Bjaj Auto Finance

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.

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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.

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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.

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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

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different niche markets. Analysis of different alternatives like outsourcing,

in-house, purchase & tie-up should be evaluated.

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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

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