Bajaj Auto Ltd_Final

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Bajaj Auto

History

Bajaj Auto Ltd. was formed in 1945 as M/s Bachraj Trading Corporation Private Limitedimporting and retailing two and three wheelers in India. It obtained an industrial licence from

the Government in 1959 and forayed into manufacturing. Bajaj Auto Ltd. came out with its

IPO in 1960.

Prior to the economy being liberalized in the 1990s, Bajaj Auto enjoyed a near monopoly in

the market. The demand for its products far outstripped the capacity that the Government had

allowed it to build. As such although its products had a ready market, yet it could not expand

capacity or explore foreign markets because of government regulation and hence capitalize

on economies of scale and compete in the International markets.

Today its the world¶s 4

th

largest two wheeler manufacturer and the second largest in India. Itscorporate office is in Pune whereas its manufacturing facilities are spread across Maharashtra

and Uttaranchal. The Forbes Global 2000 list ranked Bajaj Auto 1946 out of 2000 in 1995.

Bajaj Auto is part of the Bajaj Group one of the foremost business houses of the country

which has interests spanning across various sectors like home appliances, financial services

and electric products amongst others. The group was founded by Jamnalal Bajaj who along

with G.D Birla were two Indian industrialists deeply involved in the freedom movement. To a

certain extent the Bajaj Group had imbibed the values and philosophy of its founder.

Mr. Rahul Bajaj is the chairman of the group today and it is under his aegis that the group has

transitioned from the licence raj regime into the era of liberalization of the Indian economy.The group used to operating in a protected environment for decades was suddenly susceptible

to foreign competition and the leadership at the Bajaj Group had to carefully tread the

business environment until they gained their foothold in the now liberalized environment.

Today Bajaj Auto competes with international auto companies like Yamaha, Suzuki and

Honda both in the Indian and international markets. Mr. Rahul Bajaj has been a vocal critic of

the licence raj and believed that by capping production he was doing injustice to his

customers. Drawing a parallel with his grandfather, Mr. Bajaj increased his production

beyond the licensed capacity and he says he was ready to face action from the government for

this violation. Also, when the Indian economy was liberalized Mr. Rahul Bajaj had voiced

serious concerns whether Indian industry would be able to face the onslaught of foreign

competition because it had operated under government regulation which had made Indian

manufacturers inefficient as compared to MNCs. However, not only Bajaj Auto Ltd. but the

Indian corporate across sectors today are significant players in the global markets and

liberalization was to the benefit of both Indian industry and consumers.

The company¶s turnover for the past financial year was Rs.46.16 billion and a market

capitalization of around Rs. 25000 crores and it has been consistently growing. The group

recently went under restructuring in order to separate the interests of various factions of the



Bajaj Family and Bajaj Auto Ltd. came under the control and management of Mr. Rahul

Bajaj. However, till this day some cross holding remains within the Bajaj family in various

group companies whereas essentially control has been demarcated within the group.

Bajaj Auto came into existence on November 29, 1945 as M/s Bachraj Trading Corporation

Private Limited. It started off by selling imported two- and three-wheelers in India. In 1959, it

obtained license from the Government of India to manufacture two- and three-wheelers and it

went public in 1960. In 1970, it rolled out its 100,000th vehicle. In 1977, it managed to

produce and sell 100,000 vehicles in a single financial year. In 1985, it started producing at

Waluj in Aurangabad. In 1986, it managed to produce and sell 500,000 vehicles in a single

financial year. In 1995, it rolled out its ten millionth vehicle and produced and sold 1 million

vehicles in a year.

It is world's fourth largest manufacturer of two-wheelers and India's second largest two

wheeler manufacturer and the world's 4th largest two- and three-wheeler maker. It is based inPune, Maharashtra, with plants in Akurdi and Chakan (Pune), Waluj (near Aurangabad) and

Pantnagar in Uttaranchal. Bajaj Auto makes and exports motorscooters, motorcycles and theauto rickshaw.

