This project was assigned as our Second Semester end project in the subject Management Accounting by our Professor Mr. R.A.Khan.In this each and every student was assigned with a company on which they have to do a Value Chain Analysis. Mine was in 2 wheeler automobile sector and the company assigned was Bajaj auto. I have tired my level best to make this presentations per my understanding with the help of informations gathered through various Journals,newspapers and other sources.

1. Value Chain Of Bajaj Auto
An assignment of Managerial
Accounting
By:
Ankita Bharti
IIBM Patna
PGDM 2012-2014
Roll No:005

2. INCEPTION, GROWTH OF THE COMPANY:
• The Bajaj Group was founded in 1926 by Jamnalal Bajaj and now
consists of 27 companies. In 1945, Jamnalal Bajaj had formed M/s
Bajaj Trading Corporation Private Limited, the flagship company, to
sell imported two-wheelers and three-wheelers.
• The company acquired a license from the government in 1959 to
manufacture these vehicles and went public the next year.
• By 1977, the company saw its plant rolling out 100,000 vehicles in a
single year. In another nine years, Bajaj Auto could produce
500,000 vehicles in a year.

3. INCEPTION, GROWTH OF THE COMPANY:
• The present Chairman of the Bajaj group, Rahul Bajaj, took charge
of the business in 1965. He was the first licensee for the Indian make
of the Italian Vespa scooter. Japanese and Italian scooter companies
began entering the Indian market in the early 1980s.
• Although some boasted superior technology and flashier brands,
Bajaj Auto had built up several advantages in the previous decades.
Its customers liked the durability of the product and its easy
maintenance; the company's distributors permeated the country.

4. INCEPTION, GROWTH OF THE
COMPANY:
• By 1994-95, Bajaj was racing to beat Honda, Suzuki and Kawasaki
in the two-wheeler segment internationally. By 1997, Bajaj faced
tough competition in the domestic market and its market share
stood at 40.5%.
• Under the leadership of Rahul Bajaj, the turnover of Bajaj Auto has
gone up from Rs.72 million to Rs.46.16 billion (USD 936 million),
its product portfolio has expanded from one to many and the brand
has found a global market.
• Bajaj as a brand is well-known across several countries in Latin
America, Africa, Middle East, South and South East Asia.

5. INCEPTION, GROWTH OF THE
COMPANY:
• The company has a network of 498 dealers and over 1,500
authorized service centers and 162 exclusive three-wheeler
dealers spread across the country.
• Around 1,400rural outlets have been created in towns with
populations of 25,000 and below.
• The current dealer network of Bajaj is servicing all these
outlets. Bajaj is convinced that the real impetus of future two-
wheeler growth will come from upcountry rural India.
•

6. INCEPTION, GROWTH OF THE
COMPANY:
• Bajaj Auto has defined specialist dealerships for rural markets,
called 'Rural Dealerships'.
• During the year 2008-09, twenty new rural dealers became
operational.
• Bajaj has identified a segment of customers called 'Pro-bikers', who
are knowledgeable about motor-bikes and appreciative of
contemporary technology.

7. INCEPTION, GROWTH OF THE
COMPANY:
• They are trendsetter‟s and very choosy about what they ride.
• Hence, Pro-bikers need to be addressed in a meaningful way that
goes beyond the product.
• Product/Service line: Bajaj Auto is in the process of setting up a
chain of retail stores across the country exclusively for high-end,
performance bikes.

8. INCEPTION, GROWTH OF THE
COMPANY:
• These stores are called “Bajaj Pro-biking".
• Fifty two such stores have been opened across the India.
• Catering to demand in this sector requires a strong and effective
distribution network as consumers are more demanding and expect
delivery on time.

9. INCEPTION, GROWTH OF THE
COMPANY:
• Early delivery is a cause of delight for customers.
• With such vast global and Indian rural presence, designing an
efficient distribution system becomes a complex task even for a
company like Bajaj Auto.
• Lot of time and effort goes into designing a strategy based efficient
distribution system.

