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Bjaj Auto Finance Ltd. Final
Citation preview
INDEX
Chapter NAME PAGE NO
1 Company history
Origins
Completion in 1990
End of licence raj
New toola in 1990
3
4
4
5
6
2 Product profile and financial
performance
Motorcycles
Three wheelers
Overall performance
Financial analysis
8
9
10
12
14
3
Strategic analysis
Mission vision and values
Logo
Swot
Porter five forces model
Managerial style
18
19
20
21
23
24
25
26
1
Business streategy
Other strategic issue
4 Supply chain analysis
Value chain
Subsidiary
Spare part division
27
28
30
31
5 CORPORATE SOCIAL
RESPONSIBILITY
32
6 THE FUTURE AND
RECOMMENDATIONS
36
7 BIBLIOGRAPHY 41
CHAPTER ONE
COMPANY HISTORY
ORIGINS
COMPETITION IN 1980
END OF LICENSE RAJ
NEW TOOLS OF 1990’S
PRODUCT REVAMP IN 2000’S
2
3
BAJAJ FINANCE HISRORY
Bajaj Auto Finance Ltd. (BAFL) was incorporated as a Private Limited
Company on 25th March, 1987. It became a deemed Public Limited
Company by virtue of Section 43(A) of the Companies Act, 1956 w.e.f.,
20th October, 1987.
Initially BAFL was promoted by erstwhile Bajaj Auto Limited and Bajaj
Auto Holdings Limited. Bajaj Auto Limited is the largest manufacturer of
two and three wheelers in the country and Bajaj Auto Holdings Limited is an
investment company and is a wholly owned subsidiary company of Bajaj
Holdings & Investment Limited. As per the Scheme of Demerger of
erstwhile Bajaj Auto Limited, the shareholding of Bajaj Auto Limited in
BAFL has been vested with Bajaj Finserv Limited.
BAFL is an NBFC registered with RBI and authorised to accept public
deposits. Consequent to the re-classification of NBFCs by RBI, BAFL has
been re-classified as an “Asset Finance Company (Deposit Taking)”.
BAFL is engaged primarily in the business of financing of two wheelers,
consumer durables, personal computers, personal loans etc.
4
BAFL made a Public Issue of Equity Shares in 1994 and its Equity Shares
are listed on Bombay Stock Exchange Limited and National Stock Exchange
of India Limited.
BAFL made a Preferential Issue of Equity Shares to the Promoters and a few
foreign corporate bodies and also warrants to the Promoters in 2006.
BAFL made a Rights Issue of Equity Shares and Non-Convertible
Debentures with detachable warrants to the existing shareholders in 2006-
07.
The present Paid-up Capital of the Company is Rs.365,960,760/-
BAFL has its headquarters at Pune and has more than 50 branches spread
across the country
ABOUT BAJAJ FINANCE
Bajaj Auto Finance Limited was incorporated on March 25, 1987 as Bajaj
Auto Finance Private Limited got converted into a public limited Company
w.e.f. September 24, 1988
The company is registered with the RBI as a Non Banking Finance
Company (NBFC) with effect from March 5, 1998
The Company primarily deals in the financing consumer durables, personal
and small business loans, loan against property, loan against shares
The Company achieved its highest ever disbursals of Rs.26,313 million
under its various financing schemes, during the year 2006-2007
5
Network of over 6,000 Bajaj Auto and consumer durable dealerships and
over 50 branch offices throughout the country to handle all the requirements
of our customers
Trust and loyalty of over 40 lakh satisfied customers across the country
Highest Credit Rating of FAAA/Stable from CRISIL for Fixed Deposits
P1+ rating from CRISIL for Short-Term Debt Programme
AA+/Stable from CRISIL and LAA+ from ICRA for Long-Term Debt
Programme
6
CERDIT RATINGS:
Highest Credit Rating of FAAA/Stable from CRISIL for Fixed Deposits
P1+ rating from CRISIL for Short-Term Debt Programme
AA+/Stable from CRISIL and LAA+ from ICRA for Long-Term Debt
Programme
MANAGEMENT TEAM:
RAJEEV JAIN: CEO
Rajeev JAIN is a Management graduate by profession and has 15 years of
experience in consumer lending industry. He comes with an experience of
managing diverse consumer lending business viz. auto loans, durable loans,
personal loans and credit cards. In his previous assignments he has worked for over
four years with GE and eight years with American Express. He Joins Bajaj Auto
Finance Ltd from AIG, where He was Deputy CEO of its consumer finance
business.
7
DEEPAK GUPTA (CHIEF HR)
Deepak has an overall experience of 19 years in Financial Services, ITES and
Manufacturing industry. Deepak has strength in areas like Strategy & Structure,
People Policies, Employee relations, Talent management, Employee engagement,
Performance measurement practices, Compensation, Rewards and Training &
Development.
Deepak joins us from SREI Infrastructure finance, where he was Group Sr. Vice
President and Head of Human Resources. He was responsible for organization
development, and HR effectiveness across the employee eco cycle i.e. spanning
across Talent attraction, Performance Management, Compensation, Rewards &
variable pay, Policies, Employee services, Leadership development and
Productivity.
Prior to that, he worked with Company like CRISIL, ENAM Financial, CEAT
Financial Services and Reliance Industries Limited.