The Forbes Global 2000 list for the year 2005 ranked Bajaj Auto at 1946.

The Bajaj Group is amongst the top 10 business houses in India. Its footprint stretches over a

wide range of industries, spanning automobiles (two-wheelers and three-wheelers), home

appliances, lighting, iron and steel, insurance, travel and finance. The group's flagship

company, Bajaj Auto, is ranked as the world's fourth largest two- and three- wheeler

manufacturer and the Bajaj brand is well-known across several countries in Latin America,

Africa, Middle East, South and South East Asia. Founded in 1926, at the height of India's

movement for independence from the British, the group has an illustrious history. Theintegrity, dedication, resourcefulness and determination to succeed which are characteristic of

the group today, are often traced back to its birth during those days of relentless devotion to a

common cause. Jamnalal Bajaj, founder of the group, was a close confidant and disciple of

Mahatma Gandhi. In fact, Gandhiji had adopted him as his son. This close relationship and

his deep involvement in the independence movement did not leave Jamnalal Bajaj with much

time to spend on his newly launched business venture.

His son, Kamalnayan Bajaj, then 27, took over the reigns of business in 1942. He too was

close to Gandhiji and it was only after Independence in 1947, that he was able to give his full

attention to the business. Kamalnayan Bajaj not only consolidated the group, but also

diversified into various manufacturing activities. The present Chairman of the group, Rahul

Bajaj, took charge of the business in 1965. Under his leadership, the turnover of the Bajaj

Auto the flagship company has gone up from Rs.72 million to Rs.46.16 billion (USD 936

million), its product portfolio has expanded and the brand has found a global market. He is

India's one of the most distinguished business leaders and internationally respected for his

business acumen and entrepreneurial spirit.



Bajaj Auto is the flagship of the Bajaj group of companies. The group comprises of 34companies and was founded in the year 1926.

The companies in the group are:

y Bajaj Auto Ltd.y Bajaj Holdings & Investment Ltd.

y Bajaj Finserv Ltd.

y Bajaj Allianz General Insurance Company Ltd.

y Bajaj Allianz Life Insurance Co. Ltd

y Bajaj Financial Solutions Ltd.

y Bajaj Auto Finance Ltd.

y Bajaj Allianz Financial Distributors Ltd.

y Bajaj Auto Holdings Ltd.

y P T Bajaj Auto Indonesia (PTBAI)

y Bajaj Auto International Holdings BV

y Bajaj Electricals Ltd.

y Hind Lamps Ltd.y Bajaj Ventures Ltd.

y Mukand Ltd.

y Mukand Engineers Ltd.

y Mukand International Ltd.

y Bajaj Sevashram Pvt. Ltd.

y Jamnalal Sons Pvt. Ltd.

y Rahul Securities Pvt Ltd

y Shekhar Holdings Pvt Ltd

y Madhur Securities Pvt Ltd

y Niraj Holdings Pvt Ltd

y Shishir Holdings Pvt Ltd

y Kamalnayan Investments & Trading Pvt Ltd

y Sanraj Nayan Investments Pvt. Ltd.

y Hercules Hoists Ltd.

y Hind Musafir Agency Pvt. Ltd.

y Bajaj International Pvt. Ltd.

y Bachhraj Factories Pvt. Ltd.

y Baroda Industries Pvt. Ltd.

y Jeevan Ltd.

y Bachhraj & Co Pvt Ltd

y The Hindustan Housing Co. Ltd.

y Hospet Steels Ltd



Top Management Hierarchy in Bajaj Auto:

Rahul Bajaj Chairman

Madhur Bajaj Vice Chairman

Rajiv Bajaj Managing Director

Sanjiv Bajaj Executive DirectorEric Vas President (New Projects)

Abraham Joseph President (Research &

Development)

Pradeep Shrivastava President (Engineering)

S Sridhar CEO (2WH)

