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Bajaj Auto riding high on the power of focus

Murali Gopalan | Updated on January 16, 2018

The management speaks It is the power of strategy where even at an all-time low, any company must be at an all-time high, says Rajiv Bajaj

Bajaj Auto MD Rajiv Bajaj reiterates that motorcycles are the company’s life

Rajiv Bajaj still remembers the time two years ago when analysts were quick to dismiss his market share vision as a pie in the sky.

At that point, Bajaj Auto had a 14 per cent share in motorcycles and its Managing Director had articulated the goal to increase this to 24 per cent. This was also the time when the Discover was clearly losing ground in the commuter space and the twin brand focus in motorcycles was just not yielding the desired results. Naturally, not everyone was convinced about the road ahead.

Today, the company can perhaps afford to gloat considering that numbers have been increasing since January 2015 when it rebooted its motorcycle strategy. Its market share then was 14 per cent which has since increased to 20 and heading towards the targeted 24 per cent mark by the end of this fiscal.

“Gaining six percentage points is not something to be scoffed at especially when this has been done in 18 months,” says Bajaj. What is even more significant here that this has been achieved without compromising on the EBITDA (earnings before interest, tax, depreciation and amortisation) margin which has gone up from 20 to 22 per cent.

“Yet, what has not been completely satisfactory is that we would like to have a 24 per cent market share sooner. This has not happened primarily due to a delay in launches which will now take place in the current October-December quarter,” says Bajaj.

This will include a motorcycle in the entry segment, an addition from the ‘V’ platform after the V15 and a new family of Pulsars to debut in 2017. More importantly, there will be an all-new 400cc bike that will take on market leader, Royal Enfield.

“Motorcycles are all that we do which only puts in perspective how we are on our way to meeting our targets. This is the power of focus and also answers those who want to know why we are not making scooters,” says Bajaj.

Sure, the company was a dominant leader in this space for decades till it was abruptly knocked off the pedestal when the motorcycle wave gathered momentum during the late1990s. Today, from its MD’s point of view, there is really no point taking a detour to scooters since it is very unlikely that Bajaj Auto can hope to be a dominant player especially with Honda miles ahead of competition.

The focus on motorcycles is clearly paying off especially when export markets are down but growth still continues back home in India. This is especially significant considering that the company’s international business accounts for over 40 per cent of volumes and is a considerable money spinner. Nigeria, in particular, has seen the biggest fall thanks to the fragile state of its economy.

“These ups and downs are characteristic of any business and we are still going strong simply because motorcycles are our life. International markets have been down for a while and significant volumes lost but we are doing well,” says Bajaj. This, in his view, is ample proof of a sound strategy where bottomline is higher when exports are down. “It is the power of strategy where even at an all-time low, any company must be at an all-time high,” he says.

Bajaj goes on to insist that his strategy could actually be termed “the most cowardly” since he is truly paranoid. Whether he is being tongue-in-cheek is not quite clear but he insists that this attitude is born out of that drive to de-risk the business. “Running with the hare and hunting with the hound will not work if you are a world beater,” he reasons.

Even while the company’s international business is down, it is quickly building its presence in the ASEAN region with the Philippines, Indonesia and Myanmar marking the first phase of entry, Thailand and Malaysia to follow next quarter. Likewise, Laos and Cambodia will also become part of the ASEAN roadmap for Bajaj Auto.

With a slew of new launches happening this quarter, the coming months are going to be particularly busy for the team. The entry segment has seen the Platina and CT 100 combine notch up big numbers and an addition to the kitty is expected to add more momentum to the growth story. In the commuter space, the ‘V’ script is working to near perfection and the second entrant to the fold is intended to widen the buyer base.

In the sports segment, the new Pulsar family will be a key part of the growth story along with the Avenger. It is the 400cc motorcycle, however, that the market will be looking out for. “The time has come to look at a new category of super sports, or premium sports, which can take on Royal Enfield. This will not only be a new product but an all-new brand,” says Bajaj.

KTM is doing 3,000 units per month in this segment but this is minuscule compared to Enfield’s output of 50,000 units each month.

Hence, there is more reason for Bajaj Auto to believe that it is important to create an all-new segment in terms of branding, technology and quality. “It is also my conviction that this product has the capability of posting five digit volumes each month,” he says.

Published on October 20, 2016

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