Deepak will be responsible for driving People strategy for the organization and in
making Bajaj Finance an employer of Choice. He will also be responsible for the
Administration function in the company
8
DEEPAK REDDY: HEAD OF PERSONAL AND SMALL BUSINESS LOANS
Deepak is a management graduate with over 14 years of experience in distributing
Financial Services & Consumer Durables. He joins us from American Express,
where he held various positions in its Personal Loans & Consumer Card businesses
over the last 9 years. He was Director - Sales (Consumer Cards) in his previous
assignment there. Prior to American Express, Deepak has worked with Standard
Chartered in Auto Loans business and also with Onida distributing durables for the
first four years of his career.
DEVANG MODY: BUSINESS HEAD SALES FINANCE, CROSS SELL AND
INSURANCE
Devang is a Chartered Accountant by education and has experience in consulting
and financial services. He joins us from AIG, where he worked as Vice President –
Business Development & CRM, Consumer Finance Business. Prior to that, he
worked with GE Money for over 8 years in various assignments in Six Sigma,
9
Sales Finance, Cross Sell and Personal Loans. Earlier, he has spent 5 years in
consulting with firms like E&Y. Sales Finance is a strategic and high growth
business for Bajaj Finance. Devang is responsible for profitably growing our
leadership position in Sales finance.
PANKAJ THADANI: CHIEF FINANCIAL OFFICER
Pankaj joined BAFL in 2006 and has an experience of 24 years in financing,
financial accounting, cost accounting, tax and systems. He is a Mathematics
Graduate and is a Chartered Accountant by profession. He joined BAFL from an
equity research company called Corporate Database. His previous assignments
were with Bajaj Auto Limited, Eischer and Mico Bosch.
RAKESH BHATT: CHIEF INFORMATION OFFICER
10
Rakesh has an overall experience of 16 years in finance & technology industry. He
has played several leadership roles encompassing CIO responsibilities, IT product
management and delivery. Rakesh joins us from AIG Consumer Finance (India)
where he was Vice President and Head – Technology. Prior to that, he worked with
3i Infotech Ltd for 5 years with assignments in IT product management and
development, product marketing and pre-sales support. Earlier, he had worked for
Reliance Industries and GE Money.
VIVEK LIKHITE: CHIEF CREDIT AND OPERATIONS
Vivek joined BAFL in 2007. He is a Chartered Financial Analyst and holds a Cost
Accountant degree from ICWAI. He has an experience of 20 years in strategic
planning, process management, operations management, accounts, funds
management, budgeting and MIS. He has worked with Larsen & Turbo Ltd for
eight years. His last assignment was with TATA Motor Finance before joining
BAFL.
11
GURUMEET KAUR: CHIEF RISK OFFICER
Gurmeet is a management graduate with over 16 years of experience in financial
services and airline industry. She joins us from Future Money where she was the
Chief Risk Officer and is credited for successful implementation of Risk policies
and underwriting structure for Consumer Durables, Personal and Business loans
and Loan against properties, implementation of state of art loan origination,
repayment management and collections system. In her role as Chief Risk Officer at
Bajaj Finance, Gurmeet is responsible for creating a proactive risk policy
framework, strengthening our existing collections strategy, strengthening the
existing loan origination platform, creating a world class data warehouse &
analytics platform and reinforcing our fraud control strategy.
12
CODE OF CONDUCT:
CODE OF CONDUCT FOR DIRECTORS AND MEMBERS OF SENIOR
MANAGEMENT
Preface
This code of conduct shall apply to the Directors and members of the Senior
Management of Bajaj Auto Finance Limited (referred to hereinafter as BAFL or
the Company).
For this code, members of the Senior Management (hereinafter referred to as
`Senior Managers’) shall mean those personnel of the Company, who are members
of the core management team, but shall exclude the Managing / Whole-time
Directors.
Directors and Senior Managers shall observe the highest standards of ethical
conduct and integrity and shall work to the best of their ability and judgement.
Directors and Senior Managers shall be governed by the rules and regulations of
the Company as are made applicable to them from time to time.
Directors and Senior Managers shall affirm compliance with this code on an
annual basis as at the end of each financial year.
13
Code of conduct :
1. Directors and Senior Managers shall ensure that they use the Company’s
assets, properties and services for official purposes only or as per the terms
of appointment.
2. Directors and Senior Managers shall not receive directly or indirectly any
benefit from the Company’s business associates, which is intended or can be
perceived as being given to gain favour for dealing with the Company.
3. Directors and Senior Managers shall ensure the security of all confidential
information available to them in the course of their duties.
4. No Director or Senior Manager, other than the designated spokespersons
shall engage with any member of press and media in matters concerning the
Company. In such cases, they should direct the request to the designated
spokespersons.
5. Directors and Senior Managers shall not engage in any material business
relationship or activity, which conflicts with their duties towards the
Company.
6. Senior Managers shall not, without the prior approval of the Managing
Director of the Company, accept employment or a position of responsibility
with any organisation for remuneration or otherwise. In case of Whole-time
Directors, such prior approval must be obtained from the Board of Directors
of the Company.
7. Directors and Senior Managers shall declare information about their
relatives (spouse, children and parents) employed in the Company.
14
PRODUCTS:
BUSINESS LOANS
CONSUMER DURABLE LOANS
IT PRODUCT LOANS
LOAN AGAINST PROPERTY
LOAN AGAINST SHARES
TWO WHEELER LOANS
INSURANCE SERVICES
15
Business Loans
Features
Our Business Loans are unsecured loan which can be availed for your business use
without providing security or guarantors. Business Loans could be taken for your
business expansion, consolidating liability, repaying existing loans or any other
immediate business requirement.
