8/8/2019 Bajaj Auto Ltd_Final http://slidepdf.com/reader/full/bajaj-auto-ltdfinal 1/19 Bajaj Auto History Bajaj Auto Ltd. was formed in 1945 as M/s Bachraj Trading Corporation Private Limited importing and retailing two and three wheelers in India. It obtained an industrial licence from the Government in 1959 and forayed into manufacturing. Bajaj Auto Ltd. came out with its IPO in 1960. Prior to the economy being liberalized in the 1990s, Bajaj Auto enjoyed a near monopoly in the market. The demand for its products far outstripped the capacity that the Government had allowed it to build. As such although its products had a ready market, yet it could not expand capacity or explore foreign markets because of government regulation and hence capitalize on economies of scale and compete in the International markets. Today its the world¶s 4 th largest two wheeler manufacturer and the second largest in India. Its corporate office is in Pune whereas its manufacturing facilities are spread across Maharashtra and Uttaranchal. The Forbes Global 2000 list ranked Bajaj Auto 1946 out of 2000 in 1995. Bajaj Auto is part of the Bajaj Group one of the foremost business houses of the country which has interests spanning across various sectors like home appliances, financial services and electric products amongst others. The group was founded by Jamnalal Bajaj who along with G.D Birla were two Indian industrialists deeply involved in the freedom movement. To a certain extent the Bajaj Group had imbibed the values and philosophy of its founder. Mr. Rahul Bajaj is the chairman of the group today and it is under his aegis that the group has transitioned from the licence raj regime into the era of liberalization of the Indian economy. The group used to operating in a protected environment for decades was suddenly susceptible to foreign competition and the leadership at the Bajaj Group had to carefully tread the business environment until they gained their foothold in the now liberalized environment. Today Bajaj Auto competes with international auto companies like Yamaha, Suzuki and Honda both in the Indian and international markets. Mr. Rahul Bajaj has been a vocal critic of the licence raj and believed that by capping production he was doing injustice to his customers. Drawing a parallel with his grandfather, Mr. Bajaj increased his production beyond the licensed capacity and he says he was ready to face action from the government for this violation. Also, when the Indian economy was liberalized Mr. Rahul Bajaj had voiced serious concerns whether Indian industry would be able to face the onslaught of foreign competition because it had operated under government regulation which had made Indian manufacturers inefficient as compared to MNCs. However, not only Bajaj Auto Ltd. but the Indian corporate across sectors today are significant players in the global markets and liberalization was to the benefit of both Indian industry and consumers. The company¶s turnover for the past financial year was Rs.46.16 billion and a market capitalization of around Rs. 25000 crores and it has been consistently growing. The group recently went under restructuring in order to separate the interests of various factions of the
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Bajaj Auto Ltd. was formed in 1945 as M/s Bachraj Trading Corporation Private Limitedimporting and retailing two and three wheelers in India. It obtained an industrial licence from
the Government in 1959 and forayed into manufacturing. Bajaj Auto Ltd. came out with its
IPO in 1960.
Prior to the economy being liberalized in the 1990s, Bajaj Auto enjoyed a near monopoly in
the market. The demand for its products far outstripped the capacity that the Government had
allowed it to build. As such although its products had a ready market, yet it could not expand
capacity or explore foreign markets because of government regulation and hence capitalize
on economies of scale and compete in the International markets.
Today its the world¶s 4
th
largest two wheeler manufacturer and the second largest in India. Itscorporate office is in Pune whereas its manufacturing facilities are spread across Maharashtra
and Uttaranchal. The Forbes Global 2000 list ranked Bajaj Auto 1946 out of 2000 in 1995.
Bajaj Auto is part of the Bajaj Group one of the foremost business houses of the country
which has interests spanning across various sectors like home appliances, financial services
and electric products amongst others. The group was founded by Jamnalal Bajaj who along
with G.D Birla were two Indian industrialists deeply involved in the freedom movement. To a
certain extent the Bajaj Group had imbibed the values and philosophy of its founder.
Mr. Rahul Bajaj is the chairman of the group today and it is under his aegis that the group has
transitioned from the licence raj regime into the era of liberalization of the Indian economy.The group used to operating in a protected environment for decades was suddenly susceptible
to foreign competition and the leadership at the Bajaj Group had to carefully tread the
business environment until they gained their foothold in the now liberalized environment.
