INTRODUCTION:

Human Being is continuously in search of the solutions of its

need of traveling from one place to another and carrying loads with
them comfortably. As the time passed different development were
made by man to increase the effectiveness of transportation. First
engine made was Steam Engine and then Petrol Engine came into
existence.

Automobile industry is very innovative since its inception. There

was new innovation came as the time passes and new automobile
developed according to new technology.

As the time passes importance of transportation increases and so

that importance of automobile industry also increases. By the time
went on few more factors add to it. e.g. comfort, luxury etc. and so
that face of whole automobile industry had change. And we can see
today that this industry is the most developed industry in terms of
Technology as well as manufacturing processes.
Also we can see that in today’s era importance of transportation
increases very rapidly and with combination of luxury, style, power,
performance as well as comfort. Thus, Now-a-days development in
automobile industry takes place very rapidly and new technology
coming up in production of automobile.

Further Automobile Industry can be divided into two parts i.e.

Four Wheeler and Two Wheeler. Four Wheeler contains Light Motor
Vehicle(LMV) and Heavy Motor Vehicle(HMV) while Two Wheeler
contains Scooters, Motorcycles, and Mopeds.
Globally, the Two-wheeler industry is worth $25 billion. Nearly 60
percent of the world’s motorcycle are produced and sold in China and
India. Honda is a global leader in motorcycle sales with a market share
of 22 percent, followed by Yamaha and Suzuki, which have 6 percent
each and Kawasaki with 5 percent.

TWO WHEELER (AUTOMOBILE) INDUSTRY IN

INDIA:
India is the second largest manufacturer and producer of two-
wheelers in the world. It stands next only to Japan and China in terms

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of the number of two-wheelers produced and domestic sales
respectively. This distinction was achieved due to variety of reasons
like restrictive policy followed by the Government of India towards the
passenger car industry, rising demand for personal transport,
inefficiency in the public transportation system etc.

The Indian two-wheeler industry made a small beginning in the

early 50’s when Automobile Products of India (API) started
manufacturing scooters in the country. Until 1958, API and Enfield were
the sole producers.

In 1948, Bajaj Auto began trading in imported Vespa scooters

and three-wheelers. Finally, in 1960, it set up a shop to manufacture
them in technical collaboration with Piaggio of Italy. The agreement
expired in 1971.

In the initial stages, the scooter segment was dominated by API;

it was later overtaken by Bajaj Auto. Although various government and
private enterprises entered the fray for scooters, the only new player
that has lasted till today is LML.

Under the regulated regime, foreign companies were not allowed to

operate in India. It was a complete seller market with the waiting
period for getting a scooter from Bajaj Auto being as high as 12 years.
The motorcycles segment was no different, with only three
manufacturers viz. Enfield, Ideal Jawa and Escorts. While Enfield bullet
was a four-stroke bike, Jawa and the Rajdoot were two-stroke bikes.
The motorcycle segment was initially dominated by Enfield 350cc bikes
and Escorts 175cc bike.

The two-wheeler market was opened to foreign competition in

the mid-80s. And the then market leaders - Escorts and Enfield - were
caught unaware by the onslaught of the 100cc bikes of the four Indo-
Japanese joint ventures. With the availability of fuel-efficient low power
bikes, demand swelled, resulting in Hero Honda - then the only
producer of four stroke bikes (100cc category), gaining a top slot.

The first Japanese motorcycles were introduced in the early

eighties. TVS Suzuki and Hero Honda brought in the first two-stroke
and four-stroke engine motorcycles respectively. These two players
initially started with assembly of CKD kits, and later on progressed to
indigenous manufacturing. In the 90s the major growth for motorcycle
segment was brought in by Japanese motorcycles, which grew at a rate
of nearly 25% CAGR in the last five years.

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 The industry had a smooth ride in the 50s, 60s and 70s when the
Government prohibited new entries and strictly controlled capacity
expansion. The industry saw a sudden growth in the 80s. The industry
witnessed a steady growth of 14% leading to a peak volume of 1.9mn
vehicles in 1990.

The entry of Kinetic Honda in mid-eighties with a variometric

scooter helped in providing ease of use to the scooter owners. This
helped in inducing youngsters and working women, towards buying
scooters, who were earlier inclined towards moped purchases. In the
90s, this trend was reversed with the introduction of scooterettes. In
line with this, the scooter segment has consistently lost its part of the
market share in the two-wheeler market.

In 1990, the entire automobile industry saw a drastic fall in

demand. This resulted in a decline of 15% in 1991 and 8% in 1992,
resulting in a production loss of 0.4mn vehicles. Barring Hero Honda,
all the major producers suffered from recession in FY93 and FY94. Hero
Honda showed a marginal decline in 1992.
The reasons for recession in the sector were the incessant rise in fuel
prices, high input costs and reduced purchasing power due to
significant rise in general price level and credit crunch in consumer
financing. Factors like increased production in 1992, due to new
entrants coupled with the recession in the industry resulted in
companies either reporting losses or a fall in profits.

India is one of the very few countries manufacturing three-

wheelers in the world. It is the world's largest manufacturer and seller
of three-wheelers. Bajaj Auto commands a monopoly in the domestic
market with a market share of above 80%, the rest is shared by Bajaj
Tempo, Greaves Ltd and Scooters India.
The total number of registered two-wheelers and three-wheelers on
road in India, as on March 31, 1998 was 27.9mn and 1.7mn
respectively. The two wheeler population has almost doubled in 1996
from a base of 12.6mn in 1990.

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TOP 10 AUTOMOBILE COMPANIES:

GAINE COMPANY AVG.MKT. AVG.MKT.

R CAPITAL CAPITAL
RANK (2002- (2002-
2003) 2003)
5 HERO HONDA MOTORS 6,255.69 3,078.88
6 BAJAJ AUTO 4,794.34 2,541.35
4 TATA ENG. CO. 4,401.09 1,840.76
7 ASHOK LEYLAND 1,202.1 705.09
9 MAHINDRA & MAHINDRA 1,104.14 1,034.22
1 TVS MOTORS CO. 1,015.25 212.92
8 MOTOR INDUSTRIES CO. 932.15 751.94
10 PUNJAB TRACTORS 903.23 1,061.14
3 BHARAT FORGE 585.17 220.67
2 ELECTROSTEEL CASTING 451.17 152.54

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STRUCTURE OF THE INDUSTRY:
The Indian two-wheelers Industry can be broadly classified as
scooters, motorcycles and mopeds. The domestic two wheeler sales of
3.4mn in FY99 is constituted by these segments as shown below.

Year Scooter Motorcycle Moped Total Growth %

FY92 769,955 428,118 408,022 1,606,095 -
FY93 709,725 379,060 414,567 1,503,352 (6.40)
FY94 840,173 472,582 457,471 1,770,226 17.75
FY95 1,033,524 652,012 523,700 2,209,236 24.80
FY96 1,223,425 809,527 627,079 2,660,031 20.41
FY97 1,301,051 978,682 683,756 2,963,489 11.41
FY98 1,262,699 1,131,314 648,842 3,042,855 2.68
FY99 1,325,868 1,395,657 681,902 3,403,427 11.85
FY2000 1,253,969 1,796,734 726,075 3,776,778 10.97

In the last six years, the domestic two-wheeler industry has seen
structural changes. This can be seen from the change in composition of
two-wheeler sales, where the motorcycles have consistently gained
market share from the scooter and moped segments to corner a share
of 41% of total two-wheeler sales. This trend is expected to continue in
the next two years till the four-stroke scooters make their presence felt
in the segment. The table below gives an idea about the strides made
by the motorcycle segment in the last six years.

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 (in %) Scooter Motorcycle Moped
FY93 47.2 25.2 27.6
FY94 47.5 26.7 25.8
FY95 46.8 29.5 23.7
FY96 46.0 30.4 23.6
FY97 43.9 33.0 23.1
FY98 41.5 37.2 21.3
FY99 39.0 41.0 20.0
FY2000 33.2 47.6 19.2

The scooter market is dominated by 150cc vehicles from Bajaj

Auto and LML, with the rest being served by 100cc variometric
scooters from Kinetic Honda.

In motorcycles sales, western region leads with a market share

of 40% of the total motorcycle sales. South and north regions come
second and third with a market share of 27.5% and 17.4% of total
motorcycle sales respectively.

For mopeds southern and western regions of India are the major
contributors with nearly 52% and 28% of the over all moped sales.
Looking at the population of moped sales in south it appears that the
sale of mopeds has reached stagnation.

Western and southern region lead in three-wheeler sales with a

contribution of 42% and 35.8% of total three-wheeler sales
respectively.

In terms of two-wheeler vehicle population, Maharashtra stands

first with a population of 2.96mn vehicles and Gujarat stands second
with 2.64mn vehicles as on March 31st 1997. Tamil Nadu is the third
largest state with 2.45mn two-wheeler population.

In terms of three-wheeler vehicle population Maharashtra stands

first with a population of 0.39mn and Gujarat in the second place with
0.22mn as on March 31st 1997.

PENETRATION OF TWO-WHEELERS

On a base of around 28mn vehicles on Indian roads and around

175mn households, there were only 160 motorized two-wheelers per
thousand households in FY98. This compares poorly with countries like

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Thailand where it is around 600 per thousand households. Also with a
household size of 5.5 persons and more than one wage earner in about
60% of the households, the potential for a second vehicle demand is
also good.

The NCAER in its latest report on market demographics has

clearly indicated that post-liberalization (ie FY92 to FY96) Indian
households have graduated to higher income groups as can be seen in
the table below.