Bajaj Finance Business loans are offered from Rs.3 lacs to Rs.30 lacs which can be
repaid in 12 - 36 monthly installments. Bajaj Finance Business Loans comes with
the following unique features:
1. Free Personal Accident Insurance of up to Rs 5 lacs
2. Prompt Repayment Benefits
3. No Foreclosure Charges
Benefits
Only Bajaj Finance Business Loans comes with the following exclusive benefits:
1. Free Personal Accident Insurance of up to Rs 5 lacs - In case of untoward
incident you would be covered with a personal accident insurance up to Rs 5
lacs.
2. Prompt Repayment Benefit - You get refund of 50% of the processing fee
charged if you clear all your monthly installment on time.
3. Nil Foreclosure Charges -If you want to repay your loan, please go ahead,
we do not charge any foreclosure charges if the loan is closed after repaying
16
6 monthly installments.
Eligibility
Entities – Partnerships, Private limited and closely held limited companies.
Documents
Professionals Businessmen
Application form Yes Yes
1 Photograph Yes Yes
Identity Details Yes Yes
Residence Details Yes Yes
Signature
verification from
Bank
Yes Yes
Degree
Certificate &
Certificate of
Practice
Yes No
Repayment
Track recordNo* Yes
Income Details IT Returns & Balance
Sheet & P/L Account
statement for the last 2
IT Returns & Balance
Sheet & P/L Account
statement for the last 2
17
years years
Bank Account
StatementsFor the last 6 months For the last 6 months
Processing Fees 2% of the loan amount Prepayment Charges
6% of the principal outstanding amount if the loan is closed within 6 months
5% of the principal outstanding amount if the loan is closed after 6 months
EMI bounce charges Rs 500 for every bounce Penal Interest 2.15% p.m
Consumer Durable Loans
Features
Bajaj Finance, the sole organized financier in the market offering Consumer
Durable loans offers you Dreams on EMI, with 0% finance options also available.
CD loans are EMI loans for Consumer Durable items like Washing Machines,
Refrigerators, Color TV's, LCD's etc. These CD loans come at a very reasonable
price, with a very simple process. You can just walk into one of our Dealer partner
showrooms and avail of this facility for the item of your choice. Loans are
available for amounts more than Rs.7500. Multiple Credit programs are also
available to suit your fitment.
18
Benefits
1. 0% finance options available (for select schemes).
2. Simple process with minimum documentation.
3. On the spot approvals with fastest processing.
4. Flexible repayment options.
5. ECS clearing, reducing hassle of arranging cheques.
6. Extended Warranty available.
Eligibility
If you are a Salaried person your age should be between
o 21 years to 60 years.
If you are Self Employed your age should be between
o 21 years to 65 years.
19
Documents
SalariedSelf
Employed
Id Proof Y Y
Residence Proof Y Y
3 Cheques Y Y
Credit Program Specific Documents (Any 1 of the following):
1. Credit Card front side photocopy Y Y
2. Visiting Card & Employee Id proof Y N
3. Photocopy of RC book (Not applicable for
vehicles registered after 2004 & commercial cars)Y Y
4. PPF Account Statement. Y N
5. Bajaj Finance existing loan Repayment
Schedule (subject to not later than 18 months old)Y Y
6. Any other Bank/NBFC Repayment Schedule Y Y
7. Latest Original Post Paid mobile bill Y Y
8. Insurance Premium Receipt Y Y
9. Salary Slip Y N
20
FEES & CHARGES:
As per schemes selected by Customer
IT Product Loans
Features
Bajaj Finance, the sole organized financier in the market offering IT Product loans,
offers your Dream Desktop/Laptop on EMI, with 0% options also available. These
IT Product loans come at a very reasonable price, with a very simple process. You
can just walk into one of our Dealer partner showrooms and avail of this facility
for the item of your choice. PC loans are available up to 100% of the product price.
Loans are available for amounts above Rs. 20000.
Benefits
1. 0% finance options available (for select schemes).
2. Simple process with minimum documentation.
3. On the spot approvals with fastest processing.
4. Flexible repayment options.
5. ECS clearing, reducing hassle of arranging cheques.
6. Extended Warranty available.
Eligibility
21
If you are a Salaried person your age should be between
o 21 years to 60 years.
If you are Self Employed your age should be between
o 21 years to 65 years.
Documents
SalariedSelf
Employed
Id Proof Y Y
Residence Proof Y Y
3 Cheques Y Y
Credit Program Specific Documents (Any 1 of the following):
1. Credit Card front side photocopy Y Y
2. Visiting Card & Emp. Id proof Y N
3. Photocopy of RC book (Not applicable for
vehicles registered after 2004 & commercial cars)Y Y
5. Bajaj Finance existing loan Repayment
Schedule (subject to not later than 18 months old)Y Y
6. Any other Bank/NBFC Repayment Schedule Y Y
9. Salary Slip Y N
22
Loan against Property:
Features
Loan Against Property is a Loan facility which a person or an entity avails by
keeping property as a collateral.
Bajaj Finance offers Loan Against Property for all your business and personal
needs - whether you need money for your business expansion, working capital,
loan consolidation, marriage in the family, children’s education or any other need
you may have.
The loans are available up to Rs.12.5 Crores and can be paid back over a
comfortable term up to 15 years.
We offer you a wide range of products to choose from:
1. Loan Against Residential Property
2. Loan Against Commercial Property
3. Loan for Purchase of Commercial Property
4. Loan Against Plot
23
5. Lease Rental Discounting
To meet the needs of all our customer we bring you a complete suite of programs
that are tailor made to your requirements, you can avail a loan under any of the
following programs:
Normal Income Program: You can avail loan basis your financial
statements.
Debt Consolidator: If you have multiple loans running and want to
consolidate to one single EMI this has been designed just for you. There is
also a flexibility of availing additional loan under this program.
