Pawan Chabra provides the solution for long-term sustainability. And proves why new launches alone are just not... enough!!!

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-53% : How would you react to the figure if your head of sales came up to you one fine day and claimed that that was the percentage change in monthly domestic sales as compared to the previous year? Would you fire him, or at least give him some words that would buzz around in his nightmares for some good quarters?!? Now let us put that hypothetical situation in realtime frame. Bajaj Auto Limited, saw its domestic sales falling to a lowly 69,419 units for the month of December 2008, a real-time 53.34% fall in sales (as compared to December 2007) and overall sales falling by 33%, after having fallen for the preceeding months too (see table titled ‘Clearly, not the time of its life... Or is’t?’)! Even for the period April-December 2008-09, the growth story was quite demotivating with the percentage figure actually being a negative 21.24% on a y-o-y comparison! Yes, we do consider the fact that this has been a year/period when many an auto giant has kissed the ground below, but at the same time (and for the same period mentioned above), how do we justify the handsome sales growth of Hero Honda, HMSI and Yamaha reading light years better at +11.16%, +16.62% & +27.09% (note the ‘+’ives there!)??? The only two-wheeler company amongst the top four in the country who we missed out in the statistical comparison above was TVS Motor Co., which too saw a relatively decent fall of just 2.45% in the period mentioned above. So once again, how does Rajiv Bajaj react to the Bajaj ship entering the cursed Doldrums, a curse which has even dug deep into its net profits for the quarter Q3, FY 2008-09, gnawing it by a further 23% to touch Rs.164 crore as compared to Q3, FY 2007-08.

Here’s a truth that would perhaps take you by surprise; Rajiv’s reaction is thus: the bold man has lined-up six new products to be launched in 2009, with an aim to make a comeback into the positive growth zone (bold?!). Out of the 6 new promises, the identity of 4 bikes were revealed, out of which 3 belong to the value-segment and one to the premium-segment (Ninja 250cc).The positive thing working for him at the moment is the fact that most experts in the sector are vouching for his success (with the new launches), as they still consider the Indian auto market to be following a growth trajectory. But will the effort be worth for Bajaj to reach expected heights? And will the company finally stage a comeback, having been reduced to the #4 spot in the two-wheeler industry from being counted amongst the top two in the country?

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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