10. Key Products: Two Wheelers and Three
wheelers

11. Value Chain Analysis Of Bajaj Auto
Suppliers:
• Bajaj selects those suppliers who provides
majority of the required raw materials together.
• Bajaj Auto has 198 key suppliers for their raw
materials . Some key Suppliers are:
Suppliers Materials
JBM Frames
MRF & Dunlop Tires
Minda Locks and Ignition Systems
Reinder Headlamps and Lights
Endurance Brakes ,clutch and Cast vehicles
Varroc Digital Meter and Plastic parts
Max Auto Components Ignition system and switches
Silico Cable Wires and cables
Makino Industry Brake shoes, Brake lining and Clutch Centre

12. Process of ordering:
• Bajaj follows a systematic process in
selecting suppliers and deal with them.
• Production manager of
the company study the application
received by the suppliers and select
proper suppliers as per their
requirement.
• The selected suppliers invite for
general meeting with the
production manager and
purchase manager of the
company.
• In this meeting they decide
conditions and time period of
supplying raw materials to the
company.

13. Process of ordering:
• Once the contract is signed by both the
parties routine work continues.
• Whenever the company required
raw material they send e-mail or
call the suppliers just three days before
requirement in advance.
• Within two days company gets raw materials.
• The payment done after getting the raw
materials on the basis of the cash or cheque.
If the suppliers are unable to provide
raw materials then Bajaj immediately inform
them and getting solution.

14. Relation with the supplier firm :
• Bajaj auto believes in good relationship with its suppliers and
customers.
• The suppliers who supply raw material to the company, Bajaj auto
pay them regularly.
• Bajaj also pay advance for bulky consumption.
• During annual day of the company, rewards those suppliers who
were with the company for whole year and survive company without
any problems.
• The suppliers gets up-to date information on purchase order,
contracts and material schedule

15. Value Chain of Auto Mobile Industry

16. Inventory policy-
• Bajaj auto maintains seven days inventory . Demand Estimations
are based on Panel Regression, which takes into account both time
series and cross section variation in data .
• All the Mediators are connected with each other through IT linkage
to know exact status of delivery of goods

17. Manufacturing:
• With operations spanning to such vast geographies, managing a
value chain globally becomes more and more complex.
• In countries where Bajaj perceives a strong market potential, they
establish a tie up with one major industrial establishment eager to
invest in the project.
• This investment may include setting up strategic manufacturing
or assembly units, apart from a well-established nation-wide
network for marketing , distribution and after sales services.
• These investors who form alliances with Bajaj Auto are termed as
“Business Partners”. Bajaj Auto offers a number of services to its
business partners

18. Manufacturing:
They include:
• Training in sales, service and spare parts management
based on the Bajaj distribution system
• Active support for setting up manufacturing facilities
overseas including transfer of technical know-how
• Assistance in setting up an assembly plant for assembly
of vehicles from complete knocked down (CKD) kits

19. Manufacturing:
• Selecting of machinery and equipment and training of technical
personnel, all in a phased manner as required by the regulations in
the recipient country
• Active support in setting nation-wide dealer network, also involving
identification and recommending suitable partner who would assist
the distributor in Business growth

20. Manufacturing:
• Manufacturing locations:
Akurdi, Pune, 411035
• This is one of the oldest plants of bajaj auto ltd with
production capacity of 0.6 million vehicles/ year. The plant
has been closed in order to equip for four wheeler production
Bajaj Nagar, Waluj Aurangabad 431136
• This is second plant with production capacity of 0.86 million/
year. Products manufactured here are Kristal, XCD and
platina and commerial GC series.

21. Manufacturing:
Chakan Industrial Area, Chakan , Pune 411501
• This is the biggest plant of bajaj auto Production
Capacity of 1.2 million/ year , Product manufactured
here are pulsar and avenger and commercial Ge series
Pantnagar , Uttarakhand
• The most advanced plant of bajaj auto .It has Capacity of
0.9 million vehicles per year. Product manufactured here
are platina and XCD

22. Manufacturing:

23. Manufacturing Overview of Bajaj Auto:

24. Distribution Channel:
Various players involved in the channel design are:
Manufacturing Plants
• Depots
• Carrying & Forward Agent
• Dealers
• Sub Dealers

25. Distribution Channel:
• Logistics
• Channel Design is dependent on the
segmentation that Bajaj have done in the
geographicand product category segments.

