions, it is the company's endeavour that the employees, who have
accepted voluntary retirement scheme, are independently self-sustaining and can
take good care of their families. Employees were also guided for alternative
possibilities, whether as employee or entrepreneur.
Health:
Government of India- Ministry of Health and Family Welfare - National Aids
Control Organisation (NACO) and CII have initiated Public Private Partnership
(PPP) in order to provide better healthcare to AIDs patients. The company has
signed a tripartite MoU with NACO and Yeshwantrao Chavan Municipal Hospital
(YCMH) in Pimpri to set up an Anti Retroviral Treatment Centre (ART Centre) at
YCMH in Pimpri, Pune with the cooperation of Pimpri Chinchwad Municipal
Corporation for HIV patients.
Many dignitaries from Global Fund, WHO and such other organisations have
visited the ART centre, which is the largest unit run by an industry under Public
Private Partnership programme. Apart from two doctors and six supporting
medical staff, the ART centre has added audio-visual facilities for group
counseling, as a result of which the ART centre registration has reached 1,900
numbers and the unit is recognised today as one of the best ART centres in the
country. Rural and community development activities and empowerment of
women.
74
Education:
The company has launched a programme that would help SC/ST students achieve
academic excellence and make them on par with those, who can afford coaching
for entrance to IITs. During the year under review, one student with a brilliant
academic record was identified from the underprivileged and low-income group,
for reimbursement of complete fees for the preparation of IIT entrance test under
the guidance of IITians Prashikshan Kendra.
Under the central government initiative of Public Private Participation (PPP), the
company has volunteered to adopt 3 ITIs (Industrial Training Institute) for up-
gradation:
* ITI Mulshi
* ITI Haveli
* ITI Ramnager
The other activities include:
Bajaj Auto Ltd. was the first and only company to launch ecologically
friendly CNG engines for three wheelers in Delhi.
Bajaj Auto promotes several welfare programmes for its employees as well
as various initiatives related to environment, health, education and rural
development in the communities around the plant areas.
75
CHAPTER SIX
THE FUTURE
RECOMMENDATIONS
76
THE FUTURE
Bajaj-Renault-Nissan to drive small car (ULC)
Bajaj Auto has redrafted its bike strategy for this fiscal that will see the Pulsar and
Discover act as the key growth drivers. The script goes according to plan, it has
have set ourselves a target of 200,000 units from both brands by March 2010. Bajaj
Auto and the Renault-Nissan Alliance to build the car code- named ULC with
wholesale price range starting from 2500 USD
All this is part of a renewed thrust by the company to focus on two key
requirements of the market which, over the years, have pretty much remained
constant for either fuel-efficient commuter bikes or sporty, powerful products. The
Discover has now been positioned to fulfill the former need in a segment where
Hero Honda reigns supreme while the Pulsar has established itself in the sporty
slot, with monthly sales of over 40,000 units.
77
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. The Bajaj Auto’s car will be expensive as it will
meet safety and emission norms. The standard version will come with an air
conditioner.
Bajaj Auto has said in a statement that the car will offer a mileage of 34 kilometer
per litter. Bajaj will launch the car in Petrol and Diesel variants. Bajaj has plans to
manufacture the small car at its facility in Chakan near Pune.
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.
78
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.
Recommendations
The impression of Bajaj in the minds of the public is that it is a moped & a
three-wheeler company, & it is a very orthodox & unhappening image in the
minds of the youth. It should use a powerful brand ambassador & individual
whom the youth can relate with.
It should aggressively market itself as a motorcycle company & move from
its traditional mindset (Rahul Bajaj had once stated that he had only one
department in his company the dispatch department & that he did not require
a marketing department.)
Bajaj should aggressively push sales of higher margin products & launch
new products in niche segments.
79
Bajaj should also try & push for tie-ups & Joint Ventures in foreign market
& try & increase its export base. (E.g. Tata Motors tie-up with Rover for
marketing of India & Joint Venture with Senegal government for
manufacturing trucks & commercial vehicles.)
Bajaj should look for possible mergers & acquisitions. (E.g. Maharashtra
Scooters) & try & improve its distribution network & provide it with
products in niche segments & help increase production capacity & provide
economies of scale.
Bajaj should evaluate the process of backward integration as it has huge cash
reserves surplus. This process would help it in acquiring inputs continuously
at lower cost & at regular intervals.
Increase its dealer network to tap rural growing markets by going in for tie-
ups & offering better margins to dealers.
The key to Bajaj real success lies in Research & development. How it is able
to use value analysis & value engineering by adding new features to its
existing product line & how it is able to come out with new product for
80
different niche markets. Analysis of different alternatives like outsourcing,
in-house, purchase & tie-up should be evaluated.
81
BIBLIOGRAPHY
www.bajajauto.com
http://www.business-standard.com/india/news/bajaj-auto-revamps-
organisational-structure/
http://www.karmayog.org/csr500companies/csr500companies_7373.htm
www.wikipedia.org
http://www.bma.ac.in/KnowledgeCentre/index1.html
http://www.prdomain.com/companies/B/BajajAuto
http://www.coolavenues.com/know/gm
82