Bajaj Case Study
Financial Management at Bajaj Auto
Bajaj Auto Limited is one of India 's largest two-wheeler manufacturers. As the dominant player until the early 1990s, Bajaj 's market share declined from 49.3% in 1994, to 38.9% in 1999 with the entry of major competitors like Hero Honda. Bajaj has initiated several measures to regain its market share and strengthen its competitive position. The case discusses the financial strategy pursued by Bajaj.
Financial Management at Bajaj Auto
We want to get back the leadership position in the two-wheeler segment and will use the cash if required to do so. However, in current volatile market conditions (not to forget the Japanese and their huge cash reserves), we would rather have the security of cash any day. We are competing not only with Indian companies, but also with large foreign two-wheeler companies, many of whom have much deeper pockets than ours. While our surplus cash will assist us in future growth, it also acts as a deterrent to others from indulging in predatory pricing tactics – Sanjiv Bajaj, Vice-President Finance, Bajaj Auto Limited. 1
Introduction
In 2003, Bajaj Auto Limited (Bajaj) was one of India’s largest manufacturers of both two and three-wheelers. The three-wheelers, also known as autorickshaws, were unique to the South Asian region. The company recorded revenue of Rs.5125.73 crores representing a 13% increase over the previous year 2. Once the unchallenged market leader, Bajaj trailed Hero Honda in the late 1990s. Bajaj’s market share declined from 49.3% in 1994, to 38.9% in 1999.3 Thereafter, Bajaj had initiated several measures to regain its market share and strengthened its competitive position. In 2003, Bajaj had a workforce of 12,000 employees and a network of 422 dealers and over 1,300 authorised service centers.4
The Indian Two-Wheeler Industry
Two-wheelers had become the standard mode of transportation in many of India’s large urban centers. Use of two-wheelers in the rural areas had also
Bajaj Auto Limited is one of India 's largest two-wheeler manufacturers. As the dominant player until the early 1990s, Bajaj 's market share declined from 49.3% in 1994, to 38.9% in 1999 with the entry of major competitors like Hero Honda. Bajaj has initiated several measures to regain its market share and strengthen its competitive position. The case discusses the financial strategy pursued by Bajaj.
Financial Management at Bajaj Auto
We want to get back the leadership position in the two-wheeler segment and will use the cash if required to do so. However, in current volatile market conditions (not to forget the Japanese and their huge cash reserves), we would rather have the security of cash any day. We are competing not only with Indian companies, but also with large foreign two-wheeler companies, many of whom have much deeper pockets than ours. While our surplus cash will assist us in future growth, it also acts as a deterrent to others from indulging in predatory pricing tactics – Sanjiv Bajaj, Vice-President Finance, Bajaj Auto Limited. 1
Introduction
In 2003, Bajaj Auto Limited (Bajaj) was one of India’s largest manufacturers of both two and three-wheelers. The three-wheelers, also known as autorickshaws, were unique to the South Asian region. The company recorded revenue of Rs.5125.73 crores representing a 13% increase over the previous year 2. Once the unchallenged market leader, Bajaj trailed Hero Honda in the late 1990s. Bajaj’s market share declined from 49.3% in 1994, to 38.9% in 1999.3 Thereafter, Bajaj had initiated several measures to regain its market share and strengthened its competitive position. In 2003, Bajaj had a workforce of 12,000 employees and a network of 422 dealers and over 1,300 authorised service centers.4
The Indian Two-Wheeler Industry
Two-wheelers had become the standard mode of transportation in many of India’s large urban centers. Use of two-wheelers in the rural areas had also
Bibliography: 1. 2. ―The BT 500,‖ Business Today, 7th September 1998. Gita Piramal, Sumantra Goshal and Sudeep Budhiraja, ―Transformation of Bajaj Auto Ltd,‖ Lessons in Excellence Case Contest, www.thesmartmanager.com, February-March, 2003. M. Anand, ―Is Munjal Being Too Generous?‖ Businessworld, 19th May 2003.B19th May Chetan Soni & Nandini Sen Gupta, ―Rolling stock: Payouts put auto investors in top gear,‖ Times News Network, 4th June 2003. Motilal Oswal, Equity Research, February 2003. Honda Annual Report 2003. Bajaj Auto Limited Annual Report 2003. CMIE - Prowess Database. CMIE - Industry Analysis Service. www.bajajauto.com. www.siamindia.com. www.indiainfoline.com. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 130