Bajaj auto

Company: Bajaj Auto

Operations Management

Project_2nd Term

By,Sindoor Naik (MBA)

Universal Business School(sindoornaik@yahoo.com)

History

• Bajaj Auto came into existence on 29 November 1945.• Bajaj Auto Limited is India's 2nd largest manufacturer of

scooters and motorcycles. • The company generally has lagged behind its Japanese

rivals in technology, but has invested heavily to catch up. • It is the lowest-cost scooter maker in the world.• Although publicly owned, the company has been

controlled by the Bajaj family since its founding.

Introduction

• Market Capital: INR 520 billion (On 31 March 2013)

• One of the oldest and the 2nd largest manufacturer of automobiles in India

• World's 4th largest two- and three-wheeler maker• Bajaj Auto makes motor scooters, motorcycles

and the auto rickshaw. • Changed its image from a scooter manufacturer

to a two wheeler manufacturer

Business; Partnership; Location

BUSINESS: Bajaj Auto makes several kinds of motorcycles, scooters and three wheelers.

PARTNERSHIP: Bajaj Auto has a technical tie-up with Kawasaki Heavy Industries of Japan to produce a range of the latest, state-of-art two-wheelers in India.

LOCATION: Bajaj Auto has three plants in Maharashtra, at Akurdi, Waluj and Chakan.

USP of Bajaj Auto Ltd.

• Style

• Technology

• Pricing Strategy

• Innovation

• Speed

• Perfection

FY2009 FY2010 FY2011 FY2012 FY20130

5000

10000

15000

20000

25000

Bajaj Auto

Net Sales and Operating Income (in Rs. Crore)

Year ended

31st March

Industry (Nos.)

Industry’s

Growth

Bajaj Auto

(Nos.)

Bajaj Auto’

s Grow

th

Bajaj Auto

’s Mark

et Shar

e

2009 6806114 4.0% 1907853

10.8%

28.0%

2010 8444243 24.1% 2506791

31.4%

29.7%

2011 10500073

24.3% 3387043

35.1%

32.3%

2012 11943535

13.7% 3834405

13.2%

32.1%

2013 11952135

0.1% 3757105

2.0% 31.4%

Bajaj Auto’s Sale of Motorcycles, Domestic +

Exports (in numbers)

Land

Waluj: Aurangabad (Maharashtra)

Chakan: Mahalunge Village (Maharashtra)

Patnagar: Uttaranchal

Bajaj Auto has in all three plants:

The use of optimised resources and improved efficiencies at all levels has

Helped the Plants to achieve superior results in:

Productivity

Product Quality

Cost Reductio

n

Company

Culture

The Waluj Plant won the TPM Award for ‘Excellence in Consistent TPM

Commitment’ from the JIPM in March 2013.

The Green Manufacturing Excellence Award, 2012 was awarded to the Waluj plant as the‘Challenger Award — Large Business’.

The National Energy Management Award, 2012 has been awarded to the Waluj plant as an

‘Efficient Energy Unit’.

Chakan plants won the TPM Award for ‘Excellence in Consistent TPM

Commitment’ from the JIPM in March 2013.

Patnagar Plant

Product Range

Plant

Output

Capacity Products

Waluj 2.40 millio

n

2.22 million-2 & 3

wheelers

Boxer, Platina

,Discov

er,Pulsar and 3 Wheel

ers

Capacity

Chakan 1.20 millio

n

0.88 million- vehicle

s

Pulsar,Avenger, Ninja

and KTM

Patnagar

1.80 millio

n

1.12 million- vehicle

s

Platina,

Discover,

Boxer

Technology

-R&D

During 2003-04, the company's R&D team

unveiled an innovative and path-breaking

technology called DTSi (Digital Twin Spark

ignition).

Was world

's first

on

small d

isplacement

two-wheelers

Technology-R&D

Plugs provide unprecedented performance and efficiency.Fast and optimal combustion.Lower emissions.Controlled by an advanced Electronic Control Unit, is the technology of the future. Combustion in a triple spark engine is 27%

faster than a twin spark and 50% faster than a single spark engine.

THE TRIPLE SPARK

TECHNOLOGY

Facilitates induction of more quantity of charge (air-fuel mixture) and complete evacuation of all burnt gases.Results in increased engine performance – power, throttle response and pick-up at all engine speeds.