Today Bajaj Auto competes with international auto companies like Yamaha, Suzuki and
Honda both in the Indian and international markets. Mr. Rahul Bajaj has been a vocal critic of
the licence raj and believed that by capping production he was doing injustice to his
customers. Drawing a parallel with his grandfather, Mr. Bajaj increased his production
beyond the licensed capacity and he says he was ready to face action from the government for
this violation. Also, when the Indian economy was liberalized Mr. Rahul Bajaj had voiced
serious concerns whether Indian industry would be able to face the onslaught of foreign
competition because it had operated under government regulation which had made Indian
manufacturers inefficient as compared to MNCs. However, not only Bajaj Auto Ltd. but the
Indian corporate across sectors today are significant players in the global markets and
liberalization was to the benefit of both Indian industry and consumers.
The company¶s turnover for the past financial year was Rs.46.16 billion and a market
capitalization of around Rs. 25000 crores and it has been consistently growing. The group
recently went under restructuring in order to separate the interests of various factions of the
Bajaj Family and Bajaj Auto Ltd. came under the control and management of Mr. Rahul
Bajaj. However, till this day some cross holding remains within the Bajaj family in various
group companies whereas essentially control has been demarcated within the group.
Bajaj Auto came into existence on November 29, 1945 as M/s Bachraj Trading Corporation
Private Limited. It started off by selling imported two- and three-wheelers in India. In 1959, it
obtained license from the Government of India to manufacture two- and three-wheelers and it
went public in 1960. In 1970, it rolled out its 100,000th vehicle. In 1977, it managed to
produce and sell 100,000 vehicles in a single financial year. In 1985, it started producing at
Waluj in Aurangabad. In 1986, it managed to produce and sell 500,000 vehicles in a single
financial year. In 1995, it rolled out its ten millionth vehicle and produced and sold 1 million
vehicles in a year.
It is world's fourth largest manufacturer of two-wheelers and India's second largest two
wheeler manufacturer and the world's 4th largest two- and three-wheeler maker. It is based inPune, Maharashtra, with plants in Akurdi and Chakan (Pune), Waluj (near Aurangabad) and
Pantnagar in Uttaranchal. Bajaj Auto makes and exports motorscooters, motorcycles and theauto rickshaw.
The Forbes Global 2000 list for the year 2005 ranked Bajaj Auto at 1946.
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. The group's flagship
company, Bajaj Auto, is ranked as the world's fourth largest two- and three- wheeler
manufacturer and the Bajaj brand is well-known across several countries in Latin America,
Africa, Middle East, South and South East Asia. Founded in 1926, at the height of India's
movement for independence from the British, the group has an illustrious history. Theintegrity, 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 reigns of business in 1942. He too was
close to Gandhiji and it was only after Independence in 1947, that he was able to give his full
attention to the business. Kamalnayan Bajaj not only consolidated the group, but also
diversified into various manufacturing activities. The present Chairman of the group, Rahul
Bajaj, took charge of the business in 1965. Under his leadership, the turnover of the Bajaj
Auto the flagship company has gone up from Rs.72 million to Rs.46.16 billion (USD 936
million), its product portfolio has expanded and the brand has found a global market. He is
India's one of the most distinguished business leaders and internationally respected for his
Nagar Uttranchal Bajaj Auto Limited (herein after referred to as the "Company")
hereby adopts the following Code of Conduct for Affirmative Action. This will be
effective from 1st December 2006.
y The Company affirms that its competitiveness is interlinked with the well being of all
sections of the Indian society.
y The Company believes that equal opportunity in employment for all sections of thesociety is a component of its growth and competitiveness. It further believes that
inclusive growth is a component of growth and development of the country.y The Company affirms the recognition that liersity to reflect socially disadvantages
sections of the society in the workplace has a positive impact on business.y The Company will not practice nor support conscious discrimination in any form.
y The Company does not bias employment away from applicants belonging todisadvantaged sections of society if such applicants possess competitive skills and job
credentials.y The Company's selection of business partners is not based on any considerations other
than normal business parameters. In case of equal business offers, the Company will
select a business partner belonging to a socially disadvantaged section of society.
y This Code of Conduct for Affirmative Action will be put up on the company web-siteto encourage applications from socially disadvantaged sections of society.
y The Company makes all efforts for upskilling and continual training of all its
employees in order to enhance their capabilities and competitive skills. No
discrimination of any type will be shown in this process.
y The Company may have a partnership programme with educational institution/s to
support and aid students from socially disadvantaged sections of society.
y The Company will maintain records of Affirmative Action.
y The Company has nominated Mr. Amrut Kumar Rath, Vice President (HR), to
oversee and promote the Affirmative Action policies and programmes. He will be
accountable to the Chairman.y The Company will make available its learning and experiences as a good corporate
citizen in Affirmative Action to other companies desiring to incorporate such policiesin their own business.