DISTRIBUTION OF HOUSEHOLDS IN %AGE:

Annual
Income group FY86 FY96
income
(Rs at FY96
Urban Rural Total Urban Rural Total
prices)
<=25,000 Low 42.1 73.6 65.2 27.9 57.2 48.9
25,001 -
Low Middle 35.8 21.4 25.2 34.9 29.0 30.7
50,000
50,001 -
Middle 15.2 4.0 6.9 20.3 8.6 11.9
77,000
77,001 -
Upper Middle 3.9 0.7 1.5 9.6 3.1 5.0
106,000
> 106,000 High 3.1 0.3 1.1 7.3 2.0 3.5

GROWTH IN INCOME GROUPS (%) IN PRE AND POST REFORM

PERIOD

Income group FY86 to FY89 FY93 to FY96

Urban Rural Total Urban Rural Total
Low 0.93 -0.20 -0.01 -7.03 -3.03 -3.72
Low Middle 3.34 4.91 4.33 5.46 10.20 8.59
Middle 8.53 17.82 12.72 11.96 3.11 7.01
Upper Middle 18.52 16.39 17.83 11.90 12.25 12.06
High 9.57 13.90 10.65 18.22 15.68 17.14
Total 4.14 2.04 2.61 3.50 1.44 2.01

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 As seen from the above tables, the number of households in the
low-income group has fallen since FY86 and has been more
pronounced in the post-reform period. On the other hand, the numbers
of households in the middle, upper middle and high-income groups,
which form the consumer base for two wheelers, have increased. Their
share of the total number of households has increased from 10.6% in
FY88 to 20.5% in FY96. The rising income profile has, however, been
more pronounced in the urban areas as average annual growth in
industry has surpassed that of agriculture in the period FY93 to FY96.

TECHNOLOGY AND USAGE OF VEHICLES:

Two-wheeler is one of the rare industries, which are capital as
well as labor intensive. The setting up of a green field venture and

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ancillary network require enormous capital investment. The assembly
operation is highly labor intensive.

The capital requirement for a venture varies from segment to

segment and based on amount of outsourcing. For e.g. setting up of
0.1mn capacity plant for manufacturing scooter requires approximately
Rs1bn and motorcycles Rs1.7bn.

Two-wheeler production entails an assembly of over 700

components, including those sourced from vendors / independent
manufacturers (about 60-70%). In the press shop, sheet metal
components like body frame, fuel tank, front fender and rear fender,
muffler etc are pressed, welded, painted / plated in respective shops.
In the engine plant, engine components (cast/ forged parts) are
machined and assembled along-with other components. The engine is
then transferred to the main plant and assembled with the body and
bought out components.

Due to the peculiar characteristic of high ancillarisation, balance

sheet does not reveal the complete picture. The material cost which is
understood as fully variable, has in-built overheads of ancillaries.
Typically, when volumes are expanding, raw material cost escalations
are not passed on, as ancillaries are able to spread their overheads
over larger volumes. Ancillaries add as much as 50-300% value on the
basic raw material. While steel and aluminum account for 5% each, of
the material cost, 60-70% of the cost is incurred on components
sourced from outside.

Engine is the heart of an automobile. The function of an

automobile engine is to convert chemical energy of the fuel into
mechanical energy, to power the vehicle. In the engine, petrol and air
mixture is burnt from the spark ignited by a spark plug in a cylinder.
The combustion builds up pressure, which pushes the piston. The
reciprocal movement of the piston (riveted to a crankshaft) is
converted in rotating motion. The power is transmitted from the
crankshaft to the wheels by a mechanism of gears.

The engines can be broadly classified as two and four stroke

engines based on number of strokes used to produce a single power
stoke. In a four-stroke engine - suction, compression, power and
exhaust operations are carried out by four different strokes of the
piston. Therefore four-stroke engine produces one power stoke out of
every four strokes of the piston. In a two-stroke engine one power
stroke is produced out of every two strokes of the piston.

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 In a 2-stroke engine, during the emission of the exhaust gases,
fresh fuel/air mixture comes from transfer port to the main cylinder.
This leads to emission of some unburnt gasses along with exhaust
gases leading to drop in fuel efficiency and increase in pollution
through emission. However, a two-stroke engine generates twice as
much power as four stroke, engine size and speed being the same. A
four-stroke engine is heavier, complex in design and expensive.

Gears determine the ratio between engine speed and wheel speed,
using a mechanism of gear wheels of different diameters. In a geared
drive, the driver manually shifts the gears to change the torque
supplied to the wheels. Whereas in a variometric drive, the torque is
transmitted by a belt running between variable diameter pulleys,
providing infinite number of gear ratios.

Scooters originated in Italy and were designed for ladies, particularly

nuns. It has no bar in the front and the engine and wheels are covered
for the convenience of women riders. The scooter engine is shaft
driven.

In India, scooter manufacturing was started in 1972 by Bajaj Auto

in collaboration with Piaggio, Italy. With the passage of time, scooters
have taken considerable position in domestic transport as they are
considered as rugged yet safe family vehicle. This perception was due
to a larger board area, which can be used to carry groceries and a
better carrying capacity, which helps in driving three adults on the
vehicle. But the scooters suffered from poor aesthetics, low fuel
efficiency and difficulty in driving.

The introduction of ABS body along with variometric transmission

by Kinetic Honda changed the perception leading to a shift in demand
from moped users like youngsters and working women.

Motorcycle - the name is evolved from motorized cycle. A motorcycle

has an engine, wheels and chain exposed. Moreover, it is chain driven.
Two-stroke motorcycles are positioned as power bikes by making use
of their high power delivery to cater the young generation. Four-stroke
motorcycle is positioned as fuel-efficient and environment friendly
vehicle.

The Indo-Japanese motorcycles have advantage of better fuel

efficiency, more power, better road grip, low emissions and lightweight
compared to scooters. Usually, motorcycles are the costliest among
two-wheelers.

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Mopeds - the motorcycle with pedals is the entry level two-wheeler.
Mopeds are the cheapest category of two wheelers, having low power
compared to scooters and motorcycles. Mopeds are most popular
amongst college students, ladies and low income house holds. These
vehicles cost in the range of Rs12,000 and onwards. Mopeds are
predominantly used for small distance transportation. Mopeds are also
used as the second vehicle in the family along with car or
scooter/motorcycle.

Autorickshaw, as the name indicates is a motorised cycle rikshaw, a

three-wheeler. The shortage of personal and mass commute transport
in the country, easy maneuverability on narrow and crowded roads and
low operation costs gave rise to exponential growth for three-wheeler
industry in the country. Three-wheelers are also used as goods
transport vehicles for small distance transportation within the city
limits.

The Indian three-wheeler industry is dominated with petrol

engine vehicles. But the dominance was threatened to an extent with
the introduction of diesel engines from Crompton Greaves, which
provides a benefit of low operating cost. But higher vibration and
maintenance cost lead to drop in sales of diesel engine three-wheelers.

All the two-wheeler manufacturers are regulated by emission

levels, noise levels, color, shape etc, which vary from country to
country. Imports of vehicles therefore have to pass through
homologation (approval process) of a sample vehicle.

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EMISSION NORMS
Two-wheelers emit harmful pollutants such as carbon monoxide
and hydrocarbons. The emission norms are becoming stringent the
world over. In India, the norms are being implemented in two phases.
While the first phase Euro 1 norms have become applicable since April
1996, even more stringent norms Euro 2 will come into effect from
April 1, 2000. The details about emission norms is as given below.

TREND IN EMISSION NORMS

Max gm/km 1991 norms After March After March

1996 2000
Vehicle/ CO HC CO HC CO HC
emission
Scooters 14.52 8.68 4.5 3.6 2.0 1.5
Two-stroke 15.9 8.8 4.5 3.6 2.0 1.5
bikes
Four-stroke 14.7 8.6 4.5 3.6 2.0 1.5
bikes
Mopeds 12 8 4.5 3.6 2.0 1.5
Three-wheeler 30 12 6.75 5.4 4.0 1.5

For the two-wheelers new emission norm for year 2000 will be an
acid test as none of the present models except four stroke vehicles

12
confirm to the norms. To full-fill emission norms the manufacturers
have three options: to switch to four-stroke engines, to fit catalytic
converters for the existing models, to improve upon the existing two-
stroke engine.

The temporary option for overcoming emission norms is to fit the

catalytic converters, this will increase the cost of vehicles. But as a
long-run solution scooter manufacturers have to opt for four-stroke
engines or improvement in two stroke engines.

The catalytic converters cost in the range of Rs1,500 - 2,500, but

have a limited life of 10,000 km of vehicle running. Therefore catalytic
converter require regular maintenance on behalf of the user. Also
catalytic converter will be effective only for unleaded petrol usage,
which is not widely available in the country.

The Japanese motorcycle segment will be able to overcome

emission norms with the technology help of respective Japanese
collaborator. The Indian motorcycles have to either shift to four-stroke
technology or make use of catalytic converter.

But this will reduce the price difference between Indian and Indo-
Japanese motorcycles, reducing the price advantage of Indian
motorcycles.

The mopeds segment will be badly affected due to Y2K emission

norms, as none of the existing moped models confirm to the
specifications. With the deadline nearing, the moped manufacturers
have to tighten the belt to meet the norms.

Three wheelers will be another major segment to be affected by

Y2K emission norms even though they are liberal in comparison to two
wheeler norms. To over come this problem the industry leader Bajaj
Auto has introduced four-stroke versions in the FY2000.

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DEMAND – SUPPLY AND IMPORT – EXPORT OF TWO
WHEELER:

DEMAND

The Indian two-wheeler industry has witnessed deep cyclical trends. A

robust growth witnessed upto 1989, was followed by a severe
recession upto FY93 and a strong recovery between 1993-96. The
industry then witnessed a slowdown since the second half of FY97,
which continued upto FY99. Prospects in FY2000 have turned for the
better once again with an overall revival in demand. The trend in two-
wheeler sales since the past decade is as given below.

Year FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY2000
Sales 1.61 1.50 1.76 2.21 2.66 2.97 3.04 3.4 3.78
volume (in
mn)
yoy growth (11.2) (6.7) 17.5 25.2 20.4 11.8 2.4 11.8 11.0
(%)

Two-wheeler sales have increased from 0.37mn in FY80 to

1.85mn in FY90 at a CAGR of 17.4%. There after the industry suffered
from drop in demand in 1991, 1992 and 1993.

