How Rajiv Bajaj created a quadricycle and why nobody likes him for it…

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Bajaj Auto bike down 8% in August


JULY 1, 2013


There is an awkward pause as the question looms. He has just that Ratan Tata a mistake with the Nano. He has off a list of stupid and meaningless that management consultants try to

And he has accused the Harvard business of the world of teaching this called MBA.

But the interview has clocked an hour and 22 minutes. The is in the bag. The question is a calculated

With that reassurance, it forth: Do you have any friends in the industry?

The question hangs in the air for a And then Rajiv Bajaj

It is a genuine, good humoured It is also a disappointing laugh.

The was intended to draw juicy hopefully vitriolic — Bajaj has been generous those, quick to strike at trying to cross the path of his Bajaj Auto. founded in by his great grandfather Jamnalal. And God you if you were to so much as frown at his new the RE60. India’s first

It is very different from the in Europe, which are expensive, novelty vehicles made of materials. The RE60, on the other is a tiny vehicle that like a well-appointed autorickshaw. But now it is a big deal.

Makers of small especially those that run as fear the RE60 because it come with a cheaper tag, somewhere between the Rs1.25 lakh and Maruti Alto’s Rs2.5 lakh. It also be more fuel giving 35 kilometres to a litre.

makers are wary because the is like a better three-wheeler doors, a roof, better (water-cooled, twin spark five gears), and is more thanks to the fourth wheel. It just 60 grams of carbon per kilometre, about half the of a small car.

Annual three-wheeler sales are about There are 70,000 plying on the of Delhi alone. Chief Sheila Dikshit, says has often complained to him about the they create before the number of foreign tourists into the capital. She would something a little more

If some other states her preference, Bajaj will be at a very busy assembly at his Aurangabad factory.


The Fourth Wheel

The first Rajiv Bajaj met Karl was at an automotive awards function in New in January this year. to Bajaj, Slym, who had come his wife, walked up to him and said He had just taken charge as Motors’ Managing Director.

a nice man, Bajaj The hall was full of industry but Slym picked Bajaj for his It is difficult not to appreciate a gesture that.

For the next few months the two at each other’s throats. questioned the rationale of the quadricycle on the site Twitter: Why? The + industry have been efforts in traffic safety now we consider Quadricycle!

Why go backwards?

response was swift. The RE60, he a business daily, was meant to three-wheeler users the safety of a wheel. To argue that users should all buy cars is to effectively tell people who afford bread to eat cake.

approach met with disastrous the last time it was tried.

was echoing the sentiments of Venu the head of TVS Motor Co. a rival to in two- and three-wheelers, and a friend of father Rahul. Srinivasan had concerns that the quadricycle dilute safety and emission

Bajaj’s riposte was that large cars were the safest, every other — cycles, motorcycles, mopeds, threewheelers, small and medium cars — be banned.

A little extreme, but Rajiv Bajaj the middle does not exist. R.C. the venerable 79-year-old Maruti and another friend of Bajaj’s got a taste of it for suggesting that the will emit four more carbon dioxide if on the same driving cycle as a

If I take Mr Bhargava’s Maruti car and put it on the car of Europe, where roads are and speeds higher, let’s see emission numbers he gets, Bajaj.

The divide became clear at a call organised by the Society of Automobile Manufacturers (SIAM), the lobby, earlier this Some participants made demands to prevent Bajaj launching the RE60 anytime Ravi Chopra of Piaggio, makes three-wheelers, wanted it only after three to provide a level playing for all.

One of the criteria in the definition of the is that it should be no heavier 500 kg. Slym of Tata Motors that raised to 700 kg. For context, the weighs 397 kg, Tata’s Nano 650 kg.

three weeks after meeting, TVS’s K.N. wrote an email to the top executives of Mahindra, Tata Motors, Suzuki, Toyota Kirloskar, General Motors, Fiat and some others. The email the minutes of the SIAM teleconference did not the deliberations accurately. While a reference is made to other one set of views appears to be given prominence.

The minutes append a of the quadricycle that is very to the specifications of the RE60.

