Description
It explains about Industry Trends of automobile industry, PEST Analysis of automobile Industry, Competitor Analysis, SWOT analysis, Company Description, General Information about Bajaj Auto, it's Finance performance, SWOT analysis and Various Strategies employed.
Automobile Industry Analysis
Industry analysis: The automobile industry in India is one of the largest in the world and one of the fastest growing globally. India?s passenger car and commercial vehicle manufacturing industry is sixth largest in the world. It is the second fastest growing automobile market in the world. According to the Society of Indian Automobile Manufacturers annual vehicle sales are projected to increase to 5 million by 2015 and more than 9 million by 2020. Automobile industry in India has huge potentials thanks to the growth of the middle class along with their overall economic growth. This is the reason of attraction for international brands who are trying hard to find new market for their products due to stagnated growth of auto sector in Europe, US and Japan. The automobile industry was marked by an impressive growth in the last fiscal. The overall Indian automobile industry grew by 12.12 percent in 2011-12 by selling 17.3 million units, majorly driven by demand for two wheelers and light trucks.
PEST analysis: Political: 1.At present 100% foreign direct investment is permissible under automatic route in this sector including passenger car segment. 2.The import of technology/technological upgradation on the royalty payment of 5% without any duration limit and lump sum payment of USD 2 million is also allowed under automatic route in this sector. 3.Automatic approval for foreign equity investment upto 100% of manufacture of automobiles and components is permitted. 4.The automobile industry is delicensed. 5.Import of components is freely allowed. 6.In order to enforce compliance and energy conservation act, the government has recently given its nod to fuel mileage standards and labeling for new cars.
7.SIAM is working on a voluntary recall policy that is in favour of auto manufacturers. On a similar note, government is in the process of constituting a national automotive board which would become a formal setup to look into the issue of recall of vehicles and hence improve manufacturing standards. 8.No special tax on diesel cars. 9.General excise duty for automobiles has been hiked by 2% from 10% to 12% which will increase prices of small cars, two wheelers, etc.
Economical: 1.Inflation always has a negative impact on the industry. The industry comes to a standstill when there is an inflation in the market. The sales decrease because of the rise in prices of the vehicles. The prices of the vehicles have to be increased to meet the increase in price of the raw materials required for manufacturing. 2.Higher interest rates have a negative impact on the industry. Higher interest rates means that it costs more for consumers to borrow money for auto loans. Therefore the demand decreases and hence the sales decrease. 3.Inflation and high interest rates also dampens the economic growth. 4.Therefore to obtain high economic growth and to increase the sales the inflation should be controlled and the interest rates should be kept low.
Social: 1.People across all age groups buy personal vehicles. 2. Rising per capita income, rising working population and middle class urbanization have all contributed to the growth of this industry. 3.People are more inclined towards buying personal vehicles to maintain their status quo. 4.People realize that during an emergency a personal vehicle will be more useful rather than relying on public modes of transport.
Technological: 1.Spending on R&D in India has increased over the last few years.
2.Cost advantage India offers makes more players likely to scale up R&D outsourcing to India 3.Role of IT is increasing in this industry. They are developing solutions for the automobile industry. 4.The increasing environmental pollution is a concern for manufacturers and all associated with the industry. Some of the initiatives to reduce emission include introduction of fuel efficient cars, electric and hybrid cars.