R C Maheshwari CEO (Commercial Vehicles)

Rakesh Sharma CEO (International Business)

C P Tripathi Vice President (Corporate)

N H Hingorani Vice President (Commercial)

Kevin P D'sa Vice President (Finance)

V S Raghavan CEO (Operations, BHIL)

S Ravikumar Vice President (BusinessDevelopment)

K Srinivas Vice President (Human

Resources)

Ranjit Gupta President (Insurance, BFSL)

J. Sridhar Company Secretary



y TPM Policy

SHE Policy



Plants

y Bajaj Auto's has in all three plants, two at Waluj and Chakan in Maharashtra and one

plant at Pant Nagar in Uttranchal, western India.

y Bajaj range of motorcycles and three-wheelers Bajaj range of motorcycles

Bajaj range of motorcycles

Plant Locations

Bajaj Auto plants are located at:

y Bajaj Nagar, Waluj, Aurangabad 431 136

MIDC, Plot No A1, Mahalunge Village, Chakan 410 501 Dist. Pune

Plot No. 2, Sector 10 Phase -II - E, Pant Nagar, Sidcul, Rudrapur Dist. Udhamsingh

Nagar Uttranchal Bajaj Auto Limited (herein after referred to as the "Company")

hereby adopts the following Code of Conduct for Affirmative Action. This will be

effective from 1st December 2006.

y The Company affirms that its competitiveness is interlinked with the well being of all

sections of the Indian society.

y The Company believes that equal opportunity in employment for all sections of thesociety is a component of its growth and competitiveness. It further believes that

inclusive growth is a component of growth and development of the country.y The Company affirms the recognition that liersity to reflect socially disadvantages

sections of the society in the workplace has a positive impact on business.y The Company will not practice nor support conscious discrimination in any form.

y The Company does not bias employment away from applicants belonging todisadvantaged sections of society if such applicants possess competitive skills and job

credentials.y The Company's selection of business partners is not based on any considerations other

than normal business parameters. In case of equal business offers, the Company will

select a business partner belonging to a socially disadvantaged section of society.

y This Code of Conduct for Affirmative Action will be put up on the company web-siteto encourage applications from socially disadvantaged sections of society.

y The Company makes all efforts for upskilling and continual training of all its

employees in order to enhance their capabilities and competitive skills. No

discrimination of any type will be shown in this process.

y The Company may have a partnership programme with educational institution/s to

support and aid students from socially disadvantaged sections of society.

y The Company will maintain records of Affirmative Action.

y The Company has nominated Mr. Amrut Kumar Rath, Vice President (HR), to

oversee and promote the Affirmative Action policies and programmes. He will be

accountable to the Chairman.y The Company will make available its learning and experiences as a good corporate

citizen in Affirmative Action to other companies desiring to incorporate such policiesin their own business.

RAHUL BAJAJChairman



WHY BAJAJ AUTO?

Proud Indian MNC

We are an automobile company with global presence and take pride in our Indianroots and values.

Be at the f oref ront of Technological Innovation

Our vibrant engineering minds consistently conceptualize new ideas, feeding

breakthrough technologies and innovative patents at our in-house R&D Center.

World class manuf acturing

TPM is the way of life at Bajaj Auto. Latest manufacturing technologies like robotics,

automation build quality in our products.

Grow with us

Our organic growth strategy provides numerous opportunities to our employees to

climb the ladder of authority and responsibility.

Culture of Empowerment

We provide our employees with high degree of autonomy in their day-to-day

decisions and to act on ideas.

Fair and Transparent Annual and Quarterly PMS

Objective goal setting, transparent performance rewards and constructive feedback inour Performance Management System, help you to exceed performance expectations

by unleashing your potential.

Amongst Top Quartile in Industry Compensation

Competence and performance are the key drivers of our compensation policy. Best

performing employees are awarded with significant rewards.

