Too good to be true? Will Bajaj be able to sustain such a high margin in this fiscal even as raw materials and commodity prices threaten to take the wind out of the sails of many business enterprises? On its part, the company is not content with its recent laurels but is hungry for more. “We always consider profitable growth rather than focusing only on the top-line. Bajaj’s margins will continue to remain strong in the coming years as well,” claims Milind Bade, GM – Marketing, Bajaj Auto. At a time when rivals like Hero Honda was stuck going over the rituals of separation from Honda, Bajaj Auto was devoting all its time, efforts and energy in establishing the brand value of its Discover & Pulsar bikes. The company has not only created a family of products under these two brands, it will soon be entering the four-wheeler segment as well with the launch of its car that has been in the works since 2008.
As the company spreads its wings to new segments, the focus on its core two-wheelers business remains as strong as ever as is its awareness about the intensifying competition. To stay ahead of the curve, the company has crafted and is working on its triple-game strategy in the market, which will ensure profitable growth in the long term. First, the company is working on expanding its volumes from exports. Currently, Bajaj exports over 30% of its total production to the global markets. With KTM now under the Bajaj umbrella, the company is seriously looking to amplify its export numbers as it enters new markets in Europe, the US, Australia and Brazil. Second, it is working on a project to replace the Rs.5-lakh Bajaj three-wheelers with a more environment-friendly product. Even as the company is aware of the fact that the product will cost 15-20% more than its typical Rs1.1 lakh price tag, it is confident of pulling it off and nudge the project towards better product viability and enhanced profitability.
Another project on which the future of Bajaj Auto could be riding is the development of ‘Bharat Bike’. For quite sometime, the two-wheeler major has been working on expanding its base in the rural parts of the country, where a lucrative market is waiting to be tapped. The Bharat Bike project is part of Bajaj Auto’s plans to develop a 150-cc engine bike to run on rugged rural roads, which will cost Rs 40,000. Bajaj’s arch rival Hero Honda sells more than 45% of its total bike volumes in the rural parts of India, which explains why Bajaj is keen to make its Bharat Bike project work. However, this third strategy for Bajaj could prove to be a gamble. While the first two strategies (exports & development of a green auto-rickshaw) are expected to bring rich financial dividends for the company, its Bharat Bike project is expected to pull in volumes, though it will be tough retaining any appreciable margin on this product. The Nano, despite its low price took a toll on Tata Motors’ profitability. Is Mr. Bajaj listening?
As the company spreads its wings to new segments, the focus on its core two-wheelers business remains as strong as ever as is its awareness about the intensifying competition. To stay ahead of the curve, the company has crafted and is working on its triple-game strategy in the market, which will ensure profitable growth in the long term. First, the company is working on expanding its volumes from exports. Currently, Bajaj exports over 30% of its total production to the global markets. With KTM now under the Bajaj umbrella, the company is seriously looking to amplify its export numbers as it enters new markets in Europe, the US, Australia and Brazil. Second, it is working on a project to replace the Rs.5-lakh Bajaj three-wheelers with a more environment-friendly product. Even as the company is aware of the fact that the product will cost 15-20% more than its typical Rs1.1 lakh price tag, it is confident of pulling it off and nudge the project towards better product viability and enhanced profitability.
Another project on which the future of Bajaj Auto could be riding is the development of ‘Bharat Bike’. For quite sometime, the two-wheeler major has been working on expanding its base in the rural parts of the country, where a lucrative market is waiting to be tapped. The Bharat Bike project is part of Bajaj Auto’s plans to develop a 150-cc engine bike to run on rugged rural roads, which will cost Rs 40,000. Bajaj’s arch rival Hero Honda sells more than 45% of its total bike volumes in the rural parts of India, which explains why Bajaj is keen to make its Bharat Bike project work. However, this third strategy for Bajaj could prove to be a gamble. While the first two strategies (exports & development of a green auto-rickshaw) are expected to bring rich financial dividends for the company, its Bharat Bike project is expected to pull in volumes, though it will be tough retaining any appreciable margin on this product. The Nano, despite its low price took a toll on Tata Motors’ profitability. Is Mr. Bajaj listening?
Read more.......
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
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Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age WomanIIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