In the 90's, the two-wheeler industry has performed extremely

well especially after the automobile recession in 1992-93. In the period
FY93-FY99 the two-wheeler industry has grown at a CAGR of 14.6%.
This splendid growth was possible due to the above average
performance of the motorcycle segment, which has grown at a CAGR
of 24.3% compared to 11% for scooters and 8.6% for mopeds.

After lying low for two years, sales of two-wheelers bounced back
to witness growth in FY99. In the period April '98 to March '99 the sales
of two-wheelers has increased by 11.85% yoy to 3.4mn. The trend has
continued in FY2000 with the sector sales growing by 11% to 3.78mn
vehicles.

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 The demand for two-wheelers in India is dependent upon factors
like availability of finance, increase in income levels, restricted growth
in public transportation and movement in petrol prices. Except petrol
prices, all other factors have positive correlation with the demand for
two-wheelers. The increase in petrol prices on the contrary, adversely
affects the demand for two-wheelers, due to increase in the running
cost of a vehicle.

Two-wheelers are distinguished on different factors for different

consumer segments. For eg, high powered two-wheelers have a niche
market as racing/sporting vehicles and have a special appeal to
youngsters. Easy maneuverability/handling ease is preferred by
teenagers and women. Urbanites are lured by fuel efficiency and low
maintenance. The lower end of the market looks for durability, value
for money and higher resale value.

SCOOTERS

The scooter segment can be further classified into the geared

and the ungeared scooter segment. Geared scooters are generally
metal bodied while the ungeared ones come in plastic bodies. The
demand for geared scooters is primarily from the middle-aged groups
who have a family to look after. They would look out for the utility
value of the vehicle. The demand for geared scooters is price sensitive
compared to motorcycles. The demand for gearless scooters (or
scooterettes) is mainly from women, teenagers and the student
community. They are basically easy to handle and ride. Demand in this
segment is also price sensitive. The scooterettes were first introduced
by BAL (Sunny) followed by TVS Suzuki (Scooty). In FY99, LML entered
the segment with a scooterette in 60cc and 75cc engine capacity.

Until 1990, the two-wheeler market was dominated by the

geared scooter with their sales equaling the combined sales of
motorcycles and mopeds. However, things have changed in the 90s
with customer preference shifting from geared scooters to motorcycles
and also to an extent to the premium end scooters and scooterettes.
This is mainly because of better fuel-efficiency and ruggedness of
motorcycles and better maneuverability and aesthetic appeal of
scooterettes.

Scooter sales have increased from 0.91mn in FY91 to 1.25mn in

FY2000 at a CAGR of 3.6%. But sales growth has dropped from a high

15
of 24%yoy in FY95 to 7.1%yoy in FY97. FY99 saw better times with
sales growth rising to 5.5%yoy. In FY2000, scooter sales fell by
5.4%yoy to 1,253,969 units over last year.

TREND IN SCOOTER SALES

Year FY9 FY92 FY9 FY9 FY9 FY9 FY9 FY9 FY9 FY2000
1 3 4 5 6 7 8 9
Sales 0.91 0.77 0.71 0.83 1.03 1.22 1.31 1.26 1.33 1.25
volume (in
mn)
yoy 3.8 (15.6) (8.1) 17.8 24.1 18.4 7.1 (3.6) 5.5 (5.4)
growth
(%)

In terms of market share in the two-wheeler market, the share of

geared scooters fell from 46.2% in FY91 to 25.8% in FY2000 while that
of scooterettes increased modestly from 4.3% to 7.2% in the same
period. In terms of absolute numbers, sales of geared scooters have
risen from 0.835mn in FY91 to 0.973mn in FY2000 while that of
scooterettes increased from around 77,000 to 0.28mn in the same
period.

The future growth in the scooter segment will be more from the
scooterettes or gearless scooters segment, as compared to basic
models. The four-stroke models of geared scooters, which were
expected to create some demand have not yet been able to do so. This
may be due to the their associated drawbacks like increased risk of
skidding, vibration problems and restricted efficiency gains. Also higher
maintenance costs due to the large number of moving parts add up to
the disadvantages of buying a four stroke scooter. Given the latest
emission norms, scooters, if not four-stroke, will have to be fitted with
a catalytic converter. This would bring down the price differential
between a scooter and motorcycle and result in further switching of
demand from the scooter segment. The four-stroke scooter model
launched by Bajaj Auto also has been unable to live up to the
expectations. Nothing much is expected from it in the future either.
Thus the demand for geared scooters is expected to fall in the future.

MOTORCYCLES

The motorcycle is being increasingly used by

youngsters/bachelors in urban areas and by rural folk as a sturdy
means of personal transportation. Bigger wheels, better road grip,
higher ground clearance, power, fuel efficiency, low maintenance cost

16
are the major attraction of this segment. The motorcycle segment, too,
can be further classified into the Japanese and the Indian motorcycle
segments. The former consist of models manufactured out of Japanese
technology while the latter category consist of the high-powered bikes
of the 'Rajdoot' and 'Bullet' range and also the step-thru's which fall
somewhere between a scooter and a motorcycle.

The sales of motorcycle has increased from 0.1mn in FY80 to

0.38mn in FY93 at a CAGR of 11.6%. The segment picked up
momentum in the 90's to grow at a CAGR of 15.7% to 1.796mn
vehicles in FY2000. Motorcycle sales achieved a major milestone of
crossing the scooter sales in the month of November 1998. This trend
has further continued for the next couple of years causing a jump in
sales of 28.7%yoy to 1,796,734 units in FY2000.

TREND IN MOTORCYCLE SALES

Year FY9 FY9 FY93 FY9 FY9 FY9 FY9 FY9 FY9 FY2000
1 2 4 5 6 7 8 9
Sales 0.47 0.43 0.38 0.47 0.65 0.81 0.98 1.13 1.40 1.80
volume
(in mn)
yoy growth 13.8 (8.9) (11.6) 23.2 39.0 24.2 20.9 15.7 23.5 28.7
(%)

In the last two years, the motorcycle segment has witnessed the
launch of several new models from existing players. Majority of these
have been in the four-stroke engine category for which the technology
has come from Japanese parents. Increasing product differentiation
and competition has resulted in new sub-segments emerging. The
efficiency segment is currently the fastest growing and constitutes
four-stroke motorcycles. This has caused a dent in the demand for two-
stroke motorcycles which is expected to further drop in the future.
Taking in to consideration the limited availability of mass
transportation in rural and semi-urban areas and suitability of
motorcycles to these conditions, we expect the segment to continue to
grow at 20%yoy growth in FY01. This will increase demand for
motorcycles from 1.80mn in FY2000 to 2.5mn in FY02.

The major growth in motorcycle segment will be coming from

Japanese segment and in particular four-stroke motorcycles, leading to
marginalisation of Indian motorcycles. The Japanese motorcycles will
continue to improve penetration in the rural areas by providing
additional features like luggage carrying provision etc. On the other
hand, sales of step-thru's will most probably stagnate.

17
 The rush of new models in the small car market combined with
upgradation of small car users to new mid-size cars has lead to sharp
drop in prices of second hand cars. In some cases the price of a second
hand car is just twice the price of a brand new motorcycle. This will
accelerate shift of two-wheeler users to cars and hence affect the
demand for high end motorcycles. Therefore, in the coming years the
high end motorcycle manufacturers will have to take into consideration
prices of second hand cars, while positioning the vehicle.

MOPEDS

Mopeds are entry level vehicles. The demand for mopeds is

predominantly from low to middle income families who graduate from
bicycles to motorized vehicles and also among college students. Moped
sales increased from 0.11mn in FY80 to 0.42mn in FY93 at a CAGR of
11.3%. But an increasing preference towards scooterettes and
motorcycles in the nineties lead to slow growth for mopeds compared
to other segments.

TREND IN MOPED SALES

Year FY9 FY9 FY9 FY9 FY9 FY9 FY9 FY9 FY9 FY2000
1 2 3 4 5 6 7 8 9
Sales 0.43 0.41 0.42 0.46 0.52 0.63 0.68 0.65 0.68 0.73
volume (in
mn)
yoy growth (4.2) (4.3) 1.2 11.7 13.3 19.6 9.4 (5.1) 4.6 7.4
(%)

After rising to 19.6%yoy in FY96, growth in the moped segment

has slowed down mainly because of rising sales in the scooterette
segment. A scooterette offered the buyer more power and higher
stability combined with the easy maneuverability of a moped. The
moped segment witnessed a 3.5% drop in sales in FY98. Growth in the
moped segment has shown a reversal in line with two-wheelers sales

18
trend, to witness a growth in sales for FY99. Sales in FY2000 has risen
by 7.4%yoy.

The future demand for mopeds will be from low and middle class
families, who will be upgrading to two-wheelers from bicycles. Taking
into consideration the present ownership of bicycles in India and
upgradation of existing moped owners to scooterettes/scooters or
motorcycles, we expect the demand for mopeds to remain stagnant in
FY01.

THREE WHEELERS

Three-wheelers are used for both goods and public transport

purposes. This segment is very sensitive to operating cost of a vehicle.
The success of diesel three-wheelers in 1995 was mainly due to low
operational cost of the vehicle.

The sales of three-wheelers increased from 26,417 in FY80 to

64,321 in FY93 at a CAGR of 7.1%. The segment witnessed
astronomical growth in the nineties to reach 233,733 in FY98 at a
CAGR of 29.5% for FY93 to FY98. Thereafter sales have been on the
decline, recording negative growth for two consecutive years, to reach
205,238mn units in FY2000. During the four year period of FY94 to
FY97, the yoy growth in the segment has been oscillating between 25
to 45%.

