Bajaj Auto History and Evolution

Brief about Company

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.

Bajaj Auto is a major Indian automobile manufacturer and.Bajaj Motors was founded in 1945.It is India's
largest and the world's 4th largest two- and three-wheeler makerIt is based in Pune, Maharashtra, with
plants in Akurdi and Chakan (Pune),Waluj (near Aurangabad) and Pantnagar in Uttaranchal Bajaj Auto
makes and exports motorscooters, motorcycles and the auto rickshaw.

The company generally has lagged behind its Japanese rivals in technology, but has invested heavily to
catch up. Its strong suit is high-volume production; 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.

Company History

The roots of the company can be traced in 1926, with Jamnalal Bajaj, the founder of the group and
disciple of Mahatma Gandhi. Jamnalal's son, Kamalnayan Bajaj, was the one who consolidated the
company and diversified into many other activities. Jamnalal Bajaj was an industrialist who admired and
followed the great Mahatma Gandhi.

The precursor to Bajaj Auto had been formed on November 29, 1945 as M/s Bachraj Trading Ltd. It
began selling imported two- and three-wheeled vehicles in 1948 and obtained a manufacturing license for
manufacturing its own motorcycles from the government 11 years later. The next year, 1960, Bajaj
Auto became a public limited company

The present Chairman of the group, Rahul Bajaj, took charge of the business in 1965. Rahul Bajaj became
the group's chief executive officer in 1968 after first picking up an MBA at Harvard. He lived next to the
factory in Pune, an industrial city three hours' drive from Bombay. The company had an annual turno ver
of Rs 72 million at the time Rahul Bajaj reportedly adored the famous Vespa scooters made by Piaggio
of Italy. In 1960, at the age of 22, he became the Indian licensee for the make; Bajaj Auto began
producing its first two-wheelers the next year.

In 1970, the company produced 100,000th vehicle and 7 years later, it managed to produce and sell
100,000 vehicles. The oil crisis soon drove cars off the roads in favor of two-wheelers, much cheaper to
buy and many times more fuel-efficient.In 1971, the company launched a three wheels vehicle and  a year
later, the first Bajaj scooter, Chetak, born. Based on Vespa, it was named after the legendary horse of
Indian warrior Rana Pratap Singh.

A number of new models were introduced in the 1970s, including the three-wheeler goods carrier and
Bajaj Chetak early in the decade and the Bajaj Super and three-wheeled, rear engine Autorickshaw in
1976 and 1977. Bajaj Auto produced 100,000 vehicles in the 1976-77 fiscal year alone.

The technical collaboration agreement with Piaggio of Italy expired in 1977. Afterward, Piaggio, maker
of the Vespa brand of scooters, filed patent infringement suits to block Bajaj scooter sales in the United
States, United Kingdom, West Germany, and Hong Kong. Bajaj's scooter exports plummeted from Rs
133.2 million in 1980-81 to Rs 52 million ($5.4 million) in 1981-82, although total revenues rose five
percent to Rs 1.16 billion. Pretax profits were cut in half, to Rs 63 million

The year 1985 brought a new record for the company, 500,000 being the number of sold motorcycles.
Ten years later, Bajaj rolled out its ten millionth vehicle and sold 1 million vehicles in a year. In 1986, the
company launched the Bajaj M-80 and the Kawasaki Bajaj KB100 and made a huge party cake for all
those half million of units sold in the financial year. Now, the company manufactures a few models:
CT100, Platina, Discover 110cc, 125cc and 135cc, XCD 125, Pulsar 150, 180, 200 and 220 and Avenger.
On the list of the company there are a few future models too: Blade, Sonic, Pulsar 300 and Discover 150

Under the leadership of Mr Rahul Bajaj, 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 from one to
and the brand has found a global market. He is one of India's most distinguished business leaders and
internationally respected for his business acumen and entrepreneurial spirit.

New Competition in the 1980s

Japanese and Italian scooter companies began entering the Indian market in the early 1980s. Although
some boasted superior technology and flashier brands, Bajaj Auto had built up several advantages in the
previous decades. Its customers liked the durability of the product and the ready availability of
maintenance; the company's distributors permeated the country.

The Bajaj M-50 debuted in 1981. The new fuel-efficient, 50cc motorcycle was immediately successful,
and the company aimed to be able to make 60,000 of them a year by 1985. Capacity was the most
important constraint for the Indian motorcycle industry. Although the country's total production rose from
262,000 vehicles in 1976 to 600,000 in 1982, companies like rival Lohia Machines had difficulty meeting
demand. Bajaj Auto's advance orders for one of its new mini-motorcycles amounted to $57 million. Work
on a new plant at Waluj, Aurangabad commenced in January 1984.