Bajaj Auto limited is India?s leading two wheeler manufacturer. Its expertise lies in making bikes, sports bikes, racing bikes, scooter and motorcycle. Bajaj Auto is a part of Bajaj group. Its founded by Jamnalal Bajaj at Rajasthan in the 1930s. Bajaj Auto was founded on 29 November,1945 as M/S Bachraj trading limited. It started off by selling imported two and three wheelers in India. It obtained the license from government of India in 1959 to manufacture two and three wheelers and it went public in 1960. Bajaj Auto is the world?s third largest manufacturer of motorcycles and second largest in India. Bajaj Auto has in all three plants, two at Waluj and Chakan in Maharashtra and one plant at Pant nagar in Uttaranchal, western India. Waluj – Bajaj range of motorcycles and three wheelers Chakan – Bajaj range of motorcycles Pant nagar – Bajaj range of motorcycles The headquarters is in Akurdi,Pune “Source: www.wikipedia.com ”
The top management of Bajaj Auto is as follows: Rahul Bajaj – Chairman Madhur Bajaj – Vice Chairman Rajiv Bajaj – Managing Director and CEO Pradeep Shrivastava – Chief Operating Officer
Abraham Joseph – Chief Technology Officer K Srinivas – President (motorcycle business) R C Maheshwari – President (commercial vehicle business) Rakesh Sharma – President (international business) Amrut Rath – Vice President (human resources)
Board of Directors: Rahul Bajaj – Chairman Madhur Bajaj – Vice Chairman Rajiv Bajaj – Managing Director Sanjiv Bajaj – Director D.S. Mehta – Director Kantikumar R. Podar – Director Shekhar Bajaj – Director D.J. Balaji Rao – Director J.N.Godrej - Director S.H.Khan – Director Mrs.Suman Kirloskar – Director Naresh Chandra – Director Nanoo Pamnani – Director Manish Kejriwal – Director P Murari – Director Niraj Bajaj – Director
Shareholding pattern as on 31st march 2012: Categories Promoters Friends and associates of promoters GDRs Foreign institutional investors Public financial institutions Mutual funds Nationalized and other banks NRIs and OCBs Others Total no. of shares 144,733,332 30,641,279 169,088 47,516,700 9,290,035 7,278,439 122,508 1,189,892 48,425,747 289,367,020 % to total capital 50.02 10.59 0.06 16.42 3.21 2.52 0.04 0.41 16.73 100
Based on recorded statements, Bajaj Auto Ltd is currently employing 8.63k people.
Bajaj Auto recorded its highest sales, exports and profits from operations last year. Net sales and other operating income grew by over 19% to Rs.19,804 crore. The company sold 4.35 million units consisting of over 3.83 million motorcycles and more than 515,000 three wheelers. Exports rose by 31%over last year to 1.58 million units. It grew even faster in revenue terms – by 45% to Rs.6604 crore. And accounted for 35% of the company?s net sales. Profit before tax grew by 15% to Rs. 4160 crore. Profit after tax but before exceptional items grew by 18% to Rs.3095 crore. In FY2012, Bajaj Auto sold over 3.83 million motorcycles in India and abroad. In doing so, it grew sales by 13.2% over FY2011. In India the company sold 2,566,757 motorcycles during FY2012. It was 6.3% higher than the sales in previous year. Exports grew by 30% to clock 1,267,648 motorcycles in FY2012. In three wheelers segment, Bajaj Auto saw a marginal fall in sales by 1.3% to 202,979 vehicles. Exports of three wheelers grew by over 34% to 362,876 units in FY2012.
The net sales value during FY2012 was Rs. 18880 crore. Total operating income was Rs.19,804 crore. Operating profit was Rs. 3,833 crores. Net profit was Rs. 3004.05 crore. “Source: www.bajajauto.com”
SWOT analysis of Bajaj Auto: Strengths: 1.Excellent brand presence and marketing in India 2.Product design and development capabilities 3.Highly experienced management 4.Extensive R&D focus 5.Widespread distribution network across India 6.Wide product range in terms of price, qualities and categories. 7.High economies of scale 8.Great financial support network for financing the automobile
Weaknesses: 1.Not a global player inspite of huge volumes 2.Lack of performance bikes like major international brands and sports bikes and cruisers.
Opportunities: 1.Its $2500 low emission car RE-60. It is banking on factors such as high fuel efficiency and lower emissions to make its entrance into the car segment a success 2.Premium sports bikes for urban areas 3.Constant growth in the two-wheeler segment.
Threats: 1.Cheaper imports from countries like India 2.Entry of international brands 3.Competition from Hero MotoCorp.