TREND IN THREE-WHEELERS

Year Sales volume (in nos) yoy growth (%)

FY92 76,921 -
FY93 64,321 (16.4)

19
 FY94 89,146 38.6
FY95 129,079 44.8
FY96 162,324 25.8
FY97 220,436 35.8
FY98 233,733 6.0
FY99 210,220 (10.1)
FY2000 205,238 (2.4)

The decline in sales in the past two years has been partly due to
the strict environmental regulatory norms made applicable by some
state governments in the country, which made it difficult for diesel
three-wheelers to ply. These governments include those of Delhi, Uttar
Pradesh and Karnataka. To counter them, companies like Bajaj Auto
have decided to gradually do away with their diesel range of three
wheelers and replace them by petrol and CNG driven ones.

The demand for two and three-wheelers in the long-term may

get affected due to commissioning of mass transport systems in state
capitals. As mass transport systems are still in the initial stages of
development, we expect it to take at least five to seven years time to
have any sort of an adverse impact on two and three-wheeler demand.

SUPPLY

The manufacturers of two-wheelers distinguish their products

based on power, fuel efficiency, maintenance requirement, ease in
handling, style, looks and ergonomics, price etc.

The two-wheeler industry is controlled by eight major players viz

Bajaj Auto Ltd (BAL), Maharashtra Scooters Ltd (MSL), LML, Kinetic
Motors Ltd, Hero Honda Motors Ltd (HHML), Escorts Yamaha Motors Ltd
(EYML), TVS Suzuki Ltd (TSL) and Kinetic Engineering Ltd (KEL). Among
these only Bajaj Auto and TVS Suzuki are having presence in all the
three segments of two-wheelers, with the rest catering to one or two
segments of the two-wheeler market.

SCOOTERS

The scooter industry is dominated by five players viz, BAL, MSL, LML,
KMCL and TVS Suzuki. A major proportion of scooter sales is garnered
by BAL, which dominates the scooter market with about 58% market
share along with its affiliate MSL. BAL which has been the market

20
leader over the years maintained its position due to aggressive
capacity addition in the late eighties and no threat from existing
players who were struggling financially. However, with the coming in of
Kinetic Motor and TVS Suzuki with their range of gearless scooters, BAL
has seen its market share drop to 46% in FY2000 from the initial 60%.

MARKET SHARE IN THE SCOOTER SEGMENT

Company FY2000 FY99 FY98

Bajaj Auto 46.0 48.6 49.9
Kinetic Motors 9.6 7.4 9.0
LML 22.6 24.8 24.4
Maharashtra Scooters 11.7 11.5 11.0
TVS Suzuki 10.2 7.6 5.7

The market share of the leading players in the scooter segment

is as given above. BAL is the leader with a 57.7% market share in
FY2000 (along with MSL). LML has also suffered with its market share
dropping from 25.2% in FY98 to 22.6% in FY2000. The biggest gainer
has been TVS Suzuki which has raised its share from 7.1% in FY98 to
10.2% last fiscal. The other player Kinetic Motor Company has also
done well by improving its share from 7.2% to 9.6% in the same
period.

In H2 FY99, four-stroke scooters were introduced from BAL

(Legend) and TVS Suzuki (Spectra). These four-stroke models are
priced at a premium to conventional two-stroke scooters and the initial
response for them hasn't been encouraging. The four-stroke scooters
are the result of continuous R&D effort by Indian manufacturers to
develop vehicles confirming to Y2K emission norms.

The capacity of scooters has increased from 1.38mn in FY96 to

2mn in FY2000. The increase in capacity was brought about by
expansion projects of LML and Bajaj. With the entry of TVS Suzuki with
0.15mn capacity along with the new plant of Bajaj, scooter industry
capacity will increase from 1.83mn in FY99 to 2.15mn by FY01.

Capacity For Scooters (mn nos)

Manufactur FY97 FY98 FY99 FY2000 FY01(P)

er
BAL 1.02 1.02 1.05 1.10 1.15

21
Kinetic 0.18 0.18 0.18 0.22 0.25
Motors
LML 0.3 0.4 0.4 0.45 0.50
TVS Suzuki 0.04 0.075 0.175 0.20 0.22
Others 0.02 0.03 0.03 0.03 0.03
TOTAL 1.55 1.7 1.83 2.00 2.15
Growth % - 9.3 7.7 9.3 7.5

The scooter segment will witness a stream of new models from

existing players in the next few months or so. Some of the launches
expected are: four-stroke scooters from LML, four-stroke scooters in
the engine capacity of 75 to 150cc range from Bajaj developed in
technical collaboration with Tokyo R&D, Japan and a variometric four-
stroke scooter from TVS.

MOTORCYCLES

The motorcycle segment is dominated by four players viz Hero

Honda, TVS Suzuki, BAL and Escorts Yamaha. The market share of
each of the players is as given below. Nearly 80% of the motorcycle
sales is of Japanese motorcycles with the rest coming from Indian
motor cycles and step-thru's. The Indo-Japanese segment is catered by
three to five models from each of the players viz BAL, TVS, Hero Honda
and Escorts Yamaha. But majority of the sales is of 100cc-125cc
vehicles. The Japanese range of motorcycles are costlier due to import
content and royalty payments to their Japanese collaborators.

MARKET SHARE IN THE MOTORCYCLE SEGMENT

Company FY2000 FY99 FY98

Bajaj Auto 24.0 27.4 27.8
Escorts Yamaha Motors 14.0 13.6 15.9
Hero Honda Motors 42.4 38.0 36.0
Royal Enfield 1.4 1.8 1.6
TVS Suzuki 18.2 19.2 18.7

The motorcycle segment will be broadened on the high price

front by introducing high powered bikes priced above Rs55,000. These
bikes have been targeted at college going students who have a flavor
for high powered rides. To cater to this segment, Hero Honda launched

22
CBZ, a 156cc four-stroke motorcycle, in March 1999. It is priced around
Rs60-65,000. 'Fiero' from TVS Suzuki has been the latest addition in
this list. Bajaj Auto is also getting ready with its 175cc 'Eliminator'. In
the near future, competition will hot up in the Japanese motorcycle
segment with players like LML and Kinetic Motors standing ready with
their offerings.

Motorcycles will be the least affected segment from Y2K

emission norms, as Japanese four-stroke motorcycles confirm to the
norms, except some models of TVS Suzuki and Escorts Yamaha. The
two-stroke Indo-Japanese motorcycles will be making use of catalytic
converter so as to confirm the emission norms. The only threat will be
for Indian motorcycles, which also have a two-stroke engine. The major
player in the Indian motorcycles segment Bajaj Auto, with its M-80
model, plans to overcome the emission problem by introducing a four-
stroke version.

The supply of motorcycles will be increasing from 2.08mn in

FY2000 to 2.38mn in FY01.

MOTORCYCLE CAPACITY (MN)

Manufacture FY97 FY98 FY99 FY2000 FY01(P)

rs
BAL 0.47 0.53 0.58 0.63 0.70
Escorts 0.30 0.30 0.30 0.30 0.35
Hero Honda 0.40 0.48 0.53 0.68 0.75
TVS Suzuki 0.25 0.30 0.35 0.40 0.45
LML 0.00 0.00 0.00 0.05 0.08
Others 0.03 0.03 0.03 0.03 0.05
TOTAL 1.45 1.63 1.78 2.08 2.38
Growth % - 12.8 9.2 16.9 13.3

MOPEDS

The major players in the moped segment are TVS, Kinetic

Engineering, BAL and Majestic Auto Ltd. TVS leads the segment with a
market share of 52.6% and a dominant position in south India. The
market share of individual players in the segment is as given in the
chart below.

23
MARKET SHARE IN THE MOPEDS SEGMENT

Company FY2000 FY99 FY98

Bajaj Auto 9.4% 7.0% 7.9%
Escorts Yamaha Negligible 1.5% 1.9%
Kinetic Engineering 22.4% 23.8% 23.7%
Majestic Auto 15.5% 18.7% 21.4%
TVS Suzuki 52.6% 49.0% 45.1%

It must be said that strictly speaking BAL manufactures

scooterettes and not mopeds. As seen from the above table, it is
apparent that the market leader by virtue of its strong presence in the
south continues to dominate the market. However, the other two
players viz KEL and Majestic Auto have been losing their hold. Clearly,
scooterettes have come to grab some space from mopeds as could be
observed from the market share changes of BAL.

With regards to conforming to Y2K norms, all manufacturers

have fitted their mopeds with catalytic converters and are not planning
to roll out four-stroke mopeds. The fitting of catalytic converters has
lead to 15 to 20% increase in the prices of the mopeds from the
present levels. The increased prices are also partly responsible for
mopeds sales to stagnate, as consumers in the segment are price
sensitive.

The capacity of moped production has increased from 0.93mn in

FY97 to 1.17mn in FY2000. The increased capacity was due to
expansion of TVS and Kinetic Engineering. The moped capacity is
expected to increase further to 1.2mn in FY01.

24
MOPED CAPACITY (MN)

Manufactur FY97 FY98 FY99 FY2000 FY01(P)

er
BAL 0.14 0.14 0.14 0.14 0.16
Escorts 0.03 0.03 0.03 0.03 0.03
Kinetic Engg 0.18 0.24 0.24 0.24 0.24
Majestic Auto 0.18 0.18 0.18 0.24 0.24
TSL 0.40 0.40 0.45 0.48 0.48
LML - - 0.05 0.05 0.05
TOTAL 0.93 0.99 1.09 1.17 1.20
Growth % 6.5 10.2 7.8 2.1

THREE WHEELERS

The three-wheeler industry was dominated by petrol engine

vehicles from BAL till the early nineties. But their dominance was
challenged by low operating cost diesel engine vehicles introduced by
Greaves in 1995. Bajaj Tempo has lately become a vigorous player in
the segment with a 8.7% market share. But still BAL commands a
strong hold in the three-wheeler industry with 83.8% market share.
The third player in the segment - Scooters India - commands 7.5% of
the three-wheeler market with its Vikram autos used mainly for goods
transport.