Alternate Income Program: You can avail of loans upto Rs. 1 Crore under
our Low LTV and Banking programs, which have been designed specifically
to meet your requirements in a quick and hassle free manner.
Benefits
Only Bajaj Finance Loan Against Property comes with the following exclusive
benefits:
Nil Prepayment Charges – You have the flexibility of partially or
completely repaying your loan at any point of time!
We do not levy any charges on partial (1 EMI or more) or complete closure
of your loan after repayment of 6 monthly installments.
Prompt Repayment Reward – You will be rewarded for repaying your
loan in time!
We pay you 1% of the Equated Monthly Installment (EMI) paid in the first
24
12 months subject to timely clearance and no defaults. This amount shall be
sent to you as a token of appreciation from Bajaj Finance at the end of the
13th month.
Free Personal Accident Insurance – You are given a completely free
Personal Accident Coverage!
In case of untowards incident you would be covered with a personal accident
insurance upto Rs. 10 Lacs.
Best in class Insurance Schemes: You can avail attractive Insurance
packages at a very competitive premium!
o Group Suraksha from Bajaj Allianz
Non Medical Loan & Life Insurance up to Rs. 70 Lacs
Level term Plan, which means you are covered for the complete
amount despite reduction/ prepayment of loan amount
Coverage for the complete tenor of the loan to a maximum of
30 Yrs
o Home Safe Plus from ICICI Lombard
Non Medical Insurance up to Rs. 3 Crores
Provides coverage against accidental death, permanent or total
disability, diagnosis of critical illness and loss of job*
Coverage for 5 years
Transparency and Flexibility - You are given the details of all the charges
upfront. A no surprises in future promise from Bajaj Finance awaits you!
25
Bajaj Finance believes in complete transparency and flexibility for its
customers. To ensure that you are aware upfront of every charge that you
might have to incur over the term of 15 years we have taken the following
steps:
o You are issued a sanction letter and a copy of loan documentation for
your records.
o You are issued a welcome letter which is exclusively designed and
customized for you. It is sent to you within a week of the loan
disbursal giving you complete details of your loan, repayment
schedule and comprehensive details on Insurance along with a tariff
card detailing all applicable charges and benefits available as a
customer.
o You have the option to make a prepayment in part or full at your
convenience without any charges
o And a special gift for a special customer!
RE-PRICING POLICY
The prevalent Bajaj FRR is 17% effective 1st Dec 2008. Bajaj FRR is the
benchmark reference rate of BAFL Loan against Property and is determined based
on the prevalent market conditions and the cost of funds of BAFL. As the cost of
funds reduces/ increases, Bajaj FRR may reduce/ increase.
26
Any revision in this rate would impact the interest rate on the floating interest
rate loans. Re pricing would be done only for the loans booked under the floating
rate scheme. For the loans which have been booked under the fixed rate scheme
there will be no changes done for the fixed rate period.
The increase/ decrease in the Interest rate will by default increase/decrease the
loan tenor.
In case of increase in interest rate, if you want to retain your existing EMI/
Tenor, you will have an option of making a part pre payment and keeping your
EMI/ Tenor at the same level. No additional charges would be levied on the part
pre payment.
The communication on the changes (Increase/ decrease) in the rate of
interest would be sent by mail
Personal Loans
Features
Our Personal Loans are the cash loan which can be availed for your own personal
use without providing security or guarantors. Personal Loans could be taken for
renovation of your home, marriage in the family, a holiday with your family, your
child's education, medical expenses or any other emergencies. Bajaj Finance
Personal loans are offered from Rs. 3 lacs to Rs. 30 lacs which can be repaid in 12
- 60 monthly installments. Bajaj Finance Personal Loans comes with the following
unique features:
1. Free Personal Accident Insurance of upto Rs 5 lacs
2. Prompt Repayment Benefits
27
3. No Foreclosure Charges
Benefits
Only Bajaj Finance Personal Loans comes with the following exclusive benefits:
1. Free Personal Accident Insurance of up to Rs 5 lacs - In case of untoward
incident you would be covered with a personal accident insurance up to Rs 5
lacs.
2. Prompt Repayment Benefit - You get refund of 50% of the processing fee
charged if you clear all your monthly installment on time.
3. Nil Foreclosure Charges -If you want to repay your loan, please go ahead,
we do not charge any foreclosure charges if the loan is closed after repaying
6 monthly installments as per repayment schedule.
Eligibility
Salaried person
o Individuals working in the approved list of companies
Self Employed
o Businessmen ( Traders, Small Manufactures etc)
o Professionals ( Doctors (MBBS , MD , BDS , MDS only) & Chartered
Accountants only)
Documents
Salaried Professionals Businessmen
28
Individual
Application
formYes Yes Yes
1 Photograph Yes Yes Yes
Identity
DetailsYes Yes Yes
Residence
DetailsYes Yes Yes
Signature
verification
from Bank
Yes Yes Yes
Degree
Certificate &
Certificate of
Practice
No Yes No
Repayment
Track recordNo* No* Yes
Income
Details
Latest payslip &
Form 16 (Form
16 required only
when applying
under holiday
finance)
IT Returns &
Balance Sheet &
P/L Account
statement for the
last 2 years
IT Returns &
Balance Sheet &
P/L Account
statement for the
last 2 years
29
Bank Account
Statements
For the last 3
months
For the last 6
months
For the last 6
months
leProcessing Fees2% of the loan amount
Prepayment Charges
6% of the principal outstanding amount if the loan is closed within 6 months
5% of the principal outstanding amount if the loan is closed after 6 months
EMI bounce charges
Rs 500 for every bounce
Penal Interest
2.15% p.m
Two Wheeler Loans
Bajaj Auto Finance Ltd offers attractive loans for purchase of new Bajaj
vehicles.