Employee f riendly work practices

Our policies and systems like SAP and ESS, provide transactional ease so that the

tedium does not claim your time and leaves you free to take on challenging targets.

Superior ³Quality of Life´

Our constant efforts towards employee welfare ensure that our employees enjoy

superior quality of life.



T ALENT ACQUISITION:

Our Talent Acquisition strategy aims to strike a balance amongst fresh & lateral hires

and growth opportunities for our employees.

Bajaj Auto is an equal opportunity employer. Selection is based strictly on individualmerit.

We comb the length and breadth of India to engage promising candidates.

A) Campus:

y Engineers/Graduates: We are preferred employers for on-campus hiring at engineering institutions of repute,

like NITs, IITs.

y Management/ Post Graduates:

We enjoy an excellent reputation with management institutes like IIFT, IITs.

B) Lateral Hiring

We recruit candidates laterally, from various organizational cultures to bring indiverse perspectives.

WORK WITH US:

Apply and be a part of the Bajaj growth engine.

The important thing is not to stop questioning - Albert Einstein

y This aptly sums up what we practice at Bajaj Auto. Learning is a daily activity, well

augmented by experienced colleagues who make it all the more enjoyable.

Some key initiatives to facilitate a learning environment at Bajaj Auto are:

a) Individual-Owned Learning ± ³I do it my way´

Employee develops one¶s own learning plan, based on mutually identifiedcompetency gaps, in present and aspired job in career path.

b) User f riendly Learning Management Sof tware We provide self-paced and location independent learning by offering 24X7 single

window platform for all learning interventions like instructor-led training programs,

E-learning modules and informal learning through communities.



c) Idea Management and Knowledge sharing

y We encourage our employees to explore the unknown and in the process, create value

for the company. Kaizen Idea Management and various Knowledge Sharing forums

ensure that we hear our employees and channelize their creativity towards product and

process innovation.

P eople rarely succeed unless they have fun in what they are doing." - Dale Carnegie

Organizational Structure in Bajaj Auto:

India's premier automotive company, has a focused organizational structure for the Auto

business. With the structure, the existing business roles and responsibilities at the company

have been strengthened and enhanced to ensure greater operational empowerment and

effective management. The structure would assists in "Aligning the Vectors" of the

organization and enables the company to live its Brand Values & be "Distinctly Ahead".

The five pillars of this new structure, called strategic units, are,

R&D

EngineeringTwo Wheeler Business Unit

Commercial Vehicles Business Unit

International Business Unit

The finance, MIS, HR, business development and commercial functions support these units.

HR guidelines in Bajaj Auto:

The Company affirms that its competitiveness is interlinked with the well being of all

sections of the Indian society.

The Company believes that equal opportunity in employment for all sections of the

society is a component of its growth and competitiveness. It further believes that

inclusive growth is a component of growth and development of the country.



The Company affirms the recognition that diversity to reflect socially disadvantagessections of the society in the workplace has a positive impact on business.

The Company will neither practice nor support conscious discrimination in any form.

The Company does not bias employment away from applicants belonging to

disadvantaged sections of society if such applicants possess competitive skills and jobcredentials.

The Company's selection of business partners is not based on any considerations other

than normal business parameters. In case of equal business offers, the Company will

select a business partner belonging to a socially disadvantaged section of society.

This Code of Conduct for Affirmative Action will be put up on the company web-site

to encourage applications from socially disadvantaged sections of society.

The Company makes all efforts for up skilling and continual training of all itsemployees in order to enhance their capabilities and competitive skills. No

discrimination of any type will be shown in this process.

The Company may have a partnership programme with educational institution/s tosupport and aid students from socially disadvantaged.

Mission and Vision of Bajaj Auto:

Bajaj doesn't have a straight vision or mission statement. They define it in terms of brand

identity, brand essence (derived from mission) and brand values.

