Company History

The Bajaj Group (NSE:BAJAJ-AUTO) is amongst the top 10 business houses in India. Its footprint stretches over a wide range of industries, spanning automobiles (two wheelers manufacturer and three wheelers manufacturer), home appliances, lighting, iron and steel, insurance, travel and finance. The group's flagship company, Bajaj Auto, is ranked as the world's fourth largest three and two wheeler manufacturer and the Bajaj brand is well-known across several countries in Latin America, Africa, Middle East, South and South East Asia. Founded in 1926, at the height of India's movement for independence from the British, the group has an illustrious history. The integrity, dedication, resourcefulness and determination to succeed which are characteristic of the group today, are often traced back to its birth during those days of relentless devotion to a common cause. Jamnalal Bajaj, founder of the group, was a close confidant and disciple of Mahatma Gandhi. In fact, Gandhiji had adopted him as his son.1

This close relationship and his deep involvement in the independence movement did not leave Jamnalal Bajaj with much time to spend on his newly launched business venture. Bajaj Auto is celebrating 125th Birth anniversary of Shri. Jamnalal Bajaj on 4th of November 2014.

His son, Kamalnayan Bajaj, then 27, took over the reigns of business in 1942. He too was close to Gandhiji and it was only after Independence in 1947, that he was able to give his full attention to the business. Kamalnayan Bajaj not only consolidated the group, but also diversified into various manufacturing activities.

The present Chairman of the group, Rahul Bajaj, took charge of the business in 1965. Under his leadership, the turnover of the Bajaj Auto the flagship company has gone up from INR.72 million to INR. 120 billion, its product portfolio has expanded and the brand has found a global market. He is one of India’s most distinguished business leaders, bike manufacturer india and internationally respected for his business acumen and entrepreneurial spirit.

In 2005, Rahul Bajaj's son Rajiv Bajaj stepped into the shoes of Managing Director of Bajaj Auto and steered the organization to becoming a global automobile behemoth. He introduced the Pulsar range of bikes, that revolutionised the two wheeler market in India. The legacy of its Auto Rickshaws have been soaring heights and display unparalleled market dominance across any automobile segment.

In 2007, Bajaj Auto acquired a 14% stake in KTM that has since grown to 48%. This partnership catalysed Bajaj Auto’s endeavour to democratise motorcycle racing in India. Bajaj Auto today exclusively manufactures Duke range of KTM bikes and exports them worldwide. In FY2018, KTM was the fastest growing motorcycle brand in the country

Bajaj Auto has also led the pioneering introduction of India’s first ever Quadricycle – Qute.

Bajaj Auto exports to 70+ countries and a significant share of revenues come from Exports. This stands as a testament to the new brand image – The World’s Favourite Indian.

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Business overview

India and China, are the two fastest growing continental sized emerging markets of the world, it is a fact that growth has been slowing down for both nations.

Sale of motorcycles in India in FY2019 grew by 7.8% to touch 13.6 million units. Though the growth rate was less than in the previous year, it was nevertheless an impressive performance given the slowing down of overall economic growth. In addition, motorcycle exports increased by 15.4% in FY2019 to almost 2.9 million units.2

The problem was with ungeared scooters. Hitherto a favourite of a growing class of consumers, domestic sale of ungeared scooters hit a wall — being virtually flat at 6.7 million units in FY2019. That was a far cry from the 19.9% growth in domestic sales that this segment had experienced in FY2018.

As in motorcycles, three-wheelers also witnessed a healthy increase in domestic sales. The number of three-wheelers sold in India in FY2019 grew by 10.3% to over 701,000 units. More significantly, three-wheeler exports increased by 49.0% to over 567,500 units.

Motorcycles

Compare to 15.1% growth in FY2018, the industry’s domestic sale and exports of motorcycles further increased by 9.1% in FY2019 to 16.47 million units. Total Domestic sales of motorcycles for FY2019 of all motorcycles grew by 7.8% to almost 13.6 million units. Bajaj Auto’s sales increased by 28.7% to over 2.5 million units. Consequently, Bajaj Auto’s share in the domestic motorcycles market increased by 3 percentage points to 18.7%

Total exports of motorcycles for FY2019  increased by 15.4% to over 2.86 million units. Bajaj Auto’s sales went up by 21.6% to almost 1.7 million units. As a result, the Company’s share in total exports of motorcycles grew by 3 percentage points to 59.2%

Entry-level segment

Bajaj Auto is represented this segment by the CT100 and the Platina. For FY2018, the average sale of all models by every player in this segment was 268,904 units per month. The segment had grown by 24% over the previous year, and had accounted for 26% of all motorcycles sold during FY2018. Bajaj Auto was the major player in this segment. In FY2018, it sold an average of 79,297 units per month, and accounted for 29.5% of this segment.

