Bajaj Auto Limited: Notes from the
AGM
July 23, 2015
Commentary
on the business by Rajiv Bajaj:
§
- The company’s strategy is a stool with 3 strong legs:(1) Global
Markets (2) Sharp Brands (3) Lean Operations
- Some people
say that Bajaj moved away from scooters. I would say that Bajaj didn’t move
away from scooters but it moved away from being a domestic player to a global
player. Our corporate brochure says “Do what you think is the best but be the
best in what you do”. We thought that motorcycles comprise about 70% of world’s
2 wheeler markets by volumes and roughly 80% by value so we should target that
segment. To be the best means to be the best in the world. And we decided to be
the best motorcycle manufacturer in the world.
- Bajaj exported
30,000 units in the year 2000. In the year 2015, Bajaj’s exports have grown to
1.8 million units. The exports have increased by 60 times in 15 years. That
proves the success of our global strategy.
- To compare
with the peers. Bajaj exports 50% of its sales, TVS 16%, Tata Motors 10%,
M&M 6% and Hero 3%. Bajaj is the only true global player from India. Hence,
we think we have made the right choice by focusing on motorcycles on the world
stage.
- We very
strongly believe that we shouldn’t do everything. We believe in doing one thing
at a time and doing it well. Often, this question comes up that Honda, Toyota
etc. sell cars, bikes; even gensets amongst a host of other things. Why not Bajaj?
The answer is that Honda and Toyota started 50-60 years back when the
competition was not that specialised. Things have changed and now it’s tough
for even Honda and the likes to enter a new segment. Honda and Toyota introduced
a host of luxury brands to take on the German brands but have failed.
- If no
scooters and only motorcycles, then why is Bajaj present in 3-wheelers and is
even looking to launch a 4 wheeler? The answer is that when it comes to
scooters and motorcycles, there is war in the market place and there is fierce competition.
Hence, it is prudent to decide on one segment in order to be able to survive
and eventually win the war. Three-wheelers on the other hand are a niche category
where the competition is benign and Bajaj is a market leader with a well
entrenched position.
- We are No.1
or No.2 in 20 out of the 60+ countries that we are present. Egypt and Iran: 60%
market share. Nigeria is doing well. Pulsar is a market leader in Turkey,
Mexico, Ecuador and Argentina amongst other markets.
- Bajaj Auto
contributed in a major way to help Nepal post the devastating earthquake. Bajaj
is a company that not only has its brands in the right position but also its
heart in the right place.
- The newly
launched CT 100 and Platina are doing very well. Pulsar RS200 along with KTM is
an undisputed leader in the super sports category. Pulsar is doing very well in
the sports category. We are now a market leader in 40% of the motorcycle
segment. Discover in the mid segment has not performed to our expectations and
this is where we need to do something different.
- A complete
overhaul was undertaken in the 3 wheeler portfolio which has led to an
increased market share for Bajaj.
- RE 60. We
are frustrated with the litigations but ready on our side and prepared to roll;
the moment we get a go ahead.
- Technical
disruption from electric bikes. When it comes to technology, with the support
of KTM and Kawasaki, we are on top of things and ready to take any challenge in
our stride. In fact, KTM has recently launched an all electric bike.
- We have
higher margins not because of higher prices. Pricing is pretty much at par with
others. Difference is in the costs. It is the adoption of TPM in letter and
spirit. Ours is the first automotive plant in the world to have all TPM
certifications.
- Bajaj has
422 robots working on the shop floor. It changes the way manufacturing takes
place. Sooner, we could have cobots which are robots working in close proximity
with humans.
- We have
developed a lot of products for KTM/ Kawasaki in the last 2 years. They want us
to develop more products for them but we had to say “No”. We are busy with
developing our own products.
- Bajaj is a
bold team with bold ideas, bold bikes and hopefully bold results.
- Bajaj has
broken many myths along the way: Myth(1): Indian products don’t have great technology. Myth(2): Japanese bikes are the best. Myth(3): Indian products cannot be exported especially to Africa where the terrain is rough. Myth(4):
Indians will only buy fill it, shut it, and forget it bikes.
§ Next myth we
want to break is that in the commuter bike segment, the position of Hero is
unassailable. In the commuter segment, we want to do what Pulsar did to the
sports segment.
Disclaimer : I hold shares in Bajaj Auto Limited. This post is not an investment advice.