Competitor Analysis: 1.The nearest competitor of Bajaj Auto is Hero MotoCorp. 2.The market share of Hero MotoCorp last year was 56% while that of Bajaj Auto was 25.6%. 3.Hero MotoCorp had a volume growth of 16.5% last year while Bajaj Auto had a volume growth of 7.4%. 4.The operating profit margin of Bajaj Auto is 18% while Hero MotoCorp has operating profit margin of 11-12% 5.Hero has broken its partnership with Honda but it has teamed up with the world?s largest privately owned engine developer, AVL of Austria, to develop technology for its 100 cc and 110 cc models – the Splender Range and the Passion. It has also signed a technology sharing deal with US motorcycle firm Erik Buell racing. On the other hand Bajaj Auto is counting on its five year alliance with KTM of Austria to crack open new markets and produce higher end products. 6.KTM and Pulsar make Bajaj Auto a powerhouse in the 60000 plus bike segment. But in the 45000-50000 price band ,Hero dominates. Even in the 40000-45000 price range Hero reigns supreme. 7.Over the years, Hero MotoCorp has built its distribution network of 700 dealers and 3700 service centres. More than 2000 rural channel partners work on the rural vertical through the „har gaon har aangan? program. Over the past four years, its distribution network has grown nearly 2x compared to peers. The distribution network is fairly spread across the rural and semi urban areas. On the other hand Bajaj Auto has a distribution network of 485 dealers and over 1600 authorized service centres. It has 171 exclusive dealers for the three wheeler segment and has total 3750 rural outlets in rural areas.
Various strategies employed by the company to improve business over the past two years: 1.Bajaj Auto formed an alliance with Renault-Nissan to manufacture a low emission and high fuel efficiency car. The car named RE-60 was unveiled in January,2012. Its an effort to challenge Tata?s Nano car. 2.Bajaj Auto acquired a 38% stake in Austrian bike maker KTM power sports and introduced products from its range in the Indian market. The first product was the Duke 125 cc. 3.Bajaj Auto has a 98.9% stake in PT Bajaj Indonesia. It is a subsidiary of Bajaj Auto. It assembles and markets pulsars in Indonesia.
doc_344311074.docx
It explains about Industry Trends of automobile industry, PEST Analysis of automobile Industry, Competitor Analysis, SWOT analysis, Company Description, General Information about Bajaj Auto, it's Finance performance, SWOT analysis and Various Strategies employed.
Automobile Industry Analysis
Industry analysis: The automobile industry in India is one of the largest in the world and one of the fastest growing globally. India?s passenger car and commercial vehicle manufacturing industry is sixth largest in the world. It is the second fastest growing automobile market in the world. According to the Society of Indian Automobile Manufacturers annual vehicle sales are projected to increase to 5 million by 2015 and more than 9 million by 2020. Automobile industry in India has huge potentials thanks to the growth of the middle class along with their overall economic growth. This is the reason of attraction for international brands who are trying hard to find new market for their products due to stagnated growth of auto sector in Europe, US and Japan. The automobile industry was marked by an impressive growth in the last fiscal. The overall Indian automobile industry grew by 12.12 percent in 2011-12 by selling 17.3 million units, majorly driven by demand for two wheelers and light trucks.
PEST analysis: Political: 1.At present 100% foreign direct investment is permissible under automatic route in this sector including passenger car segment. 2.The import of technology/technological upgradation on the royalty payment of 5% without any duration limit and lump sum payment of USD 2 million is also allowed under automatic route in this sector. 3.Automatic approval for foreign equity investment upto 100% of manufacture of automobiles and components is permitted. 4.The automobile industry is delicensed. 5.Import of components is freely allowed. 6.In order to enforce compliance and energy conservation act, the government has recently given its nod to fuel mileage standards and labeling for new cars.
7.SIAM is working on a voluntary recall policy that is in favour of auto manufacturers. On a similar note, government is in the process of constituting a national automotive board which would become a formal setup to look into the issue of recall of vehicles and hence improve manufacturing standards. 8.No special tax on diesel cars. 9.General excise duty for automobiles has been hiked by 2% from 10% to 12% which will increase prices of small cars, two wheelers, etc.