In FY2019, while average sale of all models in this segment increased by 26%, Bajaj Auto’s sale increased by 51.6% to an average of 120,249 units per month. As a result, Bajaj Auto’s share of this segment increased to 35.4% — a solid 6 percentage point increase in the segmental market share.

Sports segment

In the sports segment Bajaj Auto has its Pulsars, ranging from 150 cc to 220 cc and the Avenger. In FY2019, sales in the ‘sports’ segment grew by 18% over the previous year and accounted for 16% of the industry’s total domestic sales. Bajaj Auto’s average volume of sales was 80,294 units per month, or a dominating segment market share of 44.1% — up by 5.1 percentage points over a single year.

Super-sports segment

In the even higher ‘super-sports’ segment; the company offer the entire range of KTMs, the Pulsar RS200 and the Dominar 400. This segment grew by 5% in FY2019 and accounted for a share of 7% in the domestic market. The company sold an average of 6,252 units per month during the year, or 7.4% of the segment.

Despite sales crossing the 50,000 mark, it needs stating that FY2019 was also a challenging year for KTM. There were aggressive competitor launches, which needed to be countered. That happened with bringing into the market the KTM Duke125 in Q3 FY2019. The Duke125, being an entry level KTM, played a strategic role of bringing in new customers into the franchise, and helped the brand to recover its market position and volumes in the second half of FY2019.

The availability of KTM throughout urban India has continued to strengthen. It now has a presence in 460 showrooms across the country — the largest network for any premium sports motorcycle brand.

Commercial Vehicles Three-Wheelers

Bajaj Auto is the world’s largest manufacturer and seller of three-wheelers.

The company increased domestic sales to 30,618 units, and now account for almost 24% of this segment’s market share. The company continue to dominate the petrol and alternate fuel market — a segment in which the company sold 282,406 vehicles in FY2019 with a domestic market share of 86%.

In the small diesel category, its market share now stands at 80%. In the larger diesel segment, its market share has grown from 24% to 26%. In the overall diesel category, therefore, its market share for FY2019 as a whole stood at 37%. The company exited FY2019 with a market share of 39% — making it the market leader in Q4 among all diesel three-wheelers.

The company's quadricycle, QUTE, was successfully launched in four states: Kerala, Gujarat, Odisha and Rajasthan. The company will continue to launch it in other states as well. In FY2019, the company sold 627 units of Qute in the domestic market.

International Business

While FY2018 was the recovery year for Bajaj Auto, FY2019 saw it gaining significant momentum and further strengthening its position as the leading Indian exporter of motorcycles and three-wheelers. During FY2019 Motorcycle exports by the company grew by 21.6% to almost 1.7 million units and Commercial vehicles exports by over 43% to almost 383,200 units. Together, Indian exported over 2 million units a growth of 25% in the course of a single year. In US dollars, revenue from exports grew by over 20% to US$ 1.6 billion

The company's motorcycle exports in FY2019 grew on the back of Very strong growth in Africa, as large economies like Nigeria and the Democratic Republic of Congo continued to show buoyant demand. The company also entered new markets, for example Benin, and continued to solidify its leadership position in Africa. Growth in South Asia and Middle East, where the company capitalised on recovery in Egypt and impressive economic growth in Bangladesh. And a strong presence in the ASEAN region, aided by growth in the Philippines and in new markets like Malaysia

The company's growth in three-wheeler exports was largely driven by Continued recovery in large, traditional markets such as Egypt and Nigeria And, more importantly, strong growth in new markets especially Cambodia, Iraq, Myanmar and Nepal. In fact, such markets, where the company entered only in the last four years, grew by 73% compared to the overall growth of three-wheelers and quadricycles exports of 43%

Bajaj Auto has increased its share of exports to net sales from a recent low of 36.9% in FY2017 to 40.1% in FY2019. Bajaj Auto is optimistic about FY2020 — a year in which the company intend to further strengthen its competitive position as well as invest in new markets and categories.

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Research and Developments

Bajaj Auto’s R&D is its powerhouse for making significant engineering, styling and riding improvements, and in helping the Company launch one product after another be it motorcycles, three-wheelers or quadricycles. Here are some of the key initiatives taken by R&D during FY2019.

A major cause of motorcycle accidents is skidding during sharp braking. To enhance safety during braking on its motorcycles, Bajaj Auto has introduced ABS technology on all models above 125 cc and CBS/Anti-Skid technology on rest.

This best-selling Pulsar with its perimeter frame was upgraded with wider front and rear tyres and a disc brake at the rear for sharper braking — thus making it even more appealing for sports motorcycle riders.

To enhance its appeal, the versatile Pulsar 180 cc was made more exciting by sporting the signature half fairing as well as the projector head lamp of the Pulsar 220. Added to these were new Neon graphics.

