Notes from the AGM- Bajaj Auto Limited

Bajaj Auto Limited: Notes from the AGM              

July 23, 2015

Commentary on the business by Rajiv Bajaj:

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• 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.