We are an automobile company with global presence and take pride in our Indianroots and values.
Be at the f oref ront of Technological Innovation
Our vibrant engineering minds consistently conceptualize new ideas, feeding
breakthrough technologies and innovative patents at our in-house R&D Center.
World class manuf acturing
TPM is the way of life at Bajaj Auto. Latest manufacturing technologies like robotics,
automation build quality in our products.
Grow with us
Our organic growth strategy provides numerous opportunities to our employees to
climb the ladder of authority and responsibility.
Culture of Empowerment
We provide our employees with high degree of autonomy in their day-to-day
decisions and to act on ideas.
Fair and Transparent Annual and Quarterly PMS
Objective goal setting, transparent performance rewards and constructive feedback inour Performance Management System, help you to exceed performance expectations
by unleashing your potential.
Amongst Top Quartile in Industry Compensation
Competence and performance are the key drivers of our compensation policy. Best
performing employees are awarded with significant rewards.
Employee f riendly work practices
Our policies and systems like SAP and ESS, provide transactional ease so that the
tedium does not claim your time and leaves you free to take on challenging targets.
Superior ³Quality of Life´
Our constant efforts towards employee welfare ensure that our employees enjoy
The Company affirms the recognition that diversity to reflect socially disadvantagessections of the society in the workplace has a positive impact on business.
The Company will neither practice nor support conscious discrimination in any form.
The Company does not bias employment away from applicants belonging to
disadvantaged sections of society if such applicants possess competitive skills and jobcredentials.
The Company's selection of business partners is not based on any considerations other
than normal business parameters. In case of equal business offers, the Company will
select a business partner belonging to a socially disadvantaged section of society.
This Code of Conduct for Affirmative Action will be put up on the company web-site
to encourage applications from socially disadvantaged sections of society.
The Company makes all efforts for up skilling and continual training of all itsemployees in order to enhance their capabilities and competitive skills. No
discrimination of any type will be shown in this process.
The Company may have a partnership programme with educational institution/s tosupport and aid students from socially disadvantaged.
Mission and Vision of Bajaj Auto:
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.
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.
Brand Essence
Blending together Youthful, Creativity and Competitive technology to exceed the spoken and
the implicit expectations of our customers.
Brand Values
Values of Learning, Innovation, Perfection, Speed and Transparency
In the Chairman¶s Letter 2008, Chairman of Bajaj Auto, Mr. Rahul Bajaj shared his Visionfor Bajaj Auto by 2010. It Involved:
To replace a legend is never easy, to replace a legend when the legacy needs a major overhaul
is even more difficult. Rahul Bajaj had created an extraordinarily triumphant company, and it
required enormous courage for Rajiv Bajaj to tinker with the business model and change the
success formula. But given the changes in the environment: more competitors and fiercer
competition, changing customer needs and tastes, new technology and more
sophisticated management tools and techniques, transformation was a necessity,
not a luxury. Bajaj began the process by recruiting new talent, and forming a new
core team of about 30 people. Among them was Abraham Joseph, Bajaj Auto's
R&D head, and RL Ravichandran, head hunted by Bajaj to give a fresh impetus
to Bajaj Auto's marketing strategy. Earlier this year, Ravichandran quietly left his
resignation letter on Bajaj's desk and went on leave. He met Bajaj two days before he was scheduled to leave Pune for a new job in the Middle East. The conversation
convinced him to stay on. Bajaj didn't offer to match the substantial salary of the new job.Instead, he offered him a different job profile. He would be freed from the daily chores of
sales management in order to focus on shaping a global strategy for Bajaj Auto. "I stayed because Rajiv convinced me he really needed me. I found great sincerity in the need,"
Ravichandran told the media. The young Bajaj clearly knows not only how to hire talent, butalso the knack of retaining people.
Bajaj inspires his employees, not by dangling a carrot or through fear, but through his
authenticity. He has no airs. Until a few years ago - he had to stop because of a severe knee
injury - his favourite pastime was playing football with the Akurdi factory workers. The
source of his credibility however lies in his transparent management style. Listen to how he
engages his managers in the unpleasant task of cost cutting. "Cost has to be looked at in a
different way," he explains. "The wrong way is to tell people that we are cutting costs.
