I just got a new piece of news in my mobile. It states, ‘With Global GDP falling to 2.6 per cent from 4 per cent in 2010, UN warns that world is on brink of another economic meltdown. ’Of course, we are not getting into economics of India at the present stage, but we’ve now got a news relating to what is mentioned within the quote above.
In an interview to the Business Line, the Managing Director of Bajaj Auto Mr. Rajiv Bajaj said, “These cycles are inevitable and if you cannot take it, you have no business to be in business. The strength of a company’s strategy is visible at the down of a cycle and this is where we are confident of holding our own.”
It is really nice to see that Bajaj Auto has started forming strategies to counter the slowdown which India might or might not face in the near future. The company has already marked its presence in many of the neighbouring countries and are planning to foray into many of the markets in other nations as well. Its flagship model – Pulsar has already been a massive hit in many of the markets across the globe.
Bajaj Auto has set a target of 20 per cent growth for this fiscal, which if converted into sales will equal a little more than 4.5 million units including bikes and three – wheelers. With the present performance of the company, Bajaj Auto is sure to reach its target within the specified time frame.
Over the last few years, Bajaj Auto has posed a strong comeback and it is very evident over the last two years. This has been made possible with its most successful brands Viz the Pulsar and Discover which has emerged as the key growth drivers for the company in bikes segment.
According to what is mentioned in Business line, ‘This has operated in tandem with a focused back-end plan where fixed costs account for a mere five per cent of the overall costing structure. “Be it good or bad times, this model will ensure that we are on track to post 20 per cent EBITDA consistently,” Mr Bajaj said.’
It is very interesting to know the way he runs his business. According to him, companies must be profitable by the end of the day so that every associate, right from the employees and shareholders to dealers and ancillary suppliers, benefits in the process. Mentioning on this note, “This is what good capitalism is all about but there is not enough going around. Neither is there enough pressure on companies to be profitable,” Mr Bajaj added.
Bajaj Auto’s new strategy named minimalist approach, where only a very few brands are now integral to the business, which has been a result of the ‘less is more’ principle. This principle has indeed become very handy for the company at times of turmoil for the company. The company has implemented this principle practically by exiting from the scooters business and by shutting down its Akurdi plant near Pune.
The company’s decision of exiting from the scooter business has shackled the sentiments of old-timers which takes them to the old slogan of the company – ‘ Hamara Bajaj’ which takes back every individual to that age where scooters dominated the roads. But then there was a reason for the company’s exit. Bajaj Auto well understood the potential of the company in motorcycle segment and then on it turned its concentration to the other side.This strategic move has paid off very well with the Pulsar and Discover (add Boxer to the portfolio which was recently launched in Egypt) which contributes to a greater extent in the international business enabling the company to attain a global reach.
Taking the company forward, Bajaj Auto is all set and geared to showcase its new engine technology in the coming weeks which will be part of the Pulsar and Discover range over a period of time. Terming this as the ‘next big step’ post the DTS-i technology era, the company says it is part of the ‘innovation for mass consumption’ strategy to help grow its bike numbers in India and abroad .
Author – BikeAdvice.in