Economical: 1.Inflation always has a negative impact on the industry. The industry comes to a standstill when there is an inflation in the market. The sales decrease because of the rise in prices of the vehicles. The prices of the vehicles have to be increased to meet the increase in price of the raw materials required for manufacturing. 2.Higher interest rates have a negative impact on the industry. Higher interest rates means that it costs more for consumers to borrow money for auto loans. Therefore the demand decreases and hence the sales decrease. 3.Inflation and high interest rates also dampens the economic growth. 4.Therefore to obtain high economic growth and to increase the sales the inflation should be controlled and the interest rates should be kept low.
Social: 1.People across all age groups buy personal vehicles. 2. Rising per capita income, rising working population and middle class urbanization have all contributed to the growth of this industry. 3.People are more inclined towards buying personal vehicles to maintain their status quo. 4.People realize that during an emergency a personal vehicle will be more useful rather than relying on public modes of transport.
Technological: 1.Spending on R&D in India has increased over the last few years.
2.Cost advantage India offers makes more players likely to scale up R&D outsourcing to India 3.Role of IT is increasing in this industry. They are developing solutions for the automobile industry. 4.The increasing environmental pollution is a concern for manufacturers and all associated with the industry. Some of the initiatives to reduce emission include introduction of fuel efficient cars, electric and hybrid cars.
Bajaj Auto limited is India?s leading two wheeler manufacturer. Its expertise lies in making bikes, sports bikes, racing bikes, scooter and motorcycle. Bajaj Auto is a part of Bajaj group. Its founded by Jamnalal Bajaj at Rajasthan in the 1930s. Bajaj Auto was founded on 29 November,1945 as M/S Bachraj trading limited. It started off by selling imported two and three wheelers in India. It obtained the license from government of India in 1959 to manufacture two and three wheelers and it went public in 1960. Bajaj Auto is the world?s third largest manufacturer of motorcycles and second largest in India. Bajaj Auto has in all three plants, two at Waluj and Chakan in Maharashtra and one plant at Pant nagar in Uttaranchal, western India. Waluj – Bajaj range of motorcycles and three wheelers Chakan – Bajaj range of motorcycles Pant nagar – Bajaj range of motorcycles The headquarters is in Akurdi,Pune “Source: www.wikipedia.com ”
The top management of Bajaj Auto is as follows: Rahul Bajaj – Chairman Madhur Bajaj – Vice Chairman Rajiv Bajaj – Managing Director and CEO Pradeep Shrivastava – Chief Operating Officer
Abraham Joseph – Chief Technology Officer K Srinivas – President (motorcycle business) R C Maheshwari – President (commercial vehicle business) Rakesh Sharma – President (international business) Amrut Rath – Vice President (human resources)
Board of Directors: Rahul Bajaj – Chairman Madhur Bajaj – Vice Chairman Rajiv Bajaj – Managing Director Sanjiv Bajaj – Director D.S. Mehta – Director Kantikumar R. Podar – Director Shekhar Bajaj – Director D.J. Balaji Rao – Director J.N.Godrej - Director S.H.Khan – Director Mrs.Suman Kirloskar – Director Naresh Chandra – Director Nanoo Pamnani – Director Manish Kejriwal – Director P Murari – Director Niraj Bajaj – Director
Shareholding pattern as on 31st march 2012: Categories Promoters Friends and associates of promoters GDRs Foreign institutional investors Public financial institutions Mutual funds Nationalized and other banks NRIs and OCBs Others Total no. of shares 144,733,332 30,641,279 169,088 47,516,700 9,290,035 7,278,439 122,508 1,189,892 48,425,747 289,367,020 % to total capital 50.02 10.59 0.06 16.42 3.21 2.52 0.04 0.41 16.73 100
Based on recorded statements, Bajaj Auto Ltd is currently employing 8.63k people.