People want to come to work eager to work. But if in a meeting I say that today I want to talk
about cost cutting, I am sure they will do their best, but they will not be motivated. I will be
talking in isolation. This is especially true in an owner-managed company. Inevitably there
will be a feeling among executives that the benefit of cost cutting will go into the owner's pocket.
Managers and workers also see cost cutting as a way to rip off and to make them work
harder. Outside the company, among vendors and customers, the moment you talk of cost
cutting, people think that the product's quality has gone down. Here in Bajaj Auto, we feel
that cost cutting is all about improving quality at lower cost. That's how profitability
improves. That's how customers keep coming back."
Succession Planning
Most business family disputes are between brothers. But some sons have ousted their fathers
(Parvinder Singh ousted Bhai Mohan Singh in Ranbaxy, Omkar Kanwar ousted RaunaqSingh in Apollo Tyres). Such companies typically fared very well after the youngsters took
over.
In happier cases, the transition from father to son has been harmonious despite strong initialdifferences of opinion. Bajaj Auto offers a fascinating case history.
Nobody who knows Rahul Bajaj will accuse him of modesty. Brash and assertive, he thinks
he created one of India's best companies in the difficult days of the licence-permit raj. By1980 Bajaj Auto was top scooter producer by far, and its Chetak brand had a 10-year waiting
list.Critics said Rahul's success flowed from the quasi-monopoly status he got as an earlyentrant at a time when foreign collaborations and licences were difficult to obtain. However,
in the 1980s capacity licensing and foreign collaboration for two-wheelers was liberalised.
All the world's top players (Honda, Suzuki, Yamaha, Piaggio, Garelli, Peugot) entered
through collaborations or joint ventures. Bajaj Auto met the challenge squarely, and beat thenewcomers hands down in scooters. Hero Honda went ahead in motor-cycles, but scooters
were far more popular in the 1980s. Unsurprisingly, Rahul saw himself as the creme de la
creme of Indian manufacturing. His ambition was to overtake Honda as the world's largest
scooter producer.Then came economic liberalisation in the 1990s. Initially, this seemed very
good for Bajaj Auto, since traditional constraints ended. But Indians began to prefer motor-
cycles to scooters, and Bajaj Auto could not touch Hero Honda in this field.
Moreover, liberalisation brought the threat of cheap imports and FDI from top companies like
Honda. Rahul Bajaj at this juncture became famous as head of the Bombay Club, opposing
liberalisation till there was a level playing field for Indians and foreigners. He claimed he hada top-class plant that could compete on even terms, but not with foreigners enjoying better
infrastructure, cheaper finance, and flexible labour laws.
The Bombay Club managed to slow liberalisation but could not stop it. Scooter salescontinued to plummet, the recession and stock market collapse of 2001 hit the company hard,
and some stock market analysts thought it was doomed.
Meanwhile, in the early 1990s, Rajiv Bajaj, Rahul's eldest son, came back to India from
business school in the US. He took a hard look at the company and came to very different
conclusions. He saw that Rahul's ambition of becoming world No. 1 in scooters was
irrelevant in a global economy where motor-cycles ruled supreme, and that the company
needed to change its strategy accordingly.
Rahul was proud of the factories he had created at Akurdi and Waluj. But Rajiv saw them as
grossly overmanned and inefficient, with such a flawed work culture that reforming it was
almost impossible. Instead, he proposed a third factory at Chakan with a totally new
workforce and work culture that could compete with the world's best. Unlike Rahul, Rajiv did
not focus on the disadvantages Indian businessmen faced. Instead, he focused on two huge
advantages: diploma engineers and R&D scientists were available at one-tenth of the
comparable wage in the West.
The Akurdi factory had 20 per cent daily wage earners, 80 per cent skilled workers and noengineers at all on the shop floor. At Chakan, Rajiv Bajaj created a workforce with 80 per
cent diploma engineers and 20 per cent skilled workers. Wages averaged just Rs 12,000 per
month for engineers at Chakan against Rs 11,500 for workers at Akurdi.
But the productivity of the engineers was several times higher, lowering costs. The R&D
focus of the company yielded new designs that finally enabled it to compete with and beat
Hero Honda, and even Honda. To his credit, Rahul backed Rajiv's new approach.
Enormous VRS payments enabled the company to halve the workforce. In 2000, Bajaj Auto
made one million vehicles with 22,000 workers. In 2004-05, it made 1.8 million vehicles with
just 11,000 workers. At Chakan productivity levels, it could have made as many vehicleswith 7,000 workers.