MARKET SHARE IN THE THREE WHEELER SEGMENT

Company FY2000 FY99 FY98

Bajaj Auto 83.8% 86.3% 82.1%
Bajaj Tempo 8.7% 6.5% 4.7%
Greaves NA NA 6.3%
Scooters India 7.5% 7.2% 6.9%

25
 The joint venture between Piaggio of Italy (51% stake) and
Greaves have launched a diesel three wheeler in FY2000. The
company has plans to set up 30,000 vehicle capacity to manufacture
range of vehicles in the country. Piaggio plans to shift its
manufacturing base for 'APE' range of vehicles and use India as a base
for exports to other Asian countries. They have started well by
capturing a market share of around 5% in FY2000. But Piaggio's
production base will be small to challenge the dominance of Bajaj Auto
in the three-wheeler industry in the near future.

The capacity of three-wheelers is expected to increase from

0.34mn in FY2000 to 0.39mn in FY01 as a result of expansion of BAL
and Greaves. Mahindra & Mahindra has test-marketed a new
electrically operated three-wheeler called 'Bijlee'. On the other hand,
BAL has already launched a four-stroke, CNG powered vehicle to
confirm to Y2K emission norms.

THREE-WHEELER CAPACITY (MN)

Company FY97 FY98 FY99 FY2000 FY01(P)

Bajaj Auto 0.21 0.24 0.25 0.28 0.30
Greaves 0.02 0.02 0.02 0.04 0.07
Ltd
Scooters 0.02 0.02 0.02 0.02 0.02
India
Total 0.25 0.28 0.29 0.34 0.39
Growth % - 12.5 4.3 18.1 14.7

EXPORTS

The exports of two-wheelers from India are insignificant in

comparison to domestic sales. The exports started looking up in FY94
and FY95 when they registered a growth of above 50% to reach a
figure of 0.116mn vehicles. In FY96, the exports remained stagnant but
continued its upward journey at a growth of 9.43% to reach 0.125mn
vehicles in FY97.

In FY98, the exports remained stagnant due to slump in Asian

demand. The sluggish trend continued during FY99 and FY2000. Shares
of both scooters and mopeds in the export market fell while that of
motorcycles remained stagnant. The major portion of exports is
contributed by motorcycles which form about 42.4% of total two-

26
wheeler exports. The composition of exports by different sectors is as
given in the table below.

COMPOSITION OF TWO-WHEELER EXPORTS IN FY2000 (NOS)

Segment Exports %age share

Scooters 20,188 24.3
Motorcycles 35,295 42.4
Mopeds 27,754 33.3

The major exporters from the country are Majestic Auto, BAL,
Escorts Yamaha and Hero Honda constituting 66% of the total two-
wheeler exports from the country in 1999.

DEMAND-SUPPLY

The capacity for two-wheelers in FY2000 was about 5.25mn units

per annum. Against this, the sales of two-wheelers amounted to
3.78mn, thus translating into a capacity utilization of 72%. Segment
wise capacity utilization was the highest for motorcycles at 87% and
lowest for mopeds at 62%. Capacity utilization for scooters was 63%.

Taking into account the supply for different sectors of two-

wheelers, the total supply will increase from 5.25mn in FY2000 to
5.73mn in FY01. With the assumptions made for demand of different
segments of two-wheelers, the demand for total two-wheelers will
increase by about 11% in FY01 to 4.2mn. This will lead to a capacity
utilization of around 73% for the industry.

INTERNATIONAL SCENARIO
A two-wheeler is used as a personal/family vehicle or a goods
carrier in the developing countries, whereas it is confined to
sports/racing (heavy motorcycles) or short distance shopping (mopeds)
in developed countries.

The world two-wheeler market is dominated by Japan. Japanese

manufacturers account for around 65% of the total two-wheeler

27
production in the world. However, production within Japan has been
declining due to lower domestic demand and shift in manufacturing
base outside the country. Japan is also the world's largest exporter of
two-wheelers in the world controlling around 75% of the world trade.
Its major markets are China, USA and Europe. In terms of player
positions, Honda Motors Corporation, Yamaha Motors and Suzuki
Motors Corporation share the top three slots in the world two-wheeler
market. The table below shows the production and sales figures of
motorcycles and scooters in Japan during the past decade.

Company Up to 50cc > 50cc Total Total (Jan-

Jun 1999)
Honda 189,131 251,903 441,034 411,655
%yoy (1.6) 14.8 7.1 (22.8)
Kawasaki 123,442 0 123,442 116,913
%yoy 6.7 0 5.6 3.8
Suzuki 45,796 176,092 222,698 225,366
%yoy (14.4) 2.9 (1.2) (18.7)
Yamaha 113,957 299,314 413,271 379,636
%yoy (22.5) 28.7 8.9 (9.0)
Others 217 0 217 1,242
%yoy (82.5) 0 (82.5) -
Total 349,101 851,561 1,200,662 1,134,812
%yoy (11.6) 15.1 5.8 (15.3)

The downward trend in production witnessed in the first six

months of 1999 has reversed. The rise has been entirely driven by
higher production of 50cc plus two-wheelers, completely reversing the
trend witnessed in the same period in 1999 when production fell by
15.5%yoy. This perhaps is a sign of the rising fortunes of the Japanese
economy. Except Suzuki, all the major manufacturers have posted
higher production figures. In terms of share in production, Honda leads
with 36.7% followed by Yamaha with 34.4%.

EXPORTS IN JANUARY TO JUNE 2000

Company Up to 50cc > 50cc Total Total (Jan-Jun

1999)
Honda 12,003 199,392 211,395 198,869
%yoy (34.8) 10.5 6.3 (21.4)
Kawasaki - 116,305 116,305 104,708

28
%yoy - 11.1 11.1 (1.7)
Suzuki 2,608 186,663 189,271 187,180
%yoy (60.7) 3.4 1.1 (6.1)
Yamaha 20,988 280,376 301,364 234,016
%yoy 12.3 30.2 28.8 (7.4)
Total 35,599 782,736 818,335 724,773
%yoy (18.6) 14.9 12.9 (10.7)

68% of the production in Japan has been exported out of the country in
the first six months of 2000 as compared to 64% last year. This
scenario contrasts directly with the Indian scenario. In India, only about
2-3% of the production in FY2000 were exported.

The Asian continent is the largest user of two-wheelers in the

world. This is due to poor road infrastructure and low per capita
income, restrictive policy on car industry. The technology for two-
wheelers is not as well developed as for car industry. This is due to
oligopoly between top five players in the segment, compared to thirty
manufacturers in the car industry.

KEY EARNING DRIVERS

Government policy impact on petrol prices:

Petrol prices determine the running cost of two/three wheelers

expressed in Rupees per kilometer. Petrol prices are the highest in
India as GOI subsidizes kerosene and diesel. But with the recent
change in GOI policy to reduce the subsidy, the prices of petrol will
remain constant at the current prices. This will have a positive effect
on purchases on two/three wheelers.

Improvement in disposable income:

With the increase in salary levels, due to entry of multinationals

following liberalization process and fifth pay commission, the
disposable income has improved exponentially over the years. This will
have multiplier effect on demand for consumer durables including two-
wheelers. This is already witnessed in improved demand for 2-wheelers
in FY99 compared to a meager growth in FY98.

Changes in prices of second hand cars:

29
 The second hand car prices of small cars have come down
sharply in the recent past. This will shift the demand from higher end
two-wheelers to cars and affect the demand for two-wheelers
negatively. A further drop in second hand car prices will lead to
pressure on the two-wheeler majors who plan to release higher end
scooters and motorcycles.

Implementation of mass transport system:

Many states have planned to implement mass transport systems

in state capitals in the future. This will have negative impact on
demand for two-wheelers in the long-run. But taking into account the
delays involved in implementation of such large infrastructure projects,
we expect the demand to be affected only five to seven years down
the line.

Availability of credit for vehicle purchase:

The availability and cost of finance affects the demand for two
and three-wheelers as the trend for increased credit purchases for
consumer durables has increased over the years. Therefore any
change with respect to any of these two parameters as a result of
change in RBI policy has to be closely watched to assess the demand
for two and three wheelers.

30
BAJAJ – THE COMPANY:
INTRODUCTION

Bajaj Auto Ltd (BAL), the largest two and three wheeler
manufacturer in the country, has a dominating 40% market share in
scooters with 18.5% in ungeared scooters , 25.2% in motor cycles,
53% in step-thrus , 8.3% in mopeds and a leading 78% market share in
three-wheelers in FY2001. Bajaj Auto has been viewed as a scooter
major but with the change in the structure of demand for 2-wheelers
the company has tried to make its presence felt in this key market by
steadily ramping up motorcycle capacities , by introducing new models
and variants and pushing up marketing and sales . However the
company is well behind Hero Honda in the motorcycle segment and
No.2 player in mopeds/scooterettes segment after TVS Suzuki. The
company has a wide array of models both in the two-stroke and four-
stroke configurations.In 1995 – 96 the sales were less than 90,000
motorcycles which was 8% of the total volume of its two- wheeler sales
which has grown to 4,22,016 units in FY2001 accounting to 50% of its
two- wheeler sales . However, with the implementation of the latest
emission norms, it is slowly moving away from two-stroke vehicles and
converting them to four-stroke ones. The company is all set to increase
its margins to double – digits through concerted cost-cutting , value
engineering , gains from ‘ Total Productive Maintenance ‘ ( TPM ) and
VRS .

The Indian two wheeler sector is characterized by largest

volumes amongst all the segments in automobile industry. Though the
segment can be broadly categorized into 3 sub-segments viz; scooters,
motorcycles and mopeds ; some categories introduced in the market
are a combination of two or more segments e.g. scooterettes and step-

31
thru's . The market primarily comprises five players in the two-wheeler
segment with most of the companies having foreign collaborations with
well-known Japanese firms earlier .But most of the companies are now
planning 100% subsidiaries in India .