To reiterate, up Radhakrishnan, we are strongly opposed to the of the category of quadricycles in India.

He be a happy man. On May 22, the government the use of quadricycles as public transport city limits. On August 8, the of Road Transport and Highways a draft notification to amend the Motor Vehicles Act to include the as a vehicle category.

It will a special licence and registration and bear a prominent Q on the body.

We are approval and can start [selling the immediately or later depending on specifications are finally approved, S. Ravikumar, Bajaj Auto’s of Business Development. If all goes Bajaj’s baby may hit the roads year. And if that makes and other SIAM members shortchanged, they have no one but to blame.

They can also John F. Wallace.

The idea of a was first mooted a decade ago by current employer, Tata and Srinivasan’s TVS. It was opposed by Auto and Maruti. We opposed it, Jagdish Khattar, who was the MD of Maruti at time. Now as the head of Carnation, the car sales and service network, he opposed.

The government, with the of experts, should formulate the and nature of a new vehicle. All manufacturers have sufficient lead

However, the subject polarised After lengthy deliberations, Chenoy, the present head of the Skill Development Council, who was director general at that sent two separate proposals to the Ministry, one in favour of the quadricycle and against. The ministry sat tight on

Years later, when Bajaj developed the RE60 and was for an alleyway to drive it into the SIAM’s open stance to his aid. And also the fact his quadricycle was meant to be an improvement on the and not a car-like thing the earlier talked about.


table, balcony

Wallace, person Rajiv Bajaj’s can blame, was a consultant Rahul engaged in the late 1980s. An of the British auto industry, he became Bajaj’s confidant. was around the time Rajiv his mechanical engineering in Pune and his father’s company for training.

He was the engineer in the family. His father, and brother were all commerce and MBAs.

Rajiv, after his training at Bajaj Auto, to the University of Warwick in the United to do Masters in Manufacturing Systems Wallace lived nearby. became close enough for to confide in the Englishman that he had no of going back to Pune. He to hang around and have

But Wallace prevailed upon him to go He said it was possible to have fun in

So Rajiv came back to Auto in December 1990. But not for it seemed. Rahul Bajaj him to go to Harvard to do his MBA, in keeping the family tradition.

Wallace again, this time tougher words. Waving a in the father’s face, he said: If you this boy for an MBA, there not be a company left when he back.

Wallace may have dramatised a but only a bit. The unbridled ushered into the two-wheeler in the middle of the 1980s had begun to root. Honda, Yamaha and were all here.

Global at local prices — Mahindra Mahindra faces Renault today — had become a part of Bajaj life. There was still a period of about 18 months for its but everyone at the company was nervous the wait used to be 10 years the Japanese 100cc motorcycles the market.

Photo: Rachit

Bajaj Auto, like the Indian groups that had wild success for decades, had preoccupied with capacity, and permits. Issues with were common. The supply was primitive.

There was no emphasis on and development, technology, quality, and

The stint at Warwick was an eye opener for He spent time at the Massey tractor plant and the Honda car He noticed that the equipment and were laid out in a certain

People were multiskilled. flowed smoothly. Quality was

He visited Japan as part of a tie-up Bajaj Auto had with Kawasaki in 1984 and saw of efficient manufacturing.

Naturally, the thing to which he turned his at Bajaj Auto was the manufacturing Thus, at age 23, he began to teach.

He classes with engineers and in batches of 20 to 30. He made a 150-page of his project work at Warwick, on manufacturing, and distributed copies of it his new students, a large number of much older than The classes were held in the

Homework was also involved.

In one class, when Bajaj a question on manufacturing, Abraham a year younger to Bajaj at 22, got up to it. Half an hour later, was still talking. A mechanical graduate from the Regional College, Bhopal, he knew Bajaj knew without gone to Warwick, done or stepped out of the country.

I knew then that this guy was a says Rajiv. Joseph, Joe to was the first one he identified for his core for manufacturing excellence. For several now Joe has been running Bajaj RD and designs everything.