Bajaj Auto recorded its highest sales, exports and profits from operations last year. Net sales and other operating income grew by over 19% to Rs.19,804 crore. The company sold 4.35 million units consisting of over 3.83 million motorcycles and more than 515,000 three wheelers. Exports rose by 31%over last year to 1.58 million units. It grew even faster in revenue terms – by 45% to Rs.6604 crore. And accounted for 35% of the company?s net sales. Profit before tax grew by 15% to Rs. 4160 crore. Profit after tax but before exceptional items grew by 18% to Rs.3095 crore. In FY2012, Bajaj Auto sold over 3.83 million motorcycles in India and abroad. In doing so, it grew sales by 13.2% over FY2011. In India the company sold 2,566,757 motorcycles during FY2012. It was 6.3% higher than the sales in previous year. Exports grew by 30% to clock 1,267,648 motorcycles in FY2012. In three wheelers segment, Bajaj Auto saw a marginal fall in sales by 1.3% to 202,979 vehicles. Exports of three wheelers grew by over 34% to 362,876 units in FY2012.
The net sales value during FY2012 was Rs. 18880 crore. Total operating income was Rs.19,804 crore. Operating profit was Rs. 3,833 crores. Net profit was Rs. 3004.05 crore. “Source: www.bajajauto.com”
SWOT analysis of Bajaj Auto: Strengths: 1.Excellent brand presence and marketing in India 2.Product design and development capabilities 3.Highly experienced management 4.Extensive R&D focus 5.Widespread distribution network across India 6.Wide product range in terms of price, qualities and categories. 7.High economies of scale 8.Great financial support network for financing the automobile
Weaknesses: 1.Not a global player inspite of huge volumes 2.Lack of performance bikes like major international brands and sports bikes and cruisers.
Opportunities: 1.Its $2500 low emission car RE-60. It is banking on factors such as high fuel efficiency and lower emissions to make its entrance into the car segment a success 2.Premium sports bikes for urban areas 3.Constant growth in the two-wheeler segment.
Threats: 1.Cheaper imports from countries like India 2.Entry of international brands 3.Competition from Hero MotoCorp.
Competitor Analysis: 1.The nearest competitor of Bajaj Auto is Hero MotoCorp. 2.The market share of Hero MotoCorp last year was 56% while that of Bajaj Auto was 25.6%. 3.Hero MotoCorp had a volume growth of 16.5% last year while Bajaj Auto had a volume growth of 7.4%. 4.The operating profit margin of Bajaj Auto is 18% while Hero MotoCorp has operating profit margin of 11-12% 5.Hero has broken its partnership with Honda but it has teamed up with the world?s largest privately owned engine developer, AVL of Austria, to develop technology for its 100 cc and 110 cc models – the Splender Range and the Passion. It has also signed a technology sharing deal with US motorcycle firm Erik Buell racing. On the other hand Bajaj Auto is counting on its five year alliance with KTM of Austria to crack open new markets and produce higher end products. 6.KTM and Pulsar make Bajaj Auto a powerhouse in the 60000 plus bike segment. But in the 45000-50000 price band ,Hero dominates. Even in the 40000-45000 price range Hero reigns supreme. 7.Over the years, Hero MotoCorp has built its distribution network of 700 dealers and 3700 service centres. More than 2000 rural channel partners work on the rural vertical through the „har gaon har aangan? program. Over the past four years, its distribution network has grown nearly 2x compared to peers. The distribution network is fairly spread across the rural and semi urban areas. On the other hand Bajaj Auto has a distribution network of 485 dealers and over 1600 authorized service centres. It has 171 exclusive dealers for the three wheeler segment and has total 3750 rural outlets in rural areas.
Various strategies employed by the company to improve business over the past two years: 1.Bajaj Auto formed an alliance with Renault-Nissan to manufacture a low emission and high fuel efficiency car. The car named RE-60 was unveiled in January,2012. Its an effort to challenge Tata?s Nano car. 2.Bajaj Auto acquired a 38% stake in Austrian bike maker KTM power sports and introduced products from its range in the Indian market. The first product was the Duke 125 cc. 3.Bajaj Auto has a 98.9% stake in PT Bajaj Indonesia. It is a subsidiary of Bajaj Auto. It assembles and markets pulsars in Indonesia.
doc_344311074.docx