In the last four to five years, the two-wheeler market has

witnessed a marked shift towards motorcycles at the expense of
scooters. In the rural areas, consumers have come to prefer sturdier
bikes to withstand the bad road conditions. In the process the share of
motorcycle segment has grown from 48% to 58% , the share of
scooters declined drastically from 33% to 25% , while that of mopeds
declined by 2% from 19% to 17% during the year 2000-01.The Euro
emission norms effective from April 2000 led to the existing players in
the two- stroke segment to install catalytic converters. This has been
replaced by 4-stroke motorcycles which do not incur the additional cost
of such converters and fierce competition led to a fall in price of certain
models

Bajaj Auto Ltd ( BAL ) has been viewed as a scooter major .

Nevertheless , in the past five years the company recognized the
important role of motorcycles in its portfolio . The scooter market is
predominantly located in the Northen and Eastern India and the
rationalization of sales taxes to a uniform rate of 12% pushed the price
of scooters by 6-8% without offering any perceived value advantage to
the customer . The company posted a total 2-wheeler sales of Rs1.05
mln in 2000-01 as against Rs1.24 mln in 1999-00 . The motor-cycle
sales contributed to almost 50% of the total sales volumes
accompanied by the decline in geared scooter sales which contributed
to only 33% of sales volumes . The company has been introducing
models in the middle end Rs.36,000 – Rs. 48,000 and high end
segments viz ; Rs. 48,000 and above but has found difficult to market
such models in competition to Hero Honda models in the similar price
category .

However BAL is on its way to recapture the highly differentiated

product market by becoming a flexible and market – driven supplier of
various models of two and three wheelers at specific price – points .

32
HISTORY
Bajaj Group came into existence during the turmoil and the
heady euphoria of India's freedom struggle. Jamnalal Bajaj, founder of
the Bajaj Group, was a confidante and disciple of Mahatma Gandhi, and
was deeply involved in the effort for freedom. The integrity, dedication,
resourcefulness and determination to succeed which are characteristic
of the Company today, are often traced back to its birth during those
long days of relentless devotion to a common cause.

Kamalnayan, the eldest son of Jamnalal Bajaj, succeeded his

father in 1942, at the age of twenty-seven. Putting the Nation before
business, he devoted himself to the latter only after India achieved
independence in 1947. But when he did so, he put his heart and soul
into it. Within a short while, he not only consolidated the Group, but
also diversified into various manufacturing activities, elevating the
Group to the status it enjoys till this day.

Rahul Bajaj today heads the Group. He has been the Chief
Executive Officer of Bajaj since 1968 and is recognised as one of the
most outstanding business leaders in India. As dynamic and ambitious
as his illustrious predecessors, he has been recognised for his
achievements at various national and international forums.

Bajaj is currently India's largest two and three-wheeler manufacturer

and one of the biggest in the world. Bajaj has long left behind its
annual turnover of Rs.72 million (1968), to currently register an
impressive figure of Rs.42.16 billion (US$ 936 million).

MILESTONES:

33
1945 Bajaj Auto comes into existence as M/s Bachraj Trading
Corporation Private Limited

1948 Sales in India commence by importing two and three-wheelers.

1959 Bajaj Auto obtains licence from the Government of India to
manufacture two and three-wheelers.
1960 Bajaj Auto becomes a public limited company. Bhoomi Poojan of
Akurdi Plant.
1969-70 Bajaj Auto rolls out its 100,000th vehicle
1971 The three-wheeler goods carrier is introduced
1971-72 The Bajaj Chetak is introduced.
1976 The Bajaj Super is introduced
1976-77 Bajaj Auto achieves production and sales of 100,000
vehicles in a single financial year.
1977 The Rear Engine Autorickshaw is introduced.
1981 The Bajaj M-50 is introduced
1984 Foundation stone laid for the new Plant at Waluj, Aurangabad.
Production commences at Waluj, Aurangabad in a record
time of 16 months.
1985 The Waluj plant inaugurated by the erstwhile President of India
Shri Giani Zail Singh.
1985 The Bajaj M-80 and the Kawasaki Bajaj KB100 motorcycles are
introduced. 500,000 vehicles produced and sold in a single
financial year.
1990 The Bajaj Sunny is introduced.
1990 The Kawasaki Bajaj 4S Champion is introduced.
1990 The Bajaj Classic is introduced.
1991 One million vehicles were produced and sold in this financial
year.
1994 The Bajaj Super Excel is introduced while Bajaj celebrates its ten
millionth vehicle.
1994 Agreements signed with Kubota of Japan for the development of
diesel engines for three-wheelers and with Tokyo R&D for
ungeared Scooter and moped development.
1995 Bajaj Auto is 50.
1997 The Kawasaki Bajaj Boxer and the RE diesel Autorickshaw are
introduced.
1999 June 7th - Kawasaki Bajaj Caliber Roll out of Waluj. July 25th -
Legend, India’s first four-stroke scooter roll out of Akurdi.
October
1998 Spirit launched.
2000 Caliber motorcycle notches up 100,000 sales in record time of 12
months.
2000 The Bajaj Saffire is introduced.
2001 The Eliminator is launched

34
BACKGROUND
BAL commenced operations as importing agents for Vespa
scooters of Piaggio in

1948. It entered into a technical collaboration agreement with

Piaggio in 1961 to manufacture scooters and three wheelers. The
agreement, which expired in 1971, was not renewed. BAL has 3 plants
located in Maharashtra. The scooters incorporate Piaggio technology as
upgraded by BAL’s in-house R&D from time to time. It also developed a
fully indigenous model of motor cycles in 1981. Subsequent to the
opening up of the sector for foreign technology and equity
participation in the mid 80’s, it entered into a technical collaboration
agreement with Kawasaki Japan. It started production of Kawasaki
100cc motor cycles in 1986. The company has also entered into

35
technical collaboration with M/s Kabota of Japan for manufacture of
diesel engines for its three wheelers and Cagiva of Italy. BAL has also
promoted Maharashtra Scooters Ltd. (MSL) with state government
bodies. MSL assembles Bajaj scooters at its Satara plant.

OUTLOOK
Throughout the 1980s and 1990s , Bajaj has countered
competition through predatory price cuts , market expansion moves or
take over threats . However both Honda and LML have cannibalized the
BAL market share and are challenging its leadership . The company
has remained less aggressive in its approach and idled away its cash
reserves without proactively deploying them in R&D , new models ,
takeovers or other risky ventures . In order to arrest its declining
market share, BAL has launched several new models during the past
fiscal and more are in the offing in each segment of the two-wheeler
market. Moreover, the management has recognized the need to utilize
its surplus reserves for strengthening its presence in the market by
way of launching new models, expanding capacity and penetrating
new markets. Kawasaki has been developing India as an export hub for
motorcycles between 50-200cc .The company has invariably become
the manufacturing base for Kawasaki and accounts for 60% of the
latter’s global sales. Though the company plans to introduce some
high-tech motorcycles from the Kawasaki range , it is trying to shed-

36
off its image of " screw-driver "company by developing its own range
of motorcycles . The TVS – Suzuki break –up is expected to pave the
way for a new relationship with BAL and the new Kawasaki – Suzuki
alliance in the two-wheeler business. BAL needs to rediscover the
spark of entrepreneurship that made it the market leader.

BUSINESS:
BAL in its 2-wheeler segment posted a volume wise sales of
87.2% of its total sales of which scooters (both geared and ungeared)
accounted for 42.3%, motorcycles for 34.9% and around 10% in step-
thrus in FY2001. The sales of scooters have fallen by 26.1% from
FY2000 but there has been a significant increase in the motorcycle
sales by nearly 65.4% since FY2000. The three – wheeler sales have
improved marginally in FY2001.The company is targetting 25% market
share in motor cycles segment during the current fiscal as against 21%
share it has cornered in FY2001.

SCOOTERS

In the geared category BAL has 'Chetak' , 'Classic' and 'Super' in the
old ones and the 'Legend', 'Bravo' among the newer models .The
ungeared segment consists of the 60CC ‘ Sunny Spice ‘ , ‘Spirit ‘ , ‘
Fusion ‘ and the 92cc ‘Saffire ‘ . The ’ Legend NXT’ is a 4 stroke geared
scooter with a 9HP engine and the ‘Bravo’ being a two-stroke 150cc
scooter with a catalytic converter designed in line with the emission
norms . The company has launched utility versions of ‘ Chetak ‘ and ‘
Super ‘ at reduced prices .With the unprecendented 38% slump in
scooter market the company faced a gradual market share loss to the
other players like Kinetic Engineering and TVS Suzuki .

37
MOTORCYCLES

BAL has two basic motorcycle products - M80, a 75cc

indigenously developed low cost vehicle in the step-thru segment and
Japanese motorcycles. BAL’s motorcycles are positioned as four-stroke
fuel-efficient vehicles. Among the Japanese ones, BAL has within its
fold, the 100cc ‘4S-Champion’, 125cc ‘KB 125’, 111cc ‘Caliber’
competing with Hero Honda’s ‘ Passion ‘ and 100cc ‘Boxer’ with a
variant ‘ Boxer City ‘ in the pipeline , all of them at competitive prices .

In FY2001 the company launched the new range of bikes viz;

175cc ‘Kawasaki Bajaj Eliminator ‘ the country’s first cruiser
motorcycle and the two variants viz; 180cc and 150cc ‘Pulsar ‘(in the
high –end segment) These models were introduced mainly in
competition to Hero Honda’s 157cc CBZ and TVS Suzuki’s Fiero . The
company also launched in its 4-stroke bikes range 100cc ‘ Kawasaki
Bajaj Acer’ competing against Hero Honda Splendor and ‘ Aspire ‘ ,
‘Caliber Croma ‘, ‘ Legend NXT ‘ (in the middle end segment ).

MOPEDS/SCOOTERETTES

BAL has a small market share of 9.5% in FY2000 in this segment.

