Financial management at Bajaj Auto

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Case Details:

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

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We want to get back the leadership position in the two-wheeler segment and will use the cash if required to do so. However, in current volatile market conditions (not to forget the Japanese and their huge cash reserves), we would rather have the security of cash any day. We are competing not only with Indian companies, but also with large foreign two-wheeler companies, many of whom have much deeper pockets than ours. While our surplus cash will assist us in future growth, it also acts as a deterrent to others from indulging in predatory pricing tactics

- Sanjiv Bajaj, Vice-President Finance, Bajaj Auto Limited.¹

Introduction

In 2003, Bajaj Auto Limited (Bajaj) was one of India's largest manufacturers of both two and three-wheelers. The three-wheelers, also known as autorickshaws, were unique to the South Asian region. The company recorded revenue of Rs.5125.73 crores representing a 13% increase over the previous year². Once the unchallenged market leader, Bajaj trailed Hero Honda in the late 1990s. Bajaj's market share declined from 49.3% in 1994, to 38.9% in 1999.³ Thereafter, Bajaj had initiated several measures to regain its market share and strengthened its competitive position. In 2003, Bajaj had a workforce of 12,000 employees and a network of 422 dealers and over 1,300 authorised service centers.⁴

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1] M. Anand, “Is Munjal Being Too Generous?” Businessworld, 19th May 2003.B1
2] Source: Prowess Database.
3] Gita Piramal, Sumantra Goshal and Sudeep Budhiraja, “Transformation of Bajaj Auto Ltd,” Lessons in Excellence Case Contest, www.thesmartmanager.com, February-March, 2003.
4] Source: Bajaj Auto Limited Annual Report 2003.

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