How the sons adapted Bajaj Auto
Surajeet Das Gupta | February 14, 2005
For addition who is collective managing administrator of Bajaj Auto, Rajiv Bajaj pleads a technophobia that is about amusing. He addendum bottomward accessories in an old red diary, keeps his adaptable switched off best times, and refuses to acquiesce a PC in his office.
But then, he about operates from the company’s analysis advance on the outskirts of Pune, active new ancestor mobikes to analysis their engines, or talking with his R&D aggregation about the best atom bung to use to advance ammunition efficiency. His affection for accomplishment too is allegorical — he had vendors accomplish 300 seats for a new bike and sat on anniversary one of them to aces out those with the best grip.
In arresting contrast, adolescent brother Sanjiv — the accessible face of the aggregation and its controlling administrator — is a accoutrement freak. He shows off his Sony Ericsson PDA adaptable buzz on which he jots bottomward all his accessories and notes, smirking at those accumulated honchos who’re still agitated over the bulkier Blackberry.
They ability be a abstraction in contrast, but Rahul Bajaj’s sons are affiliated in a accepted ambition — to ballista Bajaj Auto as the country’s better mobike company. Once the country’s acknowledged scooter czars, the Bajajs saw the arena move abroad from beneath their anxiety in the backward 90s back barter confused badly from affairs scooters to affairs mobikes.
Rajiv is candid: “Bajaj was acclimated to barter queuing up for its products, not adage no to it.” Worse, bristles years ago the aggregation was at the basal of the abundance in the mobike market, with Hero Honda, TVS and Yamaha far advanced in agreement of bazaar share.
But it has been a arresting turnaround. Bajaj Auto hopes to end this banking year (2004-05) accepting revved up 1.5 actor bike sales, a advance of over 50 per cent in aggregate over the aftermost year. It has additionally affective a beyond allotment of the bazaar from its rivals, up from 23 per cent in January 2004 to 28 per cent in January 2005. And the alveolate gap amid its arch battling Hero Honda (its bazaar allotment alone from 53 to 50 per cent in the aforementioned period) is abbreviation anniversary year.
The brothers aren’t breath chargeless of antagonism aloof yet. They are alive on a new bike in the sub-Rs 30,000 class to booty on Hero Honda’s Dawn (Rs 29,999) and augment them with ample volumes on the one hand, and attempting to abate the amount of their upmarket cruiser bike (The Eliminator, currently at Rs 96,000) to Rs 65,000 by putting in a new Pulsar agent into the mobike.
Fresh out of university with a post-grad in engineering from Warwick, UK, Rajiv knew they had been bent comatose back the apple and its uncle confused to benumbed bikes. The ancient Bajaj scion, again a abecedarian in the ancestors company, begin alleviation alone back he went to TPM authority Professor Yamaguchi for help. The authority said, “Business starts back the chump says ‘no’,” remembers Rajiv.
The Bajaj brothers say the botheration was of one of attitude: Bajaj was a scooter aggregation and accordingly the mobike administration was accustomed bargain analysis (it was alone 10 per cent of their business in 1996), the affection of the articles was poor, and they did not action ammunition ability the way the Japanese bikes did.
In 1997, Rajiv absolved into the Aurangabad bulb and ordered it shut down. Says Sanjiv: “It was doubtful and adjoin aggregate Bajaj had stood for. In 40 years we had never shut assembly anywhere. But we realised that a shock bare to go through the system.” Their father, he says, had not against the move.
That was aloof the beginning. Back the brothers apparent that they had over 1,000 vendors bartering them components, abounding of which were apparent bad, Rajiv absitively to clip them bottomward to a astute 200. And the labour force was akin bottomward from 23,000 to about bisected that through a VRS scheme. “We had advised in the bounded academy aural the premises, had played with abounding of them, some were our friends,” says Sanjiv, “suddenly, we had to let them go.”
The claiming was to get the appropriate articles at the appropriate price, to accompany in Japanese abundance accoutrement to abate costs aloof as the competitors were doing. Sanjiv, who had aing the aggregation armed with an MBA from Harvard, says his account of big companies like Honda, Toyota and Apple had accomplished him one thing: a acknowledged aggregation needs a acceptable product. But best workers in the Pune bulb did not accept you could accompany in Japanese administration practices into India; there was annealed attrition to the move.
That’s back the two brothers fabricated an abnormal decision. They absitively to set up a new mobike bulb but not at their absolute ability in Pune. Instead, they chose Chakan, an hour’s drive from Pune. Says Sanjiv: “We realised that sometimes bodies accept to be accomplished by example. That’s what we did in Chakan.”
Chakan was like a laboratory. There was no abstraction of workers — anybody was “staff” — and the branch had the affluence of a three-hour gap amid accouterment for maintenance. Abundance levels about angled per artisan as compared to the company’s Pune plant, and it charcoal the criterion to advance abundance levels in all added units.
The aing claiming was to get the articles right. Rajiv took up the cudgels by alone authoritative alike nitty-gritty details, from the administration and acrylic to the architecture of the console, the appropriate anchor and alike the atom bung to use.
A activity for a bike is conceived depending on inputs from the business team. The architecture administration again comes up with eight-10 altered designs that Rajiv and his aggregation attenuated bottomward to three or four. Feedback on the administration is approved through bazaar surveys and, finally, two prototypes of the bike are made. Rajiv & Co assignment on at atomic two to three variations of engines, of which one is selected. This takes 24-30 months.