26. Infrastructure facilities:
• Bajaj Auto Ltd. has well designed infrastructure facilities.
• They highly care of clarity and arrangement.
• The whole plant has divisional area like, offices, operation house, godown, and
packing department.
• Bajaj Auto Ltd. l has modern technological machines; from this it can produce
products.
• This machinery arranged in operation department systematically.
• The production process is step by step so as per the machinery arranges Bajaj provide
all the best facilities to their employees, like parking, canteen, rest room, and also
proper working conditions.
• They greatly care of their employees. They pay on monthly basis and also give bonus
on special occasions.

27. Infrastructure facilities:
• For distribution bajaj auto uses mix of depots and C&f agents.
• This is completely dependent on the distance of manufacturing
location from dealer point .
• For example due to extensive distance from manufacturing plant
from west Bengal to north-east India, there exist a depot in
Khadakpur with capacity of housing 800vehicles.
• There are similar depots in Punjab, Rajasthan and southern India.

28. Depots:
• Setting up depots is a geographical strategy adopted by Bajaj Auto.
• But this does not mean that the company has gone all out to open a
large number of depots.
• It has chosen strategic locations.
• The key role played by depots is that they are meant to cater to any
sudden rise in demand of vehicles, and to cover the existing
geographic span of India.
• When we spoke to the management, they explained to us the
reasons behind having a depot in Kharagpur.
• There are two reasons for which Kharagpur was chosen to hold a
depot for Bajaj Auto.

29. Depots:
They are as follows:
• Catering to a sudden shooting up of demand- In Bengal itself,
it is common knowledge that during the festive season which
spans from September to November, there is a huge demand
as people spend more on festival extravaganza and it is
considered an auspicious time to buy household gadgetry.
• There is a conspicuous rise in the sales of white goods, motor
vehicles and jewellery.

30. Depots:
• Reaching the states of the North-East- As per the people at Bajaj,
“We take 15 days to reach the North-East if we go via the carrying
and forwarding agent concept.
• Generally bikes reach West Bengal in 7-8 days.
• The bottleneck is the Darjeeling route.
• Hence, came in the concept of a depot whereby we can reach the
North-East in the same time, instead of experiencing a lag of almost
a week.”

31. Dimensions for Choosing Depot or
Factory Approach
• A dealer needs to consider his order requirements and then come up
with an order to place to the regional office.
• If the demand is immediate, he may approach a Depot for the load.
• Else, he has to try to stick to factory load.
• Both of these loads have their own sets of pros and cons
• . We have listed them in the following table depending upon the
criteria that are more important to the dealer , he places his order to
either the factory or the Depot.
• Generally, orders are placed to the factory but in case of urgent
requirement, due to which the lead time reduces considerably, the
order is procured from the depot.

32. Dealers:
• Like mentioned above, the company has a network of 498 dealers
and over 1,500authorised service centers and 162 exclusive three-
wheeler dealers spread across the country.
• Around 1,400 rural outlets have been created in towns with
population of 25,000 and below.
• The current dealer network is servicing these outlets. Dealers can be
classified under 3 heads.

33. Dealers:
• COCO
These are Company Owned & Company Operated showrooms.
These concepts exists only for Pro-Biking showrooms.
Bajaj Auto has tried showcasing their muscle power in high end biking
segment.
The concept has evolved very fast and now there are 52 Pro-Biking showrooms
in the country.
The company itself does not take any order from the customer in these
showrooms.
The giant dealer of the region who is acting as a logistics partner for the pro-
biking concept takes the order on behalf of the company and fulfils the customer
requirement.

34. Dealers:
CODO
Codo
• These are Company Owned & Dealer Operated showrooms.
• In case of this concept ,showrooms are owned by the company but
the operations in the showroom are managed by the dealer.
• This is generally the case where Bajaj wants to provide the dealer
financial benefits considering the high working capital requirement
of the company.