Among its models are the ‘Sunny Zip’, ‘Rave’ and the ‘Spirit’. Its ‘Bajaj
Sunny’, a 50cc upgraded scooterette model has been extremely
successful .The other models include 74cc ‘ Rave ‘launched in FY98
and ‘ Spirit ‘ 60cc, 2-stroke scooterette competing with leader TVS
Suzuki’s ‘Scooty’.

THREE WHEELERS

BAL continues to dominate the three – wheeler market with over

73% market share and sales of 1,55,000 units in FY2001 which have
fallen from around 85% two years back. The company is trying to
maintain its market share by creating environment-friendly vehicles
and has already launched the CNG model in Delhi . BAL also launched
its 4- stroke rear engine CNG – autorickshaw model in Mumbai during
the year . It is testing the LPG model which will take off as soon as the
government regulations permit . Apart from this the company also
plans to introduce a four-stroke version in auto-rickshaw and a goods
carrier in both petrol and diesel versions.

38
RESEARCH & DEVELOPMENT:
Bajaj Auto has a huge, extensive and very well-equipped Research and
Development wing geared to meet two critical organisational goals:
development of exciting new products that anticipate and meet
emerging customer needs in India and abroad, and development of
eco-friendly automobile technologies. While the manpower strength of
the R&D represents a cross-section of in-depth design and engineering
expertise, the company has also been investing heavily in the latest,
sophisticated technologies to scale down product development
lifecycles and enhance testing capabilities. Bajaj Auto R&D also enjoys
access to the specialised expertise of leading international design and
automobile engineering companies working in specific areas.

39
EXPORTS
BAL is keen to export motorcycles through Kawasaki’s
distribution network in Indonesia and Argentina wherein the company
planned to sell through their network . The company’s exports
registered a marginal decline from Rs1378 mn to Rs1351 mn i.e 2% in
FY2001 . The exports consisted of 30,652 two and three – wheelers in
FY2001as against 32,730 ( including CKD packs ) in FY2000 .
Bangladesh , Egypt , Peru , Iran and Sudan performed consistently well
with lower exports in Sri Lanka and Latin American markets . The total
foreign exchange earned by the company was Rs. 1,391 million in
FY2001 as against Rs1430 mn in FY2000. Bajaj exported around 5,000
motorcycles in 2000-01 and hopes to increase that to 15,000 –20,000
in fiscal 2001-02. Bajaj is also exporting completely knocked and semi-
knocked down kits to Manaus at Brazil for assembly and sales.

40
EXPANSION
The expansion at both Akurdi and Waluj plants has been
completed during FY99 taking total capacity to 2mn vehicles. BAL has
also set up a third manufacturing plant at Chakan near Pune with a
capacity of 1mn vehicles. The company has planned for selling through
separate channels in case of its 2-wheeler and 3-wheeler segment .It
has been planning to streamline its vendor network by cutting down
the number of suppliers by 50% from current 800 during the current
fiscal , intended to improve the efficiency of its supply - chain
management. BAL has been experimenting with higher dealer
commissions on some models in a bid to loosen the stranglehold of
market leader Hero Honda in the motorcycle segment . It introduced
VRS II in June 2001 as a part of its man–power planning process at all
its three plant locations as the company is slated to bring down the
workforce to 10,000 over the next four years . The company also
planned to commission a 20-MW capacity wind power plant ( fourth
phase with the other three being set up near Satara in 2000-01 ) with
an investment of Rs1000 mn in Ahmednagar district by entering into
the Power Purchase Agreement (PPA) with MSEB during current fiscal
to be completed by third quarter of 2001-02 . The company expects to
source its current power requirements in-house and also avail of the
benefit of sales tax incentives . BAL has also been exploring the
possibility of an equity tie-up or a marketing alliance with a Chinese
company for selling its three – wheelers in Chinese market . It has also
been planning a technical collaboration on high-end scooters with the
Italian 2-wheeler major ‘ Aprilia ‘ .The company has chalked out a
strategy for co-existence with Kawasaki wherein BAL would
concerntrate on developing products in the price range of Rs 30,000 –
60,000 and Kawasaki to offer a wider choice of products priced from
Rs. 35000 upto Rs. 2.5 lakh .

CURRENT SCENARIO

41
 BAL has performed fairly in the current fiscal 2001-02 with the
Net Sales going up by 3.06% to Rs19720 mn HY ended September
2001 from Rs19133.3 mn in the corresponding period previous year .
The total expenditure has gone up by 5.3% with the material cost
accounting for the major increase . The company has posted a growth
of 69% in PBT and the Net Profit has increased by 55% to Rs2644.7 mn
from Rs1701.5 mn in the corresponding period last year . The Net
Profit Margin has also improved by almost 50.7% from the half year
ending FY2000-01 . The employee cost has fallen but the company will
be charging an equal expenditure of Rs 22.6 mn over the three
quarters of the current fiscal amounting to Rs 67.8 mn as the VRS
expenditure incurred in June 2001.

PLANT LOCATIONS
BAL has two plants located near Pune viz; Akurdi and Chakan
plant being recently set up . The third plant is located at Waluj near
Aurangabad. The plants incorporate state-of-art flexible manufacturing
facilities that are cross-sourced in increasing demand situations .
Akurdi was set up in 1961 and Waluj in the mid-80s. Super and Chetak
( geared ) scooters are manufactured in both the plants. Besides,
Akurdi plant manufactures front engine three-wheelers and M-80,
Indian motorcycle. Waluj plant manufactures rear engine three-
wheeler, Sunny mopeds and Kawasaki motorcycles.The Waluj plant is
planned to be the global hub for Kawasaki motorcycles upto 200cc .
The Akurdi plant manufactures around 1 mln units p.a, Waluj plant
manufactures 1.14mln units p.a , and the Chakan plant has a
manufacturing capacity of 0.18 mln units p.a.
The company is successfully implementing the TPM (Total Productivity
Maintenance) activities at its Akurdi plant with a view to improve on
efficiency, productivity and effectiveness. BAL has recently
commenced its three-wheeler production at its new plant in Brazil for
the local market and its neighboring regions.

BAJAJ’S MOTORCYCLE MARKET:

When Bajaj find that there was no market for scooter in India and
motorcycle market is really going up, they came with more no. of
motorcycles in the market than any other company and for each of the
segment.
First of all they came with KB-100, but it did not put its might
behind motorcycles, as its core competency was scooters and three-
wheelers. May be it felt that motorcycles were an aberration and the
people would return to scooters. But that was not so. The scooter
market shrinking and Bajaj was relegated to fourth place in

42
motorcycles. Interestingly, the company did not suffer red ink or skip
dividends as three-wheelers, its most profitable business from which it
earns 30 to 35 percent margin. But there were lessons “Hamara Bajaj”
learnt that it will never forget. In fact, the “You just can’t beat a Bajaj”
slogan was staring it in the face. The same problem that Hindustan
Lever had with competition from Nirma and Colgate.
There were few things that gone wrong with Bajaj. Petrol price
hiked in 1993. Its flagship Chetak brand, which once enjoyed a waiting
period of 15 years, gave a mileage of 45 km/l with its two-stroke
engine. When petrol price started moving north people started shifting
to Hero Honda’s 100cc four-stroke motorcycle, which gave a mileages
of 85 km/l. Hero Honda’s ad campaigns “Fill it. Shut it. Forget it.”
Really appealed to the masses. The company continued to focus
aggressively on scooters, taking on LML. In the process it increased its
market share, but could not grow the market. Meanwhile Hero Honda
was on roll.
At the time market for motorcycles began to expand. Motorcycle
became an attractive financing proposition and this really revved up
the market. And, finaaly the real stimulus was rural penetration; the
motorcycle, with the big wheels, made better sense than a scooter.
Here too finance was easily available. In this scenario the only
commonality between Bajaj Auto and other players was that financing
available for scooters. Also, 16 percent duty rationalistion narrowed
the price difference between scooters and motorcycles from Rs.15,000
to 7,000. One apparent reason for the waning popularity of scooters,
fuel efficiency apart, is that people got bored of seeing the same
models, whereas in motorcycles you had a variety of models from
Yamaha, Honda and Suzuki; for every one scooter model you had 10
models of motorcycle.
COMPANY’S STRATEGY TO FIGHT OUT WITH HERO
HONDA:

Bajaj came out with three main strategies to fight out with Hero
Honda.
First Strategy was – Do what is doable. Having realized that it could
not change overnight, the only way to kick-start action was to get into
dog-fight. For this it enlisted the support of Kawasaki Heavy Industries,
its technical collaborator for 16 years. The result was an aggressively
priced Boxer, a 100cc motorcycle in 1997, produced at Waluj
(Aurangabad) plant, which has a capacity of one million vehicles. Thus
were sown the seeds of an ongoing collaboration with Kawasaki, which
might culminate in a separate joint venture or the Japanese major
picking up stake in Bajaj Auto. Prior to the Boxer its offering KB-100, a
two-stroke bike, which has followed by the 4s Champion, a four stroke
replacement, which was phased out in Jan 2001.

43
 The Boxer was an effective filler between its own scooters and
Hero Honda’s bike. Positioned in the entry level segment, it was priced
Rs.8,000 lower than Hero Honda’s CD 100. The price became a buy
motivation. Sure, there was specticism. The cynical competition said
Bajaj had no style and no technology, and with such predatory pricing
the company itself would not survive. The response to the Boxer was
heartening; from 14,000 in April 2000 sales zoomed to 58,000 in May
2002. Over this period visibility went up. People who came to the Bajaj
showroom to buy scooters shifted to the Boxers. Thus the company
didi not lose customers. For the year ended March 2002 it sold 497,137
Boxers – a 93 percent jump over the previous years. Result : by
Doing what is doable, the company was able to smartly ride into the
motorcycle segment.