Bajaj Finance executives are available at most of the Bajaj Auto dealerships
to offer finance schemes to suit the requirements of individuals.
Bajaj Finance is the only finance company to offer a unique Extended
30
Warranty on the two wheelers financed by it.
Bajaj Finance also finances Bajaj three wheelers.
Insurance Services
Bajaj Auto Finance Limited (BAFL) has tied up with Bajaj Allianz Life (part of
Bajaj Group), to offer a rich bouquet of world class life insurance products to suit
the financial needs of all segments of buyers through different stages of their lives.
With its successful track record and its highly acclaimed standing, Bajaj Allianz
Life Insurance Company (BALIC) prides on serving over 8 million Indian
customers. BAFL shares BALIC's philosophy of providing insurance solutions
relevant to the customer's needs.
Employment fell from about 23,000 in 1995-96 (the year Bajaj suffered a two-
month strike at its Waluj factory) to 17,000 in 1999-2000. The company planned to
lay off another 2,000 workers in the short term and another 3,000 in the following
three to four years.
Principal Subsidiaries: Bajaj Auto Finance Ltd.; Bajaj Auto Holdings Ltd.; Bajaj
Electricals Ltd.; Bajaj Hindustan Ltd.; Maharashtra Scooters Ltd.; Mukand Ltd.
Principal Competitors: Honda Motor Co., Ltd.; Suzuki Motor Corporation;
Piaggio SpA.
31
Balance Sheet of Bajaj Auto------------------- in Rs. Cr. -------------------
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
12 mths 12 mths 12 mths 12 mths 12 mths
Sources Of Funds
Total Share Capital 101.18 101.18 144.68 144.68 144.68
Equity Share Capital 101.18 101.18 144.68 144.68 144.68
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 4,669.55 5,433.14 1,442.91 1,725.01 2,783.66
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Networth 4,770.73 5,534.32 1,587.59 1,869.69 2,928.34
Secured Loans 0.02 22.46 6.95 0.00 12.98
Unsecured Loans 1,467.13 1,602.97 1,327.39 1,570.00 1,325.60
Total Debt 1,467.15 1,625.43 1,334.34 1,570.00 1,338.58
Total Liabilities 6,237.88 7,159.75 2,921.93 3,439.69 4,266.92
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
12 mths 12 mths 12 mths 12 mths 12 mths
32
Application Of Funds
Gross Block 2,894.22 3,178.54 2,994.68 3,350.20 3,379.25
Less: Accum. Depreciation 1,761.22 1,904.94 1,726.07 1,807.91 1,899.66
Net Block 1,133.00 1,273.60 1,268.61 1,542.29 1,479.59
Capital Work in Progress 43.33 107.62 34.74 106.48 120.84
Investments 5,856.97 6,447.53 1,857.14 1,808.52 4,051.52
Inventories 272.93 309.70 349.61 338.84 446.21
Sundry Debtors 301.55 529.83 275.31 358.65 272.84
Cash and Bank Balance 80.84 62.16 54.74 135.68 100.20
Total Current Assets 655.32 901.69 679.66 833.17 819.25
Loans and Advances 2,282.98 2,925.24 1,099.68 1,567.09 2,291.29
Fixed Deposits 1.25 21.32 1.33 1.19 1.21
Total CA, Loans & Advances 2,939.55 3,848.25 1,780.67 2,401.45 3,111.75
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 1,419.08 1,683.46 1,185.19 1,378.20 2,218.06
Provisions 2,315.89 2,833.79 834.04 1,224.15 2,248.72
Total CL & Provisions 3,734.97 4,517.25 2,019.23 2,602.35 4,466.78
Net Current Assets -795.42 -669.00 -238.56 -200.90 -1,355.03
Miscellaneous Expenses 0.00 0.00 0.00 183.30 0.00
Total Assets 6,237.88 7,159.75 2,921.93 3,439.69 4,266.92
33
Contingent Liabilities 719.06 811.66 1,129.29 924.96 818.25
Book Value (Rs) 471.49 546.96 109.73 129.23 202.40
Chapter 2
PRODUCT PROFILE AND FINANCIAL PERFORMANCE
34
Bajaj Auto Finance Limited (BAFL) has launched today a unique finance scheme
exclusively for all Bajaj Motorcycles. With this initiative Bajaj Auto Finance
aspires at capitalizing on the void created in the market due to the exit of many
Banks and NBFC’s from the 2-wheeler financing business.
The major profit of this worth full scheme is that A FREE EXTENDED
WARRANTY is availed on each Bajaj Motorcycle. Now the Bajaj motorcycle
customers enjoy a dual play by its finance availability and extended warranty.
Mr K Srinivas. Vice President of Retail Finance said that , for a loan of 36 months
tenor the free extended warranty offered by Bajaj Auto Finance extends for the
entire 3months. Timely payment of EMI is the only required thing from the
customers. The maintenance cost for the vehicle will be taken care by the finance
itself.
Extension is going on in a rapid speed. BAFL has now extended its reach to more
than 300 Bajaj dealership locations. Each of this Bajaj dealership invokes full-time
employees to ensure a smooth and hassle free financing to deserving customers.