With a new dual overhead camshaft four-valve engine and best-in-class power and torque throughout its RPM range, the new Dominar has distinctly superior performance. An all-new double barrel exhaust delivers a dominant idling thump with a linear bass-like note across the entire RPM range. Introduction of upside down forks and improved rear suspension have further enhanced the already superior ride and handling of the bike. A new radial calliper front disc brake system along with dual channel ABS add to its safety. The noise, vibration and harshness (NVH) character of the bike has been improved significantly through detailed design refinements.

Other added features like a new forged side stand, aluminium stay for the mirrors, tail lamp with light guide and a new tank dome decal have enhanced the premium design theme. A dot-matrix display added to the primary speedometer provides the rider with useful information and warning messages relating to speed, fuel consumption and the like. The secondary speedometer has been updated for gear position indication, adding to the premium feel of the bike.

The first ever quadricycle on Indian roads, the Bajaj QUTE, was launched in India in Q4 of FY2019. It has already been exported to over 30 countries. Designed for intra-city travel applications, QUTE’s compact foot print, best-in-class turning circle and excellent manoeuvrability makes it an ideal solution for last mile transportation. It’s completely enclosed body offers good protection from the elements.

QUTE’s 216 cc power train delivers a strong 9.7 kw of power which enables it to easily negotiate gradients and other road traffic conditions with full load. With a fuel efficiency of around 35 km/litre, it is sufficiently economical to own and operate. Its state-of-the-art liquid cooled, closed loop fuel injection coupled with DTSi technology is designed to meet both the current BS IV as well as the more stringent BS VI emission norms. QUTE CNG, launched in FY2019, is a variant for regions where this green fuel is available. It offers excellent fuel efficiency of 43 km/litre.

Financial highlights

On 30 January 2020, Bajaj Auto Limited annouced results for Q3 / FY20

Domestic Business

Motorcycle - Domestic motorcycle industry recorded a decline of 14% over Q3 / FY19. Performance of Bajaj Auto was in line with the industry; in Q3 / FY20, recorded a share of 20%. In the 100-110cc segment, Company sold over 299,000 units. Pulsar 125, launched in August 2019, sold over 68,000 units in Q3 / FY20.In the 150cc+ segment, the Company continues to maintain its dominance. Pulsar, along with Avenger, sold over 158,000 units in Q3 / FY20.3

Company continues to be a leader in the domestic Commercial Vehicles market sold over 96,000 units in Q3 / FY20 and recorded a market share of 57%. RE brand is the market leader in the small three-wheeler segment; market share at 89%. MAXIMA brand is a dominant player in the big three-wheeler passenger carrier segment; market share at 38%. Goods carrier segment recorded a growth of 11 % as against a decline of 3% for the industry; market share at 26%.

International Business

Company recorded its highest ever quarterly export volumes of 562,772 units in Q3 / FY20, a growth of 7% over Q3 / FY19 and now contributes 43% of its net sales.

Motorcycle sales grew by 11 % over Q3 / FY19, to over 484,000 units, Highest ever. Africa, driven by Nigeria, Congo, Uganda and Ethiopia, recorded a growth of 15% over Q3 / FY19.  Commercial Vehicles, excluding Egypt, grew by 26%, to over 78,000 units.

In value terms, exports in US$ was 426 million. Realization per US$ was  71.3 in Q3 / FY20 as against  70.6 in Q2 / FY20 and  68.5 in FY19.

Cash and cash equivalents

As on 31 December 2019, surplus cash and cash equivalents stood alt 17,407 crore as against Rs 15,986 core as on 30 September 2019.

Bajaj Auto Consolidated December 2020 Net Sales at Rs 8,909.88 crore, up 16.63% Y-o-Y 4

January 22, 2021; Reported Consolidated quarterly numbers for Bajaj Auto are:

  • Net Sales at Rs 8,909.88 crore in December 2020 up 16.63% from Rs. 7,639.66 crore in December 2019.
  • Quarterly Net Profit at Rs. 1,716.26 crore in December 2020 up 29.78% from Rs. 1,322.44 crore in December 2019.
  • EBITDA stands at Rs. 2,097.84 crore in December 2020 up 21.03% from Rs. 1,733.33 crore in December 2019.
  • Bajaj Auto EPS has increased to Rs. 59.30 in December 2020 from Rs. 45.70 in December 2019.

References

  1. ^ https://www.bajajauto.com/about-us/the-company
  2. ^ https://www.bseindia.com/bseplus/AnnualReport/532977/5329770319.pdf
  3. ^ https://www.bseindia.com/xml-data/corpfiling/AttachHis/74e71147-d590-41f6-ae0f-f1f22211c612.pdf
  4. ^ https://www.moneycontrol.com/news/business/earnings/bajaj-auto-consolidated-december-2020-net-sales-at-rs-8909-88-crore-up-16-63-y-o-y-6381771.html
Created by Asif Farooqui on 2020/04/20 08:03
     
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