Financial management at Bajaj Auto (Page2)

Abstract

Bajaj Auto Limited is one of India''s largest two-wheeler manufacturers. As the dominant player until the early 1990s, Bajaj''s market share declined from 49.3% in 1994, to 38.9% in 1999 with the entry of major competitors like Hero Honda. Bajaj has initiated several measures to regain its market share and strengthen its competitive position. The case discusses the financial strategy pursued by Bajaj.

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The Indian Two-wheeler Industry contd...

Foreign players quickly changed the rules of the game. From a supplier's market, it became a buyer's market. Companies tried to outdo each other in terms of style, price and fuel efficiency.

The technological expertise that the foreign collaborators brought to the market place helped increase the overall quality of the products quite significantly. In the early 2000s, the competition intensified further. In 2000, Honda announced its intentions to set up a 100% subsidiary to manufacture scooters and motorcycles.The Indian two-wheeler industry witnessed remarkable growth rates since 2000, due to a host of factors like fall in interest rates, availability of finance and affordable prices relative to the growing purchasing power.Despite the impressive growth rate of the last few years, two-wheeler penetration still remained low in the country.

Analysts believed, increasing urbanization, expanding cities, lack of other modes of transportation and favourable demographics would support double-digit growth in the coming decade.

The Indian two-wheeler industry could be broadly classified into three major segments- scooters, motorcycles and mopeds . Until the early 1990s, locally manufactured scooters with gears dominated the markets. But in recent times, demand for scooters had tapered off, while that for motorcycles looked buoyant. The motorcycle market in India had about tripled in size over the past 10 years . In 2002, the two-wheeler industry demand totaled 5 million units, making India the second largest market in the world after China . .......

More...

Exhibit: I Comparative Valuation of the Leading Companies

Exhibit: II Two Wheelers Industry: Changing Dynamics

Background Note

Exhibit: III Comparative Analysis: Motorcycle Sales (Number)

Exhibit: IV Bajaj: Major Models

Exhibit: V Bajaj vs. Competitors: Major Models in Different Segments in 2003

Financial Management

Exhibit: VI Bajaj: Operating Working Capital (Rs Million)

Exhibit: VII Bajaj: Investment of Surplus Funds (Rs. million) ...

Bibliography

        Case Code   FINA004
   Case Length    21 Pages
              Period    2003 - 2004
Organization     Bajaj Auto
        Pub Date     2004
Teaching Note    Not Available
     Countries    India
      Industry    Automobile

Issues

Financial Management, Bajaj Auto

Keywords

Indian two-wheeler history; Working capital; Cost of capital; Capital structure; Cost structure; Dividends; Investments; Return on capital; Bajaj Auto Limited; Ratio analysis

Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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