The 1986-87 fiscal year saw the introduction of the Bajaj M-80 and the Kawasaki Bajaj KB100
motorcycles. The company was making 500,000 vehicles a year at this point.

Although Rahul Bajaj credited much of his company's success with its focus on one type of product, he
did attempt to diversify into tractor-trailers. In 1987 his attempt to buy control of Ahsok Leyland failed.

The Bajaj Sunny was launched in 1990; the Kawasaki Bajaj 4S Champion followed a year later. About
this time, the Indian government was initiating a program of market liberalization, doing away with the
old 'license raj' system, which limited the amount of investment any one company could make in a
particular industry.

A possible joint venture with Piaggio was discussed in 1993 but aborted. Rahul Bajaj told the Financial
Times that his company was too large to be considered a potential collaborator by Japanese firms. It was
hoping to increase its exports, which then amounted to just five percent of sales. The company began by
shipping a few thousand vehicles a year to neighboring Sri Lanka and Bangladesh, but soon was reaching
markets in Europe, Latin America, Africa, and West Asia. Its domestic market share, barely less than 50
percent, was slowly slipping.

By 1994, Bajaj also was contemplating high-volume, low-cost car manufacture. Several of Bajaj's rivals
were looking at this market as well, which was being rapidly liberalized by the Indian government.
Bajaj Auto produced one million vehicles in the 1994-95 fiscal year. The company was the world's fourth
largest manufacturer of two-wheelers, behind Japan's Honda, Suzuki, and Kawasaki. New models
included the Bajaj Classic and the Bajaj Super Excel. Bajaj also signed development agreements with two
Japanese engineering firms, Kubota and Tokyo R & D. Bajaj's most popular models cost about Rs 20,000.
'You just can't beat a Bajaj,' stated the company's marketing slogan.

The Kawasaki Bajaj Boxer and the RE diesel Autorickshaw were introduced in 1997. The next year saw
the debut of the Kawasaki Bajaj Caliber, the Spirit, and the Legend, India's first four-stroke scooter. The
Caliber sold 100,000 units in its first 12 months. Bajaj was planning to build its third plant at a cost of Rs
4 billion ($111.6 million) to produce two new models, one to be developed in collaboration with Cagiva
of Italy.

New Tools in the 1990s

Still, intense competition was beginning to hurt sales at home and abroad during the calendar year 1997.
Bajaj's low-tech, low-cost cycles were not faring as well as its rivals' higher-end offerings, particularly in
high-powered motorcycles, since poorer consumers were withstanding the worst of the recession. The
company invested in its new Pune plant in order to introduce new models more quickly. The company
spent Rs 7.5 billion ($185 million) on advanced, computer-controlled machine tools. It would need new
models to comply with the more stringent emissions standards slated for 2000. Bajaj began installing Rs
800 catalytic converters to its two-stroke scooter models beginning in 1999.

Although its domestic market share continued to slip, falling to 40.5 percent, Bajaj Auto's profits
increased slightly at the end of the 1997-98 fiscal year. In fact, Rahul Bajaj was able to boast, 'My
competitors are doing well, but my net profit is still more than the next four biggest companies combined.'
Hero Honda was perhaps Bajaj's most serious local threat; in fact, in the fall of 1998, Honda Motor of
Japan announced that it was withdrawing from this joint venture.

Bajaj Auto had quadrupled its product design staff to 500. It also acquired technology from its foreign
partners, such as Kawasaki (motorcycles), Kubota (diesel engines), and Cagiva (scooters). 'Honda's
annual spend on R & D is more than my turnover,' noted Ruhal Bajaj. His son, Sangiv Bajaj, was working
to improve the company's supply chain management. A marketing executive was lured from TVS Suzuki
to help push the new cycles.

Several new designs and a dozen upgrades of existing scooters came out in 1998 and 1999. These, and a
surge in consumer confidence, propelled Bajaj to sales records, and it began to regain market share in the
fast-growing motorcycle segment. Sales of three-wheelers fell as some states, citing traffic and pollution
concerns, limited the number of permits issued for them.

In late 1999, Rahul Bajaj made a bid to acquire ten percent of Piaggio for $65 million. The Italian firm
had exited a relationship with entrepreneur Deepak Singhania and was looking to reenter the Indian
market, possibly through acquisition. Piaggio itself had been mostly bought out by a German investment
bank, Deutsche Morgan Grenfell (DMG), which was looking to sell some shares after turning the
company around. Bajaj attached several conditions to his purchase of a minority share, including a seat on
the board and an exclusive Piaggio distributorship in India.