35. Dealers:
• DODO
These are Dealer Owned & Dealer Operated.
These dealers are fewer in number because they are
generally the giant dealers who are the financial muscle for
the company.
In our talks, the management indicated that the top
management wants to do away with this concept.
The reason behind this is that the bargaining power increases
in the hands of the dealer, which puts the company in a knotty
situation.

36. Transport & Logistics:
• This function of distribution is not owned by the company in
any form.
• This is outsourced to the third party vendors.
• The third party here is Transport Corporation of India (TCI)
and a few other private vendors.
• The fleet to be transported is custom-designed for Bajaj Auto
by the vendor.

37. Transport & Logistics:
• Key Facts:
There are twenty vendors all across India
• OSL
• Jamuna Transport
• Sumit Transport

38. Transport & Logistics:
• A Transit Insurance Compliance Letter (TICL) is
signed between the two parties
• The local level sub-dealer sometimes gets to decide
the last mile logistics, as he can decide to pick up the
vehicles himself or have it transported to him.
• Logistics of the vendor is decided by the company.
• Freight charges are built in the product price.

39. Transport & Logistics:
• Services provided by Bajaj Auto to the dealer
Workshop Training
In a month:
• 30-40 Mechanics can be trained per dealer
• 15-20 Sales personnel can be trained per dealer

40. New Product Launch
• Information is percolated around a month
before the product is to be launched
• The date of launch can be rescheduled in case
the current stocks of the dealer are not getting
cleared

41. Key Role & Deliverables
• The most important loop that is the outcome of the
dealer management is the feedback loop.
• Using this loop company designs its strategy for different
segments.
• Dealer need to fill in the required form provided by the
company and update it to the company on monthly
basis.
• The three heads under which the feedback is filled are:

42. Key Role & Deliverables
• Monitoring Sheet
• Day wise Summary of Customer Satisfaction
Feedback
• Health Card for Monitoring Workshops

44. Key Role & Deliverables
• Bajaj has total of approx 498 dealers 1500
authorized service stations and 1400rural outlets for
population of below 25000.
• This function is not owned by bajaj auto in any form.
• This is outsourced to third party vendor.
• The third party here is TCI along with some others
like OSL, Jamuna transport and Sumit transport.

45. Key Role & Deliverables
• Logistics to the vendor is decided by the company, transit
insurance compliance is signed between the two parties -
Freight charges are included in product price.
• Bajaj rides the SAP advantage.
• In year 2000 „Project 110 percent‟ was launched to spear head
Bajaj‟s growth in the future.
• Bajaj auto has linked 386 dealers out of 498 and 165 suppliers
out of 198 Business information is available to company
external community in real time.

46. Key Role & Deliverables
• The dealers can get real time information, unstructured information
like news items, new product releases, dealer discussion group and
internal market place.
• On operational activities and also the company can monitor the
external members.

47. Key Role & Deliverables

48. Order Tracking:
• Taking a daily account of the order received from various
dealers and Regional Offices (RO).
• Orders from dealers are punched in by dealer
themselves.
• Orders are followed up in the system only if the credit
limit is not crossed.
• This credit limit is preset into the system depending
upon the dealer and his/her track record.

50. Packaging:
• Packaging in factory is outsourced to third party
vendor. These vendors are generally from the
Transport & Logistics partners

51. Dispatching Goods:
• Goods need to be dispatched via third party
vendor TCI. State corporations and other private
players are also part of the vendor list

52. Generating Invoice & Waybill:
• These documents need to be generated and
dispatched to the respective dealer.

53. CUSTOMER DETAILS
Types of Customers:
• Bajaj Auto ltd. produces goods by considering the different
types of customers. They distribute products in small towns of
the country and all over the world. The bikes lights produce as
per the current trend of the customers.
• After sales Service:
Bajaj Auto ltd. is one of the most accepted products
by the customers. With best quality products
Bajaj Auto ltd. can survive customers
after selling products.