4-VALVE

4-valve engines can be revved to much higher RPMs, without any engine strain, allowing the

rider to experience superior performance.

LIQUIDCOOLI

NGEngine is kept cooled using liquid coolant, which is better at heat dispension as compared to an air cooled engine.Ensures there is no power fading due to overheating.Results in longer engine life.The coolant provides for a muffling effect which smoothens engine noises even at high RPMs.

Air Coole

d

Liquid Coole

d

6SPEED 

GEARBOX

Ensures optimal use of the wider range of power

delivery.

FOCUSMarket

Customer

Segments

Focus Market

Youth

Most of their Bikes Targets the Youth.

Bajaj Pulsar 150cc is certainly one of them!

Office Goers

Discover 125 and 100 T, rather the Discover Brand is clearly aimed at Targeting the Office Goers, specially the Middle Class Segment.

Sports Segment

With the Launch of KTM DUKE 200, even KTM DUKE 100, as well as the PULSAR

200 NS, they are surely Targeting those who want

Speed !

Focus Product

s

Auto-Rickshaws

Bajaj-Pulsar 150 cc

Bajaj-Avenger

Pulsar 200NS

Has redefinedthe sports

motorcycle segmentin India.

Set new benchmarksin terms of

performance, style,technology and

affordability.The award for the best

product design across the entire

automobile segment.

Pulsar 200 NS

Discover 125 ST Discover 125 ST

The Discover 125 ST is equipped with a

high performance four-valve air cooled engine powered by twin spark

ignition,delivering 13 Ps, and a 5 speed gear box suitably

synchronised to the power

characteristics of the engine.

This provides the joy of a powerful drive

whilemaintaining the high

fuel efficiency for which Discover is

known for.

Nitrox mono shock absorber

Swing arms

Big and stylish fuel tank

Bajaj Discover 100T

Bajaj Discover 100TSmaller engine capacity

More fuel efficiency

The vehicle ispowered by a high performance four-

valve air cooled 100 cc DTSi engine

delivering10.2 Ps, with a five-

speed gear box.The Discover 100 T is

The world’s first 100 cc single cylinder four-valve DTSi engine

and also delivers best-in-class power and fuel efficiency.

KTM DUKE-

125

KTM DUKE-125

KTM DUKE-200

KTM DUKE-125 and 200

Anti-lockbraking system (ABS)

The KTM 200 Duke also won eight awardsduring the year.

This increases driversafety by not allowing

the vehicle to skideven in cases of panic

braking on highskid surfaces.

The KTM 200 Duke also won eight awardsduring the year.

Value Chain Analysis of Bajaj Auto

They select Suppliers that provide majority of the required Raw Materials!

Suppliers and Raw Materials

Minda

Headlamps and Lights

Suppliers

Raw Materials

JBM

MRF

Minda

Reinder

Frames

Tires

Locks and Ignition Systems

Headlamps and Lights

Endurance

Varroc

Max Auto Comp.

Silico Cable

Brakes, Clutch & Cast Vehicles

Digital Meters & Plastic Parts

Ignition Systems & Switches

Wires & Cables

Inventory Management

Bajaj Auto

maintains

7 days Invento

ry

Demand Estimation

is based on

Panel Regression

Takes into

account

Time Series & Cross Section

Variation in Data

All Mediators are connected with each other through IT

Linkage

Manufacturing:• Bajaj Auto is the world's third-largest manufacturer of motorcycles and the

second-largest in India.

• Manufacturing locations: Akurdi, Pune, 411035

• This is one of the oldest plants 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.

Manufacturing: 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

Cont…..

ISO

• Bajaj Auto have Adhered to ISO9001(Quality System) .

• It also posses ISO-4001(Environment System) Certification.

• All plants of bajaj Auto is actively invovled in Afforestation with Plantation work in & Around plant premises.

• It also made huge Investment in Effluent Treatment Plant(ETP)

ISO CERTIFICATE

DISTRIBUTION CHANNEL

Various players involved in the channel design are:

• Manufacturing Plant Depots

• Carrying & Forward Agent

• Dealers

• Sub Dealers

• Setting up depots is a geographical strategy adopted by Bajaj Auto.

• It has chosen strategic locations.

• The key role played by depots is that they are meant to cater to any sudden rise in demand of vehicles, and to cover the existing geographic span of India.