The Base Rate
This is the rate of interest at which the financier is willing to do business. For
example, a financier may be willing to provide car loans at a base rate of 10.5% to 11%
per year. This rate is generally fixed and cannot be negotiated. Most financiers operate at similar base
rates. However, financiers generally provide "interest rate breaks" to the extent of 0.5% to 1% per year
for customers who have an existing relationship with them, a credit card issued by them or an income
level that is higher than their eligibility requirement. Contrary to popular belief, reduction of a
customer's car loan interest rate is achieved as a result of financial contributions provided by other
players such as the manufacturers, dealers or sales agents, and not the financier except for the "interest
rate breaks".
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Car manufacturers' subvention
Car manufacturers give a financial incentive to a select few car finance firms to
push sales of their cars. This makes some of the larger car financiers more
competitive than the smaller players who are not eligible to receive manufacturers'
subvention. For example, a financier may receive Rs.6000 from Maruti Udyog for
every Esteem car loan booked by him. Generally, the financier will build this
incentive amount received from the manufacturer into the pricing of the car loan.
Dealer discount
Agent re-subvention
Agents market the financier's loan schemes to you and complete all the paperwork
on behalf of the financier. It is the agent who negotiates the discounts provided by
the car dealers. The amount of discount that the agent is able to negotiate from the
dealer depends upon how many cars are sold from the dealership by the agent and
the relative importance of the given agent's business to the dealership. The agent
also receives a commission from the financier for bringing him his car finance
customers. This commission is of two types. The first is a standard commission
given to the agent by the financier on the loan amount disbursed to you. This
could be around 3% of the loan amount disbursed. The second is a target-
achievement incentive. Most agents give away the standard commission so that
their rates can be cheaper than those of their competitors'. This is called the agent's
re-subvention i.e. the agent giving back his standard commission to the financier
in order to further reduce the borrowing rate for you.
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Borrowing rate
From the above you would observe that you may get your loan at 9.5% per year
even though the car finance firm has priced the loan at 11% per year. The
difference between your borrowing rate and the financier's base rate is the benefit
to you, the customer, created as a result of the car manufacturers' subventions,
dealers' discounts and agent re-subventions.
Two wheeler loan
Whichever the bike, our Two Wheeler loan is the answer. With quick approvals,
flexible payment options and easy repayment - we'll help you buy the bike you
desire.
Features & Benefits
Flexible repayment options, ranging from 12 to 48 months available even at the
point of purchase.
Repay through post-dated cheques with easy EMIs. Calculate your EMI.
Hassle free loans - No guarantor required.
Speedy loan approval.
Available for almost all models at attractive interest rates.
Free gifts from time to time on approval of your Two Wheeler Loan. (Watch
this space for more details on the free gift promotion).
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Special Schemes to suit your needs
Now enjoy exciting offers on Honda Two-Wheeler bikes with the Bajaj Auto
Finance Two-Wheeler Loan. Choose from a great range of top quality models
on offer and enjoy the amazing experience of riding your dream machine.
Some of the key features of Bajaj Auto Finance Two-Wheeler Loan include:
- 3% lower interest rate
- 50% discount on processing fees
- Additional One year warranty*
- Priority delivery of your Honda within 30 days*
- Upto 95% Loan on Honda Two wheelers
*Offer from HMSI, Conditions apply
To avail offer please click here
Offer vaild till 10th October 2011
FastTrack - If a spot approval is what you need, this highly flexible scheme
gets you a loan of up to 70% with minimum interest rates.
EasyLoan - This great scheme gets you a loan of upto up to 85% with
minimal documentation. All you need as a Surrogate Income proof is:
- A copy of credit card and credit card billing statement for the last 2 months
OR
- A repayment track record OR
- Last 3 months bank statements.
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New car loan
Features & Benefits
Covers the widest range of cars and multi-utility vehicles in India.
Avail 100% finance on your favourite car**
Loan repayment tenure ranging from 12 to 60 months.
Borrow up to 3 times your annual salary (for salaries professionals) and 6
times your annual income (for self employed professionals)*.
Speedy processing - within 48 hours.
Repay with easy EMIs
Attractive car loan plans - To fastrack your loan, just choose the plan that is
right for you.
Attractive interest rates
Hassle-free documentation.
Customer Priviledges
If your an Bajaj Auto Finance account holder, we have special rates for
you.
If you have a Preferred Account or a Corporate Salary Account with
Bajaj Auto Finance for more than 6 months, you can get fast approvals on your
loans with minimal documentation.
If you are an Bajaj Auto Finance Car Loan customer with a clear
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repayment of 12 months or more we can Top-Up your car loan to the extent
of the original loan value.
Features & Benefits
Choose any car manufactured in India within a certain age*.
Borrow up to 80% of the value of the car.
Flexible repayment options, ranging from 12 to 60 months.
Borrow up to 3 times your annual salary (for salaried professionals) and 6
times your annual income (for self employed professionals)**.
Available for almost all car models at attractive interest rates.
Repay with easy EMIs.
Attractive car loan plans - To Fastrack your loan, just choose the plan that is
right for you.
Additional loan on existing loan - If you are a existing Bajaj Auto Finance
Auto loan customer with a clear track record of 12 months or more, then you
can get an additional loan to the extent of your existing loan amount at attractive
rate of interest.
Customer Privileges
Special benefits for Bajaj Auto Finance account holders.
If you have had a Preferred Account or a Corporate Salary Account with
Bajaj Auto Finance for more than six months, you can get fast approvals on
your loans with minimal documentation.