In late 2000, Maruti Udyog emerged as another possible acquisition target. The Indian government was
planning to sell its 50 percent stake in the automaker, a joint venture with Suzuki of Japan. Bajaj had been
approached by several foreign car manufacturers in the past, including Chrysler (subsequently
DaimlerChrysler) in the mid-1990s.
Employment fell from about 23,000 in 1995-96 (the year Bajaj suffered a two-month strike at its Waluj
factory) to 17,000 in 1999-2000. The company planned to lay off another 2,000 workers in the short term
and another 3,000 in the following three to four years.

Timeline of new releases

 1960-1970 - Vespa 150 - Under the licence of Piaggio of Italy

 1971 - three-wheeler goods carrier
 1972 - Bajaj Chetak
 1976 - Bajaj Super
 1977 - Rear engine Autorickshaw
 1981 - Bajaj M-50
 1986 - Bajaj M-80, Kawasaki Bajaj KB100
 1990 - Bajaj Sunny
 1991 - Kawasaki Bajaj 4S Champion
 1994 - Bajaj Classic
 1995 - Bajaj Super Excel
 1997 - Kawasaki Bajaj Boxer, Rear Engine Diesel Autorickshaw
 1998 - Kawasaki Bajaj Caliber, Bajaj Legend, India's first four-stroke scooter, Bajaj Spirit
 2000 - Bajaj Saffire
 2001 - Eliminator, Bajaj Pulsar
 2003 - Caliber115, Bajaj Wind 125, Bajaj Pulsar
 2004 - Bajaj CT 100, New Bajaj Chetak 4-stroke with Wonder Gear, Bajaj Discover DTS-i
 2005 - Bajaj Wave, Bajaj Avenger, Bajaj Discover
 2006 - Bajaj Platina
 2007 - Bajaj Pulsar-200 (Oil Cooled), Bajaj Kristal, Bajaj Pulsar 220 DTS-Fi (Fuel Injection) ,
XCD 125 DTS-Si
 2008 - Bajaj Discover 135 DTS-i - sport (Upgrade of existing 135 model)
 2009 - (January) Bajaj XCD 135 cc , Bajaj Pulsar 220 DTS-i , Bajaj Discover 100 DTS-Si.

Spinoffs and acquisitions

The demerger of Bajaj Auto Ltd into three separate companies is now complete with Bajaj Auto, the
automotive manufacturing company, and Bajaj Finserv, the strategic business undertaking, listing on the
stock exchanges on May 26, 2008. The 14.46 crore shares each of Bajaj Auto and Bajaj Finserv will list
and be permitted for trading on the Bombay Stock Exchange and the National Stock Exchanges.

In November 2007, Bajaj Auto acquired 14.5% stake in KTM Power Sports AG (holding company of
KTM Sportmotocycles AG). The two companies have signed a cooperation deal, by which KTM will
provide the know-how for joint development of the water-cooled four-stroke 125 and 250 cc engines, and
Bajaj will take over the distribution of KTM products in India and some other Southeast Asian nations. [5]
Bajaj said it is open to taking a majority stake in KTM and is also looking at other takeover opportunities.
On the 8th of January 2008, Managing Director Rajiv Bajaj confirmed the collaboration and announced
his intention to gradually increase Bajaj's stake in KTM to 25%.

What is Bajaj Now

The Forbes Global 2000 list for the year 2005 ranked Bajaj Auto at 1946.
Over the last decade, the company has successfully changed its image from a scooter manufacturer to a
two wheeler manufacturer. Its product range encompasses scooterettes, scooters and motorcycles. Its real
growth in numbers has come in the last four years after successful introduction of a few models in the
motorcycle segment(the most successful of them being Bajaj Pulsar).According to the authors of
Globality: Competing with Everyone from Everywhere for Everything, Bajaj has grown operations in 50
countries by creating a line of value-for-money bikes targeted to the different preferences of entry-level
buyers.

Foray into Cars segment

Bajaj Auto says its $2,500 car, which it is building with Renault and Nissan Motor, will aim at a fuel-
efficiency of 30 km/litre, or twice an average small car, and carbon dioxide emissions of 100 gm/km. [7]

It is a Tata Nano competitor. The Bajaj venture will have an initial capacity of 400,000 units, while Tata
expects eventual demand of 1 million Nanos.

Principal Subsidiaries of Bajaj

Bajaj Auto Finance Ltd.; Bajaj Auto Holdings Ltd.; Bajaj Electricals Ltd.; Bajaj Hindustan Ltd.;
Maharashtra Scooters Ltd.; Mukand Ltd.

Principal Competitors of Bajaj auto

Honda Motor Co., Ltd.; Suzuki Motor Corporation; Piaggio SpA.