Ex : Due to extensive distance of manufacturing plants in Maharashtra from West Bengal and north-east India, there

exist a depot in Kharagpur with capacity of housing 800 vehicles• There are similar depots in Punjab, Rajasthan and southern India.

Depots:

Depots:

• Reaching the states of the North-East takes 15 days if we go via the carrying and forwarding agent concept.

• Generally bikes reach West Bengal in 7-8 days.

• The bottleneck is the Darjeeling route.

• Hence, came in the concept of a depot whereby we can reach the North-East in the same time, instead of experiencing a lag of almost a week.”

Dimensions for Choosing Depot or Factory Approach

• A dealer needs to consider his order requirements and then come up with an order to place to the regional office.

• If the demand is immediate, he may approach a Depot for the load.

• Else, he has to try to stick to factory load.

• Generally, orders are placed to the factory but in case of urgent requirement, due to which the lead time reduces considerably, the order is procured from the depot.

Dealers:

• Bajaj Auto has a network of 498 dealers and over 1,500 authorized service centers and 162 exclusive three-wheeler dealers spread across the country.

• Around 1,400 rural outlets have been created in towns with population of 25,000 and below.

• The current dealer network is servicing these outlets.

Company Owned & Company Operated showrooms.

• These concepts exists only for Pro-Biking showrooms. ( Ex: Bajaj Kawasaki Ninja and Bajaj KTM Duke)

• Bajaj Auto has tried showcasing their muscle power in high end biking segment.

• The concept has evolved very fast and now there are 52 Pro-Biking showrooms in the country.

• The company itself does not take any order from the customer in these showrooms.

• The giant dealer of the region who is acting as a logistics partner for the pro-biking concept takes the order on behalf of the company and fulfills the customer requirement.

Dealer Owned & Dealer Operated

• These dealers are fewer in number because they are generally the giant dealers who are the financial muscle for the company.

• In the future years Bajaj wants to do away with this concept.

• The reason behind this is that the bargaining power increases in the hands of the dealer, which puts the company in a knotty situation.

• This function of distribution is not owned by the company in any form.

• This is outsourced to the third party vendors.

• The third party here is Transport Corporation of India (TCI) and a few other private vendors namely OSL Jamuna Transport ,Sumit Transport etc.

• The fleet to be transported is custom-designed for Bajaj Auto by the vendor.

Transport & Logistics:

Transport & Logistics:

• A Transit Insurance Compliance Letter (TICL) is signed between the two parties

• The local level sub-dealer sometimes gets to decide the last mile logistics, as he can decide to pick up the vehicles himself or have it transported to him.

• Logistics of the vendor is decided by the company.

• Freight charges are built in the product price.

Services to Dealer :

Workshop Training

In a month:

• 30-40 Mechanics can be trained per dealer

• 15-20 Sales personnel can be trained per dealer

Order Tracking:

• Taking a daily account of the order received from various dealers and Regional Offices (RO).

• Orders from dealers are punched in by dealer themselves.

• Orders are followed up in the system only if the credit limit is not crossed.

• This credit limit is preset into the system depending upon the dealer and his/her track record.

Packaging:

• Packaging in factory is outsourced to third party vendor. These vendors are generally from the Transport & Logistics partners

Dispatching Goods:

• Goods need to be dispatched via third party vendor TCI. State corporations and other private players are also part of the vendor list

Generating Invoice & Waybill:

• These documents need to be generated and dispatched to the respective dealer.

Key Players in Market• Hero Honda• Bajaj Auto• TVS• Honda• Yamaha• Suzuki• LML• Royal Enfield

Market Share

Hero Honda

TVS Motors

Bajaj Auto

Others

41%

31%

14%

14%

Bajaj InvestmentParticular As at 31st

March 2013

Govt. Securities & Bank deposits 8653

Mutual funds including UTI 1739

Debentures & Bonds 8698

Preferences shares 854

Inter corporate Deposits 1651

Fixed income investments 21735

Market value 29433

Particulars As of 31st March

Share Capital 2893.70

Inventories 6362.80

Sundry Debtors 7675.80

Cash & Bank 5588.50

Sundry Creditors 5461.60

Liabilities & Assets

Turnover €612 millionNet Profit € 25.3 millionShare of dividends € 3.64 millionTotal production 4237162 unitsNet sales 20,792.74 croreTotal exports 1,547,157 units Market capitalization €61 million

FINANCIALS 2013

Hamara Bajaj!!!

Thanking You