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LOGO of BAJAJ:
INITIAL LOGO (upto
2004)
CHANGED LOGO (upto
2007)
LATEST LOGO (since
2007)
Hexagonal blue and white
logo
Completely blue logo to
signify modernity and
dynamism
To stress the leadership
position of the brand in
the market
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SWOT Analysis:
Let's analyze the position of Bajaj in the current market set-up, evaluating its
strengths, weaknesses, threats and opportunities available.
Strengths:
Highly experienced management.
Product design and development capabilities.
Extensive R & D focus.
Widespread distribution network.
High performance products across all categories.
High export to domestic sales ratio.
Great financial support network (For financing the automobile)
High economies of scale.
High economies of scope.
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Weaknesses:
Hasn't employed the excess cash for long.
Still has no established brand to match Hero Honda's Splendor in commuter
segment.
Not a global player in spite of huge volumes.
Not a globally recognizable brand (unlike the JV partner Kawasaki)
Threats:
The competition catches-up any new innovation in no time.
Threat of cheap imported motorcycles from China.
Margins getting squeezed from both the directions (Price as well as Cost)
TATA Ace is a serious competition for the three-wheeler cargo segment.
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Opportunities:
Double-digit growth in two-wheeler market.
Untapped market above 180 cc in motorcycles.
More maturity and movement towards higher-end motorcycles.
The growing gearless trendy scooters and scooterette market.
Growing world demand for entry-level motorcycles especially in emerging
markets.
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Porter’s Five Forces Analysis:
Supplier Bargaining Power: Suppliers of auto components are
fragmented and are extremely critical for this industry since most of the
component work is outsourced. Proper supply chain management is a costly yet
critical need.
Buyer's Bargaining Power: Buyers in automobile market have more choice
to choose from and the increasing competition is driving the bargaining power
of customers uphill. With more models to choose from in almost all categories,
the market forces have empowered the buyers to a large extent.
Industry Rivalry: The industry rivalry is extremely high with any product
being matched in a few months by competitor. This instinct of the industry is
primarily driven by the technical capabilities acquired over years of gestation
under the technical collaboration with international players.
Substitutes: There is no perfect substitute to this industry. Also, if there is
any substitute to a two-wheeler, Bajaj has presence in it. Cars, which again are a
mode of transport, do never directly compete or come in consideration while
selecting a two-wheeler, cycles do never even compete with the low entry level
moped for even this choice comes at a comparatively higher economic
potential.
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Managerial Style:
Off late Bajaj Auto Limited, India’s premier automotive company, has
emphasised a lot on organizational restructuring for the Auto business.
With this restructuring, the existing business roles and responsibilities
at the company has been strengthened and enhanced to ensure greater
operational empowerment and effective management.
The five pillars of this new structure (Strategic units) are R&D,
Engineering, Two Wheeler Business Unit, and Commercial Vehicles
Business Unit & International Business Unit. These pillars will be
supported by functions of Finance, MIS, HR, Business Development
and Commercial.
Pradeep Srivastava, who was VP-Engineering prior to restructuring,
will now be President- Engineering. As per the reorganized structure
the company will have three CEO’s. S. Sridhar, currently, VP, Mktg. &
Sales Two-Wheelers, will now head the Two Wheeler Business Unit as
CEO with manufacturing operations at Waluj and Akurdi also reporting
to him. RC Maheshwari has joined Bajaj Auto as CEO Commercial
Vehicles. The company is in the process of identifying a CEO for its
International Business. The three CEO’s will be responsible for Top
line, Business Growth & profitability of their respective businesses.
Abraham Joseph will continue to lead Research & Development.
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Business Stratergies:
Marketing Strategies:
The focus of BAL off late has been on providing the best of the class models at
competitive prices. Most of the Bajaj models come loaded with the latest features
within the price band acceptable by the market. BAL has been the pioneer in
stretching competition into providing latest features in the price segment by
updating the low price bikes with the latest features like disk-brakes, anti-skid
technology and dual suspension, etc.
BAL adopted different marketing strategies for different models, few of them are
discussed below: -
Kawasaki 4S - First attempt by bajaj to make a mark in the motorcycle segment.
The target customer was the father in the family but the target audience of the
commercial was the son in the family. The time at which Kawasaki 4S was
launched Hero Honda was the market leader in fuel-efficient bikes and Yamaha in
the performance bikes.
Boxer - It took the reins from where the Kawasaki 4S left. Target was the rural
population and the price sensitive customer. Boxer marketed as a value for money
bike with great mileage. Larger wheelbase, high ground clearance and high
mileage were the selling factors and it was in direct competition to Hero Honda
Dawn and Suzuki MX100.
Caliber - The focus for the Caliber 115 was youth. And though Bajaj made the
bike look bigger and feel more powerful than its predecessor (characteristics that
will attract the average, 25-plus, executive segment bike buyer), its approach
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towards advertising is even more radically different this time around. Bajaj gave
the mandate for the ad campaign to Lowe, picking them from the clique of three
agencies that do promos for the company (the other two being Leo Burnett and
O&M). Going by the initial market response, the campaign was clearly a hit in the
5-10 years age bracket. So, the teaser campaign and the emphasis on the Caliber
115 being a `Hoodibabaa' bike placed it as a trendy motorcycle for the college-
goers and the 25 plus executives both at the same time.
Pulsar - Pulsar was launched in direct competition to the Hero Honda's 'CBZ'
model in 150 cc plus segment. The campaign beared innovative punch line of
"Definitely Male" positioning Pulsar to be a masculine-looking model with an
appeal to the performance sensitive customers. The Pulsar went one step ahead of
Hero Honda's 'CBZ' and launched a twin variant of Pulsar with the 180 cc model.
The model was a great success and has already crossed 1 million mark in sales.