Brand Identity:

Our Brand is the visual expression of our thoughts and actions. It conveys to everyone our intention to constantly inspire confidence. Our customers are the primary audience for our

brand. Indeed, our Brand Identity is shaped as much by their belief in Bajaj as it is by our

own vision.

Brand Essence

Blending together Youthful, Creativity and Competitive technology to exceed the spoken and

the implicit expectations of our customers.

Brand Values

Values of Learning, Innovation, Perfection, Speed and Transparency

In the Chairman¶s Letter 2008, Chairman of Bajaj Auto, Mr. Rahul Bajaj shared his Visionfor Bajaj Auto by 2010. It Involved:

y Mobilising India

y Globalising India

y Financing India

y De- Risking India



Strategies at Bajaj Auto:

Mark eting Strategies:

The focus of BAL off late has been on providing the best of the class models at competitive

prices. Most of the Bajaj models come loaded with the latest features within the price band

acceptable by the market. BAL has been the pioneer in stretching competition into providing

latest features in the price segment by updating the low price bikes with the latest features

like disk-brakes, anti-skid technology and dual suspension, etc.

Some other strategies Bajaj Auto is working on is:

y Separation of company¶s financial assets from its Auto Business.

y Strategic alliance with Kawasaki Japan.

y Going International

y Cost effective and environmental strategies

K ey Policies at Bajaj Auto:Total Productive Maintenance (TPM):



Safety, Occupational Health and Environmental (SHE) Policy:



Management Style

To replace a legend is never easy, to replace a legend when the legacy needs a major overhaul

is even more difficult. Rahul Bajaj had created an extraordinarily triumphant company, and it

required enormous courage for Rajiv Bajaj to tinker with the business model and change the

success formula. But given the changes in the environment: more competitors and fiercer

competition, changing customer needs and tastes, new technology and more

sophisticated management tools and techniques, transformation was a necessity,

not a luxury. Bajaj began the process by recruiting new talent, and forming a new

core team of about 30 people. Among them was Abraham Joseph, Bajaj Auto's

R&D head, and RL Ravichandran, head hunted by Bajaj to give a fresh impetus

to Bajaj Auto's marketing strategy. Earlier this year, Ravichandran quietly left his

resignation letter on Bajaj's desk and went on leave. He met Bajaj two days before he was scheduled to leave Pune for a new job in the Middle East. The conversation

convinced him to stay on. Bajaj didn't offer to match the substantial salary of the new job.Instead, he offered him a different job profile. He would be freed from the daily chores of

sales management in order to focus on shaping a global strategy for Bajaj Auto. "I stayed because Rajiv convinced me he really needed me. I found great sincerity in the need,"

Ravichandran told the media. The young Bajaj clearly knows not only how to hire talent, butalso the knack of retaining people.

Bajaj inspires his employees, not by dangling a carrot or through fear, but through his

authenticity. He has no airs. Until a few years ago - he had to stop because of a severe knee

injury - his favourite pastime was playing football with the Akurdi factory workers. The

source of his credibility however lies in his transparent management style. Listen to how he

engages his managers in the unpleasant task of cost cutting. "Cost has to be looked at in a

different way," he explains. "The wrong way is to tell people that we are cutting costs.

People want to come to work eager to work. But if in a meeting I say that today I want to talk

about cost cutting, I am sure they will do their best, but they will not be motivated. I will be

talking in isolation. This is especially true in an owner-managed company. Inevitably there

will be a feeling among executives that the benefit of cost cutting will go into the owner's pocket.

Managers and workers also see cost cutting as a way to rip off and to make them work

harder. Outside the company, among vendors and customers, the moment you talk of cost

cutting, people think that the product's quality has gone down. Here in Bajaj Auto, we feel

that cost cutting is all about improving quality at lower cost. That's how profitability

improves. That's how customers keep coming back."

Succession Planning

Most business family disputes are between brothers. But some sons have ousted their fathers

(Parvinder Singh ousted Bhai Mohan Singh in Ranbaxy, Omkar Kanwar ousted RaunaqSingh in Apollo Tyres). Such companies typically fared very well after the youngsters took

over.