After winning the first leg in the race the second strategy was:
Do what is not expected. That basically meant learning from scooters.
The target was to produce the Pulsar, an in-house bike. Then again, it
was decided to go in for the Eliminator crusier in Collaboration with
Kawasaki.This premium bike, costing Rs80,000 plus, was launched in
Jan 2001. When Eliminator was being produced at Waluj plant, the
employees learned a lot from the Japanese shopfloor. R & D team of
Bajaj launch its Pulsar in two variants – 150cc and 180cc – in November
2001. The masculine bike targeted to the Premium Segment. It was a
run away success – beginning with only 596 bikes in the first month it
now sells around 18,000 per month. Pulsar was a successful venture.
Boxer was the way of Bajaj, but Pulsar was not. Bajaj flanked Hero
Honda.

Then third and final Strategy comes into Picture: Do the Obvious.
Take the competition head on with a slew of launches and build a
bouquet of offerings. Now they are planning to launch three new
motorcycles. The three are 115-125cc models targeted at the
executive segment, a market that is estimated ar 200,000 units per
month and constitutes 40 percent of the motorcycle market. Here the
dominant leader is Hero Honda with its Splendor and Passion, selling
an average of 120,000 bikes per month, followed by TVS’s Victor
model with average of 35,000. Now Bajaj has trained its eye on the
executive segment, where its market share is a poor 6 per cent
(Caliber and Caliber Croma).

The Caliber, launched in June 1998, gave the company visibility

in this segment. Bajaj Auto hopes to change the complexion of this
market with its three launches. From their three new bikes, two has
already entered into the market. i.e Caliber 115 and BYK . Former one
is available in the market at price of Rs 40,000 and Later one is

44
available at Rs 28,000. Third one will be launched very soon. And will
be named as World Bike; other one will be an in-house endavour, a
variant of the Pulsar. The good news is that Kawasaki intends to
market the World Bike globally. And obviously opportunity will be more
in India for 200cc Motorcycle.

Now about the cost incurred in the development of the product.

Indian companies have demonstrated strong product development
capabilities with which they have cut down costs to five-year lows. This
is the reason behind Japanese Manufacturers are looking to India to set
up base to supply world market.

Bajaj Auto is already leading in the entry-level segment and

premium segment. The Boxer priced at between Rs 29,000 to 35,000
has a 45 per cent market share. To ensure its dominance even if
cannibalizing scooters, the company launched Byk in Dec 2002 a 97cc
motorcycle priced at Rs 27,990. and it gives mileage of 85 to 95 km/l.
Chetak with 45 km/l, Hero Honda with 80 km/l, and now Byk with 98
km/l. It seems doing well with 3,974 units sold in Dec 2002 and in Jan
2003 it was 7,000. In March they expected 10,000.
At the premium end too the company enjoys a 45 per cent market
share, with the Pulsar selling 45,000 vehicles on an average. The
175cc motorcycle Eliminator averages around 100 vehicles because of
high price, but this product is basically show off Bajaj Auto’s technical
prowess. In this segment, its competitors are Hero Honda’s Ambition
and CBZ, TVS’s Fiero, and Yamaha’s Enticer.

The company could be riding back into the number one lane. In,
2002 Bajaj Auto produced 1,358,980 vehicles and Capacity 2,000,000,
which includes Motorcycles, Scooters, and Three Wheelers, while Hero
Honda produced 1,412,279 Motorcycles. This gap of 53,299 may be
filled because Hero Honda offering only one new model Ambition as
compared to Bajaj with four to five. TVS Motor, which has proved its
R&D mettle with the success launch of the Victor, is also revving up
with new launches – a brand new motorcycle by May/June, two variants
of the Victor by April/May, and a new variant of the Fiero by Sep 2003.
Yet it does not have a product range like Bajaj Auto. According to
Society of Indian Automobile Manufacturers(SIAM) FOR April – Dec
2002, the market share of Hero Honda is 45 per cent(previously 49.6
per cent), Bajaj Auto 23 per cent (previously 21.7 per cent), and TVS
19 per cent (previously 14.4 per cent).

45
 4PS OF MARKETING FOR MOTORCYCLE:
1. PRODUCT
2. PRICE
3. PLACE
4. PROMOTION

1. PRODUCT : There are different products available in the

market of Bajaj. Here we are talking about different brands of
motorcycles available in the market. Different Brands of
motorcycles available are as shown below:
1. Boxer AT
2. Boxer AR
3. Boxer CT DELUX (K-TEC)
4. Pulsar 150
5. Pulsar 180
6. Eliminator
7. Byk
8. Caliber
9. Caliber Croma

2. PRICE: Price of different model of Bajaj Motorcycle is as given in

the next page with comparision of other company’s motorcycle and
also displacement.
Displ
Displace Hero acem
Category Bajaj Price ment Honda Price ent TVS Price Displacement

ENTRY BYK 27,900 92cc

BOXER AT 28,990 99cc CD 100SS 42,530 97cc SAMURAI 39,999 98cc

BOXER AR(K-
TEC) 38,671 99cc MAX100R 33,433 100cc
BOXER CT
DELUX(K-TEC) 40,703 99cc DAWN 40,842 97cc MAXDLX 35,875 100cc

EXECUTIVE CALIBER(K-TEC) 44,721 110cc SPLENDOR 46,195 100cc VICTOR 47,628

CALIBER CROMA 50,639 110cc PASSION 47,341 97cc
PREMIUM PULSAR 150 54,679 150cc AMBITION 52,421 133cc FIERO 54,553 147cc

46
 PULSAR 150(SS) 58,557 150cc CBZ DISC 58,389 156cc FIERO DLX 56,830 147cc
PULSAR 180 64,122 180cc CBZ (SS) 64,299 156cc FIERO ES 57,275 147cc

STYLE ELIMINATOR 95,645 173cc

3. PLACE: As Bajaj is very old company in this Industry
Distribution Network of Bajaj is very wide. Bajaj Distributed its
Motorcycle to all over India even in small villages.
Product is to be distributed in a very simple way. From Manufacturing
facility Motorcycle directly come to the state wise authorized Dealer of
Bajaj Auto. The Distribution Network is as shown below in the chart .

Manufacturer

Authorized dealer

customers
Figure

Thus as shown in the above Fig. First of all Motorcycle manufactured at

its plant. Then after it goes to state wise Authorized distributor. And
after from the Authorized Distributor it goes to its ultimate customer.

4. PROMOTION: Bajaj Mototcycle heavily promoted on Television,

Newspaper (Local as well as National), and also in internet i.e. On
Electronic Media.
When Bajaj Introduced its New Bike Caliber 115 it was heavily
promoted on Television during Cricket World Cup 2003. Also in the
same time Bajaj also heavily promoted Byk. Bajaj also introduced its
pulsar with two variant i.e. 150cc and 180cc. That model is also very
well promoted by them.

BALANCE SHEET:
BALANCE SHEET (RS MN)

47
Period ended 03/98 03/99 03/00 03/01
No. of months 12 12 12 12
SOURCES OF FUNDS
Equity capital 1,193.9 1,193.9 1,193.9 1,011.8
Share premium account 2,892.1 2,892.1 2,892.1 -
Profit & Loss/ General reserve 17,024.9 22,913.9 27,937.3 25,154.9
Other reserves 71.3 17.5 17.5 198.6
Reserves and surplus 19,988.3 25,823.5 30,846.9 25,353.5
Net worth 21,182.2 27,017.4 32,040.8 26,365.3
Secured loans 275.5 410.8 1,015.8 559.7
Unsecured loans 2,306.7 3,086.1 3,940.9 4,577.4
Total debt 2,582.1 3,497.0 4,956.7 5,137.1
Capital employed 23,764.3 30,514.4 36,997.5 31,502.4

APPLICATION OF FUNDS
Gross block 15,798.1 17,357.1 20,665.8 25,450.1
Accumulated depreciation (9,070.8) (8,982.9) (10,323.4) (11,890.6)
Capital work in progress 109.1 851.2 804.4 224.3
Total fixed assets 6,836.5 9,225.5 11,146.8 13,783.8
Investments 11,432.3 14,590.6 19,523.6 11,845.8
Inventories 2,333.9 1,775.0 2,611.3 2,534.4
Sundry debtors 1,273.5 2,146.6 1,858.0 1,207.2
Cash & bank balance 925.1 540.8 359.8 213.5
Total loans & advances 13,561.3 17,507.7 18,904.7 16,661.3
Sundry creditors/ Acceptances (2,611.4) (3,049.2) (4,314.8) (3,573.0)
Other liabilities (1,116.7) (1,162.9) (2,282.6) (1,102.6)
Provisions (8,870.1) (11,059.7) (10,809.3) (10,067.8)
Net current assets 5,495.5 6,698.4 6,327.1 5,872.9
Capital deployed 23,764.3 30,514.4 36,997.5 31,502.4

RATIOS
Turnover ratios (x)
Net sales to total assets 1.1 1.0 0.8 1.0
Net sales to fixed assets 3.9 3.2 2.8 2.2
Net sales to working capital 4.8 4.4 4.9 5.1
Net sales to inventory 11.4 16.7 11.8 11.9
Gross sales to debtors 24.8 16.4 19.9 29.7
Liquidity ratios (x)
Current ratio 1.4 1.4 1.4 1.4
Debt equity ratio 0.1 0.1 0.2 0.2
Interest cover 100.5 195.1 307.0 75.0
Return on (%)
Networth (post tax) 21.8 20.5 19.8 9.5
Capital employed (pre tax) 29.4 25.0 22.4 12.0
Per share (Rs)
Net earnings (EPS) 38.7 46.3 53.2 24.7
Cash earnings (CPS) 50.8 57.4 65.3 42.2

48
Dividend payout 8.8 8.9 11.1 8.8
Book value (NAV) 177.4 226.3 268.4 260.6
Asset composition (%)
Net fixed assets 28.8 30.2 30.1 43.8
Working capital 23.1 22.0 17.1 18.6

BIBLIOGRAPHY

 BUSINESS INDIA (MARCH 2003).

 BUSINESS TODAY (NOVEMBER 2002).

 www.bajajauto.com

 www.indiainfoline.com

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 www.google.com

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