All Bombay Club rhetoric has ended. Instead of opposing multinationals, Bajaj Auto aims to
become one itself, with factories in Indonesia, Brazil and Nigeria. Its share price has risen
from Rs 200 in 2001 to Rs 1,300.
The main lessons seem to be as follows:
Youngsters with global experience know better than senior managers whether a factory is
good or bad.
No CEO will heed a 30-year-old manager who says the factory is terrible, but may heed his
30-year-old son. This is why family businesses sometimes beat professionally managed ones.
A champion in one set of conditions can collapse when conditions change. Owners should
beware of delusions of grandeur.
India's big advantage lies not in cheap labour but in cheap design and engineering skills.
Some key initiatives to facilitate a learning environment at Bajaj Auto are:
a) Individual-Owned Learning ± ³I do it my way´ Employee develops one¶s own learning plan, based on mutually identified competency gaps,
in present and aspired job in career path.
b) User f riendly Learning Management Sof tware We provide self-paced and location independent learning by offering 24X7 single window
platform for all learning interventions like instructor-led training programs, E-learning
modules and informal learning through communities.
c) Idea Management and Knowledge sharing We encourage our employees to explore the unknown and in the process, create value for the
company. Kaizen Idea Management and various Knowledge Sharing forums ensure that wehear our employees and channelize their creativity towards product and process innovation.
Chairman Rahul Bajaj¶s Management Philosophy
y Be at the f oref ront of Technological InnovationOur vibrant engineering minds consistently conceptualize new ideas, feeding breakthrough
technologies and innovative patents at our in-house R&D Center.
y World class manuf acturing
TPM is the way of life at Bajaj Auto. Latest manufacturing technologies like robotics,automation build quality in our products.
y Grow with us
Our organic growth strategy provides numerous opportunities to our employees to climb theladder of authority and responsibility.
British forces and the absolute obedience within the Germans. It is when both these, strategy
and organization culture, are robust that we can place big bets even on relatively weak market
signals. The success of Microsoft, Google, Airtel can be attributed to the ability to do this. If
we look at our own company's successes and failures we would realize the centrality of this
feature. When the demand for a product is obvious, competition intensifies and margins
weaken. It is when it is not obvious that we have the latitude to dig in to a market and realizethe first mover advantage. Quality of management is the key resource any organization has
and therefore the core attribute which should be cultivated in it. I believe that it comes from
the organisation's values and performance orientation. If these are in place, the rest can be put
together. This aptly sums up what is practiced at Bajaj Auto. Learning is a daily activity, well
augmented by experienced colleagues who make it all the more enjoyable.
Evolution of Two-wheeler Industry in India
Two-wheeler segment is one of the most important components of the automobile sector that
has undergone significant changes due to shift in policy environment. The two-wheeler
industry has been in existence in the country since 1955. It consists of three segments viz.
scooters, motorcycles and mopeds. According to the figures published by SIAM, the share of
two-wheelers in automobile sector in terms of units sold was about 80 per cent during 2003-
04. This high figure itself is suggestive of the importance of the sector. In the initial years,
entry of firms, capacity expansion, choice of products including capacity mix and technology,
all critical areas of functioning of an industry, were effectively controlled by the State
machinery. The lapses in the system had invited fresh policy options that came into being in
late sixties. Amongst these policies, Monopolies and Restrictive Trade Practices (MRTP) and
Foreign Exchange Regulation Act (FERA) were aimed at regulating monopoly and foreign
investment respectively. This controlling mechanism over the industry resulted in: (a) several
firms operating below minimum scale of efficiency; (b) under-utilisation of capacity; and (c)
usage of outdated technology. Recognition of the damaging effects of licensing and fettering
policies led to initiation of reforms, which ultimately took a more prominent shape with the
introduction of the New Economic Policy (NEP) in 1985.
However, the major set of reforms was launched in the year 1991 in response to the major
macroeconomic crisis faced by the economy. The industrial policies shifted from a regime of
regulation and tight control to a more liberalised and competitive era. Two major results of
policy changes during these years in two-wheeler industry were that the, weaker players died
out giving way to the new entrants and superior products and a sizeable increase in number of brands entered the market that compelled the firms to compete on the basis of product
attributes. Finally, the two-¬wheeler industry in the country has been able to witness a
proliferation of brands with introduction of new technology as well as increase in number of
players. However, with various policy measures undertaken in order to increase the
competition, though the degree of concentration has been lessened over time, deregulation of
the industry has not really resulted in higher level of competition.