Saturday, August 18, 2007

Bajaj: Riding into glory

From riding the Chetak scooter to zipping past the Pulsar 220CC, it has been an evolution for Bajaj Auto. India's second largest two-wheeler maker's origins is rooted in Bachchraj Trading Corporation, first set up to trade in a few 2 and 3-wheelers.

Founded by Jamnalal Bajaj, who associated closely with Mahatma Gandhi during the freedom struggle, the Bajajs' have seen real growth starting from the sixties. Though Bajaj started off as dealers in imported 2 and 3-wheelers, it was only in 1960, that it started manufacturing, having obtained the precious manufacturing licence from the government. In mid-sixties, current Chairman Rahul Bajaj took over the reins as the CEO, but the eighties are still seen as the best years for Bajaj.

"The decade of the 80s was the greatest decade for Bajaj Auto. We did well in the 70s, but 70s was a disaster for Indian industry. It was the height of misguided socialism. No technology was allowed to come," reminisces Bajaj.

Interestingly, during the 80s, Bajaj Auto's production jumped 8 fold to touch 8 lakh units! In the 80s, the company also touched the magic figure of Rs 100 crore, which was in 1980-81. But the rapid expansion saw a cooling off in the 90s. Volumes grew by only about 78%, partly because the scooter king was faced with consumer preference shifing from scooters to bikes. Bajaj had no presence in bikes and had to forge an alliance with Japanese major Kawasaki to get a jumpstart in the motorcycle business in 1986. That was not good enough to fight the new rivals - the Munjals with the Hero Honda joint venture.

As a result of the Kawasaki partnerships, Bajaj succeeded where LML and Kinetic had failed.

That success called for a crucial makeover time for the Bajaj management. The next generation Rajiv Bajaj and Sanjiv Bajaj were inducted into the company in the early nineties. The young energy of the two brothers backed by an equally energetic research team helped Bajaj Auto roll out a winner in this Pulsar in 2001.

This model, the first indigenously developed one by the company, catapulted what was then called a 'niche segment' with sales of around 10,000 units per month among three players to around 60,000 now. Pulsar today has a market share of over 50% in that category.

In the last six years, constant upgradation has led the Pulsar grow from a single variant to four engine options now. A unique technology feat was achieved with what Bajaj calls DTSi having two spark plugs and added frills. Bajaj is itching to push its frontiers to the global markets with buyouts being eyed in Europe.

It will be more to enter new markets or acquire prestigious brands than technology, because, as MD Rajiv Bajaj sees its, "I believe technology is actually to be grown inside out. It's never to be acquired from outside in and certainly, in this business, which is not new to us."

For the business, which is new to the company, Bajaj has started talking to French car major Renault to explore a collaboration for 'very competitively priced vehicles'. This move could also be to pre-empt any problem similar to the scooter to motorcycle shift it faced earlier. That deal may take shape early next year.

While these moves are expected to grow Bajaj into a full fledged automobile company, Rahul Bajaj has clearly charted out the succession plan. The financial acivities of the company have been demerged and will be led by Sanjiv Bajaj. It has been a gradual, seamless handover of responsibilities carefully planned by the Bajaj patriarch.

Says the Chairman, "I take more credit for that change than I take for whatever little I did in the 60s, 70s and 80s."

There are others who also commend the transition of the company. Shankar Sharma, who heads a share broking business with a portolio of over USD 100 million, is one of the few who had a bullish view about Bajaj Auto even during its tough times in early 90s.

"You have to credit them for changing the DNA from a monopoly, to being an aggressive, lean and agile company," he said.

Bajaj Auto has no choice. It's history to wait for a Bajaj Chetak for eight years. So, Bajaj is not wasting time to launch its next motorcycle platform with another technology upgradation, due in September. And it's also leveraging its arrangment with Kawasaki's Philippine subsidiary to export around 100,000 bikes. All these activities to capture a 10% share of the global 2-wheeler market.

And as a four wheeler manufacturer, well it will only start on that jounrey in 2009.

Source:- Moneycontrol