In happier cases, the transition from father to son has been harmonious despite strong initialdifferences of opinion. Bajaj Auto offers a fascinating case history.

Nobody who knows Rahul Bajaj will accuse him of modesty. Brash and assertive, he thinks



he created one of India's best companies in the difficult days of the licence-permit raj. By1980 Bajaj Auto was top scooter producer by far, and its Chetak brand had a 10-year waiting

list.Critics said Rahul's success flowed from the quasi-monopoly status he got as an earlyentrant at a time when foreign collaborations and licences were difficult to obtain. However,

in the 1980s capacity licensing and foreign collaboration for two-wheelers was liberalised.

All the world's top players (Honda, Suzuki, Yamaha, Piaggio, Garelli, Peugot) entered

through collaborations or joint ventures. Bajaj Auto met the challenge squarely, and beat thenewcomers hands down in scooters. Hero Honda went ahead in motor-cycles, but scooters

were far more popular in the 1980s. Unsurprisingly, Rahul saw himself as the creme de la

creme of Indian manufacturing. His ambition was to overtake Honda as the world's largest

scooter producer.Then came economic liberalisation in the 1990s. Initially, this seemed very

good for Bajaj Auto, since traditional constraints ended. But Indians began to prefer motor-

cycles to scooters, and Bajaj Auto could not touch Hero Honda in this field.

Moreover, liberalisation brought the threat of cheap imports and FDI from top companies like

Honda. Rahul Bajaj at this juncture became famous as head of the Bombay Club, opposing

liberalisation till there was a level playing field for Indians and foreigners. He claimed he hada top-class plant that could compete on even terms, but not with foreigners enjoying better

infrastructure, cheaper finance, and flexible labour laws.

The Bombay Club managed to slow liberalisation but could not stop it. Scooter salescontinued to plummet, the recession and stock market collapse of 2001 hit the company hard,

and some stock market analysts thought it was doomed.

Meanwhile, in the early 1990s, Rajiv Bajaj, Rahul's eldest son, came back to India from

business school in the US. He took a hard look at the company and came to very different

conclusions. He saw that Rahul's ambition of becoming world No. 1 in scooters was

irrelevant in a global economy where motor-cycles ruled supreme, and that the company

needed to change its strategy accordingly.

Rahul was proud of the factories he had created at Akurdi and Waluj. But Rajiv saw them as

grossly overmanned and inefficient, with such a flawed work culture that reforming it was

almost impossible. Instead, he proposed a third factory at Chakan with a totally new

workforce and work culture that could compete with the world's best. Unlike Rahul, Rajiv did

not focus on the disadvantages Indian businessmen faced. Instead, he focused on two huge

advantages: diploma engineers and R&D scientists were available at one-tenth of the

comparable wage in the West.

The Akurdi factory had 20 per cent daily wage earners, 80 per cent skilled workers and noengineers at all on the shop floor. At Chakan, Rajiv Bajaj created a workforce with 80 per

cent diploma engineers and 20 per cent skilled workers. Wages averaged just Rs 12,000 per

month for engineers at Chakan against Rs 11,500 for workers at Akurdi.

But the productivity of the engineers was several times higher, lowering costs. The R&D

focus of the company yielded new designs that finally enabled it to compete with and beat

Hero Honda, and even Honda. To his credit, Rahul backed Rajiv's new approach.

Enormous VRS payments enabled the company to halve the workforce. In 2000, Bajaj Auto

made one million vehicles with 22,000 workers. In 2004-05, it made 1.8 million vehicles with



just 11,000 workers. At Chakan productivity levels, it could have made as many vehicleswith 7,000 workers.

All Bombay Club rhetoric has ended. Instead of opposing multinationals, Bajaj Auto aims to

become one itself, with factories in Indonesia, Brazil and Nigeria. Its share price has risen

from Rs 200 in 2001 to Rs 1,300.