Discover - The same DTSI technology of Pulsar extended to 125 cc Discover was
a great success. With this, Bajaj could realize its success riding on the back of
technological innovation rather than the joint venture way followed by competitors
to gain market share.
BAL now is taking a leaf out of the FMCG business model to take the company to
greater heights.Bajaj has kicked off a project to completely restructure the
company's retail network and create multiple sales channels.
Over the next few months, the company will set-up separate sales channels for
every segment of its business and consumers. Bajaj Auto's entire product portfolio,
from the entry-level to the premium, is being sold by the same dealers. The
restructuring will involve separate dealer networks catering to the urban and rural
markets as well as its three-wheeler and premium bikes segments. Bajaj Auto also
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plans to set-up an independent network of dealers for the rural areas. The needs of
financing, selling, distribution and even after-sales service are completely different
in the rural areas and do not makes sense for city dealers to control this. The
company also plans to set-up exclusive dealerships for its three-wheeler products
instead of having them sold through an estimated 300 of its existing dealers.
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Other Strategic Issues:
Cash is strength: Bajaj Auto has been sitting on a cash pile for over five years
now. Over the next couple of years, competition in the two-wheeler market is set to
intensify. TVS Motors and Hero Honda are on a product expansion binge. To fight
this battle and retain its hard-earned market share in the motorcycle segment, Bajaj
Auto will need its cash muscle. A look at its own story over the past five years
provides valuable insight.
Stake for Kawasaki: Bajaj Auto's attempt to vest the surplus cash in a separate
company may be a prelude to offering a stake to Kawasaki of Japan in the equity
of the automobile company. The latter has been playing an increasingly active role
in Bajaj's recent models, and its brand name is also more visible in Bajaj bikes than
in the past.
Better value proposition: Shareholder interests may be better served if the cash is
retained to pursue growth in a tough market. This would also obviate the need to
fork-out fancy sums as stamp duty to the government for the de-merger. A
combination of a large one-time dividend and a regular buyback program through
the tender route may offer better value. A strategic stake for Kawasaki would only
positively influence the stock's valuation.
Strategies for the Overseas Markets:
Bajaj Auto looks at external markets primarily with three strategies: -
1) A market where all BAL need to do is distribute through CKD or CBU routes.
2) Markets where BAL need to create new products.
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3) Markets where BAL need to enter with existing products and probably with a
good distributor or a production facility or a joint venture.
Earlier, most of the products that Bajaj exported were scooters and some
motorcycles. However, in its target markets, like in India, the shift was towards
motorcycles. With the expansion in Bajaj's own range to almost five-six platforms
of motorcycles, it had a better offering to export, also the reason for its stronger
showing. For the last fiscal, 60 per cent of its exports were two-wheelers and the
rest three-wheelers. Exports to middle Africa and the Saharan nations. Egypt and
Iran also continue to be strong markets for Bajaj.
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Conclusion
The company currently offers six lending products, including loans for two-wheelers and three-wheelers, consumer durables, small business loans, construction equipment finance, mortgages and loan against securities, it said.
Bajaj Auto Finance recently got shareholders' approval for changing the name of the company to Bajaj Finance.
Meanwhile, Bajaj Finserv, the holding company of Bajaj Auto Finance, has picked up a further 4.37 per cent stake in the auto finance company for Rs 111.33 crore through open market transactions.
As per the bulk deal data available with the National Stock Exchange, Bajaj Finserv yesterday bought 16,01,900 shares of Bajaj Auto Finance, representing a 4.37 per cent stake, at a price of Rs 695 per piece.
After the latest deal, Bajaj Finserv now holds a 54.79 per cent stake in Bajaj Auto Finance. Bajaj Finserv is engaged in the life and general insurance and consumer finance businesses.
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Recommendations
The impression of Bajaj in the minds of the public is that it is a moped & a
three-wheeler company, & it is a very orthodox & unhappening image in the
minds of the youth. It should use a powerful brand ambassador & individual
whom the youth can relate with.
It should aggressively market itself as a motorcycle company & move from
its traditional mindset (Rahul Bajaj had once stated that he had only one
department in his company the dispatch department & that he did not require
a marketing department.)
Bajaj should aggressively push sales of higher margin products & launch
new products in niche segments.
Bajaj should also try & push for tie-ups & Joint Ventures in foreign market
& try & increase its export base. (E.g. Tata Motors tie-up with Rover for
marketing of India & Joint Venture with Senegal government for
manufacturing trucks & commercial vehicles.)
Bajaj should look for possible mergers & acquisitions. (E.g. Maharashtra
Scooters) & try & improve its distribution network & provide it with
products in niche segments & help increase production capacity & provide
economies of scale.
Bajaj should evaluate the process of backward integration as it has huge cash
reserves surplus. This process would help it in acquiring inputs continuously
at lower cost & at regular intervals.
Increase its dealer network to tap rural growing markets by going in for tie-
ups & offering better margins to dealers.
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The key to Bajaj real success lies in Research & development. How it is able
to use value analysis & value engineering by adding new features to its
existing product line & how it is able to come out with new product for
different niche markets. Analysis of different alternatives like outsourcing,
in-house, purchase & tie-up should be evaluated.
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BIBLIOGRAPHY
www.bajajauto.com
http://www.business-standard.com/india/news/bajaj-auto-revamps-
organisational-structure/
http://www.karmayog.org/csr500companies/csr500companies_7373.htm
www.wikipedia.org
http://www.bma.ac.in/KnowledgeCentre/index1.html
http://www.prdomain.com/companies/B/BajajAuto
http://www.coolavenues.com/know/gm
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