55. CUSTOMER DETAILS
• Customer relation management:
Bajaj Auto ltd. believes in customer satisfaction.
They try to earn consumers trust by providing good quality
products and after sales services.
Every two months Bajaj Auto ltd. researches the market and
tries to implement the problems.
They also believe in innovation and produce different variety
of products with minimum price.

57. Strategic Implementation of I.T in
Bajaj Auto to Maintain It’s
competitive Edge Over Others:
• For decades, Bajaj Auto was riding high. The
company was enjoying a huge market share and
the only way it knew was: by building basic,
durable scooters on the platform of „value for
money.‟

59. Strategic Implementation of I.T in
Bajaj Auto to Maintain It’s
competitive Edge Over Others:
• But when the market place changed, Bajaj was
late to respond. It became clear that the
company could no longer derive big market
shares from limited brands and products. Then
started the re-structuring of products, channels
and the performance management system

60. Strategic Implementation of I.T in
Bajaj Auto to Maintain It’s
competitive Edge Over Others:
• Along with that, the company realised that it had
to redesign its IT structure. Bajaj Auto
announced the successful “Go Live” of
their External Portal Initiative for their sales and
service employees, dealers and suppliers.

61. Strategic Implementation of I.T in
Bajaj Auto to Maintain It’s
competitive Edge Over Others:
• SAP‟s my SAP Enterprise Portal was
implemented simultaneously with the current
SAPR/3 ERP implementation.

62. Strategic Implementation of I.T in
Bajaj Auto to Maintain It’s
competitive Edge Over Others:
• . Business information is now available to the
company‟s external community in real time. This
assists in improved decision-making, whether it
is to meet customer requirements or to maintain
efficiency in supply chain
management.

63. Strategic Implementation of I.T in
Bajaj Auto to Maintain It’s
competitive Edge Over Others:
• The company‟s field sales teams get full visibility on all dealer
activities while the dealers get real-time access to relevant
information on operational activities.

64. Strategic Implementation of I.T in
Bajaj Auto to Maintain It’s
competitive Edge Over Others:
• The dealers and sales employees get information relevant to their
respective region and territory by aggregation from the underlying
SAP R/3 ERP database. Bajaj has linked 380 out of its 483 dealers
through this system. Also connected are 165 out of a total of 200
suppliers.

65. Strategic Implementation of I.T in
Bajaj Auto to Maintain It’s
competitive Edge Over Others:
• The dealer portal, in addition to operating information, provides
access to unstructured information like news items, new product
releases, new product introduction, dealer discussion groups and
internal marketplace.

66. Strategic Implementation of I.T in
Bajaj Auto to Maintain It’s
competitive Edge Over Others:
• The supplier gets up-to-date information on purchase orders and
contracts, material schedules, and payment details. Bajaj Auto, in
turn, gets invoicing information from suppliers for its automated
material receipt system.

67. Strategic Implementation of I.T in
Bajaj Auto to Maintain It’s
competitive Edge Over Others:
• This helps in streamlining the supply chain, optimizing inventories
and reducing non-value-adding activities at both ends. Every PC has
a hardware lock so that the correct terminal is established and does
not travel out of the dealer‟s premises

68. Strategic Implementation of I.T in
Bajaj Auto to Maintain It’s
competitive Edge Over Others:
• Bajaj is also planning to extend the IT systems even as it plans to
launch a major marketing initiative in rural areas. “As this project
gets implemented, we have to see how IT can support it. There is an
issue of Internet connectivity.

70. Strategic Implementation of I.T in
Bajaj Auto to Maintain It’s
competitive Edge Over Others:
• But the infrastructure is changing with telecom majors expanding
their network as company is focussing in connecting all it‟s network
with each other through WLL.

71. Inbound
Logistics
(Pay order
cycle,
reordering etc)
Operations
(processing ,
machines etc)
Outbound
Logistics
(Polyurethane,
Brakes , steel
etc)
Marketing and
Sales (COCO,
CODO etc)
Services
(Training for
dealers, IT
implications
etc)
Infrastructure Facilities
Human Resources
Technicalities
Procurement
Margin
Margin