The main lessons seem to be as follows:

Youngsters with global experience know better than senior managers whether a factory is

good or bad.

No CEO will heed a 30-year-old manager who says the factory is terrible, but may heed his

30-year-old son. This is why family businesses sometimes beat professionally managed ones.

A champion in one set of conditions can collapse when conditions change. Owners should

beware of delusions of grandeur.

India's big advantage lies not in cheap labour but in cheap design and engineering skills.

Some key initiatives to facilitate a learning environment at Bajaj Auto are:

a) Individual-Owned Learning ± ³I do it my way´ Employee develops one¶s own learning plan, based on mutually identified competency gaps,

in present and aspired job in career path.

b) User f riendly Learning Management Sof tware We provide self-paced and location independent learning by offering 24X7 single window

platform for all learning interventions like instructor-led training programs, E-learning

modules and informal learning through communities.

c) Idea Management and Knowledge sharing We encourage our employees to explore the unknown and in the process, create value for the

company. Kaizen Idea Management and various Knowledge Sharing forums ensure that wehear our employees and channelize their creativity towards product and process innovation.

Chairman Rahul Bajaj¶s Management Philosophy

y Be at the f oref ront of Technological InnovationOur vibrant engineering minds consistently conceptualize new ideas, feeding breakthrough

technologies and innovative patents at our in-house R&D Center.

y World class manuf acturing

TPM is the way of life at Bajaj Auto. Latest manufacturing technologies like robotics,automation build quality in our products.

y Grow with us

Our organic growth strategy provides numerous opportunities to our employees to climb theladder of authority and responsibility.



y Culture of Empowerment We provide our employees with high degree of autonomy in their day-to-day decisions and to

act on ideas.

y Fair and Transparent Annual and Quarterly PMS

Objective goal setting, transparent performance rewards and constructive feedback in our

Performance Management System, help you to exceed performance expectations byunleashing your potential.

y Amongst Top Quartile in Industry Compensation

Competence and performance are the key drivers of our compensation policy. Best

performing employees are awarded with significant rewards.

y Employee f riendly work practices

Our policies and systems like SAP and ESS, provide transactional ease so that the tedium

does not claim your time and leaves you free to take on challenging targets.

y Superior ³Quality of Life´ Our constant efforts towards employee welfare ensure that our employees enjoy superior

quality of life.y The Company affirms that its competitiveness is interlinked with the well being of all

sections of the Indian society.y The Company believes that equal opportunity in employment for all sections of the society is

a component of its growth and competitiveness. It further believes that inclusive growth is acomponent of growth and development of the country.

y The Company affirms the recognition that diversity to reflect socially disadvantages sections

of the society in the workplace has a positive impact on business.

y The Company will not practice nor support conscious discrimination in any form.

y The Company does not bias employment away from applicants belonging to disadvantaged

sections of society if such applicants possess competitive skills and job credentials.

y The Company's selection of business partners is not based on any considerations other than

normal business parameters. In case of equal business offers, the Company will select a

business partner belonging to a socially disadvantaged section of society.

y This Code of Conduct for Affirmative Action will be put up on the company web-site to

encourage applications from socially disadvantaged sections of society.

y The Company makes all efforts for upskilling and continual training of all its employees in

order to enhance their capabilities and competitive skills. No discrimination of any type will

be shown in this process.

y The Company may have a partnership programme with educational institution/s to support

and aid students from socially disadvantaged sections of society.

y The Company will maintain records of Affirmative Action.

y The Company has nominated Mr. Amrut Kumar Rath, Vice President (HR), to oversee and

promote the Affirmative Action policies and programmes. He will be accountable to theChairman.

y The Company will make available its learning and experiences as a good corporate citizen in

Affirmative Action to other companies desiring to incorporate such policies in their own

business.

Being able to disagree with the boss is to my mind a key requirement for sustained results.