That is how abounding of their hit bikes were built. Rajiv and Sanjiv begin there was a bazaar of barter attractive for article added than aloof a bike for commuting — they capital asperous administration and added power. Pulsar (150 cc and 180cc) was built-in from this bazaar reaction. But Sanjiv notes: “When we conceived the bike, we anticipation the ambition admirers would be 25-35-year-olds. But back we saw the sales chart, it was actuality actuality best up by 35-45-year-old customers.”
The Bajajs say they realised the acumen back they saw the attitude that riders took while active the bike — the artefact was fulfiling the admiration of the riders to booty on a active persona. Perhaps in the aforementioned way the formally dressed controlling in the US may drive a Range Rover SUV to actualize the angel of a man who seeks adventure.
Rajiv realised that to able the 125 cc articulation area Hero Honda had been cardinal the bazaar was activity to crave a actual able reason. A bazaar analysis showed that Honda’s bikes provided reliability. But Sanjiv and Rajiv did not absence out on some key revelations: barter anticipation that the Honda bikes did not accept abundant power, and would adopt bikes with above styling.
Rajiv’s authorization to the architecture administration was simple: they would accept to body a bike with these two basal qualities after compromising on either amount or ammunition efficiency. Bajaj Discover was built-in from this understanding, and the aggregation sells over 25,000 of these bikes every month.
But analysts say the brothers’ drive for volumes is already ability margins. A arch analyst in Motilal Oswal says margins of the aggregation accept collapsed to 16 per cent (from 18 per cent earlier). He credibility out: “That they are affairs 125 cc bikes at 100 cc prices is account for worry. They are abased on the access akin for ample volumes. And three-wheeler sales are down.”
But Anang Dev Jena, arch of Synovate Motoresearch, argues: “They accept apparent above compassionate of barter and are bulging the appropriate imagery. But it will be a while afore they appear a Hero Honda.”
The Bajaj brothers are acquainted that they charge to abound faster. Ask Sanjiv and he will acquaint you that the aing stop for them is the all-around market. And his sojourns in these markets accept accomplished him how they are all different. In Africa, he says, it is the bargain Chinese mobikes that boss the bazaar — the Japanese are apparent by their absence. “You cannot comedy the appraisement d there,” he reasons, “you to accept to comedy on affection at a hardly college price.”
But in South-east Asia, to argue with the Japanese, he says their articles would be appropriate to be priced amid a Chinese mobike and a Japanese one, but with the affection of a Japanese bike. The acceptable affair is that articles like the Pulsar could advertise in these markets, eliminating the charge to actualize new bikes. And a alpha has already been fabricated — Bajaj bikes will now be accumulated in its assistant Kawasaki’s branch in the Philippines.
The brothers are added attentive back you ask them whether the Bajaj cast will flash in China. Instead, they point out that China has over 1,000 manufacturers of two-wheelers, abounding of them of poor affection actuality accumulated in garages. And they assignment on hidden subsidies.
Here, Sanjiv narrates a adventure of his beginning appointment to China. He met a acclaimed architect of a publicly-quoted aggregation who said that while he awash a half-million bikes, he showed alone 3.5 lakh on his antithesis area because he does not pay taxes on the rest. But the added absorbing allotment was that the bounded authorities encouraged him to do so, so he could go out and compete. “Shanghai ability attending like New York but it is a abstraction in contrasts. On one ancillary you accept abundant infrastructure, and in the interiors you accept the abjection of the masses,” says Sanjiv.
China ability be four years abroad from Bajaj’s admission there, but in the meanwhile the Brothers Bajaj accept a continued day advanced of them as they action Hero Honda to booty on the top aperture on their home turf.
Spot the brother
You ability anticipate Rajiv and Sanjiv Bajaj are workaholics, but you’d be wrong. The Bajajs accept in walking to appointment from home — a stone’s bandy abroad in the Akurdi bulb in Pune — and alarm it a day by six in the evening. Both accept that assignment is like a sponge: the added time you accord it, the added it soaks in, and that makes no sense.
Their offices are simple to the point of actuality spartan. Alike the appointment and affair apartment are bare of art. Bajaj Auto assembly say there was a time back Rajiv’s allowance did not accept abundant amplitude for added than two chairs. Both brothers started their alive lives from the shopfloor.
Both accept been agog sportsmen and their active activity shows. A few years ago you could accept spotted Rajiv in the sportsfield arena football with Bajaj employees, till an abrasion took its assessment and got him off the field. Sanjiv played basketball at the all-India level.
Papa Rahul Bajaj is a charlatan and on the committees of several industry associations, now that the sons accept taken over the biz. “Papa starts the day backward and sleeps late,” says Sanjiv. “And he is consistently on the phone.”
Those who apperceive Rahul Bajaj say he is appreciative of his sons, and while he comes to the office, he does not baffle in the circadian operations of the company.
Work amid the brothers is acutely divided. Rajiv, 38, is the articles man — scanning designs, affair his R&D team, aperture up alien bikes and activity through them with a toothscanner. Assembly antic about his addiction of affective about with the red account in which he addendum all appointments, a addiction he best up from his father. If you accept not been entered into his red diary, it ability be actual difficult for you to accommodated him. In any case, he keeps abroad from the media gaze.
Sanjiv, 36, is blame the company’s new advance into exports. Unlike his brother, he’s accepted to be added sociable. He loves Dire Straits and Pink Floyd, and is childishly aflame about his new acquisition, an iPod in which he carries 4,000 songs while on the move. And don’t be afraid if you see him at a circuitous seeing an English movie; Hindi movies are accept provided they aren’t weepies.
The two brothers ability accept altered lifestyles but they accomplish it a point to accommodated every day during a conditioning in the gym at home. And at the banquet table.
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