Some attribute the outcome of the IInd world war to the freedom to disagree within the



British forces and the absolute obedience within the Germans. It is when both these, strategy

and organization culture, are robust that we can place big bets even on relatively weak market

signals. The success of Microsoft, Google, Airtel can be attributed to the ability to do this. If

we look at our own company's successes and failures we would realize the centrality of this

feature. When the demand for a product is obvious, competition intensifies and margins

weaken. It is when it is not obvious that we have the latitude to dig in to a market and realizethe first mover advantage. Quality of management is the key resource any organization has

and therefore the core attribute which should be cultivated in it. I believe that it comes from

the organisation's values and performance orientation. If these are in place, the rest can be put

together. This aptly sums up what is practiced at Bajaj Auto. Learning is a daily activity, well

augmented by experienced colleagues who make it all the more enjoyable.

Evolution of Two-wheeler Industry in India

Two-wheeler segment is one of the most important components of the automobile sector that

has undergone significant changes due to shift in policy environment. The two-wheeler

industry has been in existence in the country since 1955. It consists of three segments viz.

scooters, motorcycles and mopeds. According to the figures published by SIAM, the share of

two-wheelers in automobile sector in terms of units sold was about 80 per cent during 2003-

04. This high figure itself is suggestive of the importance of the sector. In the initial years,

entry of firms, capacity expansion, choice of products including capacity mix and technology,

all critical areas of functioning of an industry, were effectively controlled by the State

machinery. The lapses in the system had invited fresh policy options that came into being in

late sixties. Amongst these policies, Monopolies and Restrictive Trade Practices (MRTP) and

Foreign Exchange Regulation Act (FERA) were aimed at regulating monopoly and foreign

investment respectively. This controlling mechanism over the industry resulted in: (a) several

firms operating below minimum scale of efficiency; (b) under-utilisation of capacity; and (c)

usage of outdated technology. Recognition of the damaging effects of licensing and fettering

policies led to initiation of reforms, which ultimately took a more prominent shape with the

introduction of the New Economic Policy (NEP) in 1985.

However, the major set of reforms was launched in the year 1991 in response to the major

macroeconomic crisis faced by the economy. The industrial policies shifted from a regime of

regulation and tight control to a more liberalised and competitive era. Two major results of

policy changes during these years in two-wheeler industry were that the, weaker players died

out giving way to the new entrants and superior products and a sizeable increase in number of brands entered the market that compelled the firms to compete on the basis of product

attributes. Finally, the two-¬wheeler industry in the country has been able to witness a

proliferation of brands with introduction of new technology as well as increase in number of

players. However, with various policy measures undertaken in order to increase the

competition, though the degree of concentration has been lessened over time, deregulation of

the industry has not really resulted in higher level of competition.



A Growth Perspective

The composition of the two-wheeler industry has witnessed sea changes in the post-reform

period. In 1991, the share of scooters was about 50 per cent of the total 2-wheeler demand in

the Indian market. Motorcycle and moped had been experiencing almost equal level of shares

in the total number of two-wheelers. In 2003-04, the share of motorcycles increased to 78 per

cent of the total two-wheelers while the shares of scooters and mopeds declined to the level

of 16 and 6 per cent respectively.

Demand Drivers

The demand for two-wheelers has been influenced by a number of factors over the past five

years. The key demand drivers for the growth of the two-wheeler industry are as follows:

y Inadequate public transportation system, especially in the semi-urban and rural

areas.

y Increased availability of cheap consumer financing in the past 3-4 years.

y Increasing availability of fuel-efficient and low-maintenance models.

y Increasing urbanisation, which creates a need for personal transportation.

y Changes in the demographic profile.

y Difference between two-wheeler and passenger car prices, which makes two-

wheelers the entry-level vehicle

y Steady increase in per capita income over the past five years; and

y Increasing number of models with different features to satisfy diverse consume

needs.



Documents

Bajaj Auto Ltd_Final