They with the assembly, the place all the work done by all the wings of a comes together. That is one realises if some parts do not if some others nick the if something is cracked, or if the paint is

Next to join the fledgling team was Pradeep Shrivastava, now the Operating Officer.An alumnus of IIT and IIM Bangalore, he could have anywhere, but chose to work Bajaj because he was passionate manufacturing.

Soon they D.V. Rangnath, who now heads Sanjay Saraswat, now the Vice of Marketing, and Madhav Kini, who is now business development and specialises in property.

We all started at the same We started at an age when the second did not matter. We worked together our own hands. We made a lot of mistakes

We have nothing to hide one another. We have seen other get married, and been at the when someone had a child. We are not a where I have to call a and espouse some wisdom and obey, says Rajiv.

He to regularly play soccer the workers until an injury a few ago put an end to it and turned him to yoga. (His handle is @motorcycleyogi, though it has inactive for years.) A lot of the product takes place on a slightly wrought iron table on the attached to Bajaj’s office. favourite spot is the balcony in Development Head Ravikumar’s A teetotaller, Ravikumar has converted the into a nice bar precisely for meetings.

Our beginning was a new beginning for the The physical entity of Bajaj existed before. But with us the end of scooters and start of motorcycles, Rajiv.



Having cleaned up the factories 1990 and 1995, Rajiv and Joe to RD. Joe found his groove there. he designed was right the first Joe never gets it wrong, Rajiv.

The company had already proved to be an outlier by not taking on an equity who would feed it technology. of its rivals had one. Hero and had Honda, TVS had Suzuki, Escorts had and LML had Piaggio.

Bajaj had Kawasaki, but as a technology supplier, with no

Not having an equity partner provided the technology, such as for Hero, gave us the opportunity to What we got was technical drawings Kawasaki. The process, the why and the how, and the were not transferred completely Kawasaki.

We made mistakes, but we says Joe.

The new plant Bajaj built in Chakan, Pune, is his ode to modern manufacturing. The factory, the company’s first, had 20 per daily wage earners, 80 per skilled workers and no engineers on the floor. Chakan began a study in contrast: 80 per cent engineers and 20 per cent skilled

We used to make a million a year with 20,000 Now we make over four with 5,000, says the COO.

By the turn of the century, began to become self-reliant in The last motorcycle it built Kawasaki’s technology was the Eliminator in

Ironically, that was when the also hit an all-time low. As the slowdown engulfed Indian Bajaj Auto’s two-wheeler made a loss in 2000/01, its ever. It was a lifechanging experience, Rajiv.

What came to his was the new-found self-reliance in technology. The launched the Pulsar, a completely motorcycle, in 2001. It created a new one with high margins, and to be a cornerstone of Bajaj’s market

Two years after its launch, the was given two spark plugs, was unheard of not only in India but in the world. It was a result of one of those on the wrought iron table on the and solved a big problem of thermodynamics by a better balance between and mechanical efficiency. It increased the and fuel efficiency of the engine, and a doff of the hat from the venerable of Japan.

We defended the Pulsar. Had we not put in spark, and had Yamaha came FZ and Honda with Unicorn, as did, they would taken away a large of our market. People forget Pulsar was already successful.

was insurance, says Rajiv.

TVS brought out its own motorcycle, Flame, too, boasted two spark Sure enough it landed the in court. As the judiciary takes its to decide the case, Bajaj has begun to put three spark in the Pulsar.

2008-Present Day


How things change. It appeared for a in 2006/07 that Bajaj challenge Hero MotoCorp Honda back then) in the game. But in September 2008, Brothers collapsed. So did much of the financial system.

And so did Bajaj’s

What the hell is happening, I We had done everything right, Bajaj. Then we understood. you are lucky, like Hero, a mai baap called Honda to see you Otherwise, if Escorts loses or Kinetic loses Honda, it

At this rate Bajaj disappear one day, I thought. We a hard look at ourselves. Why we not fail?

Why will he not fail?

We the meaning of the word strategy.

And is strategy?

Pulsar is a complete leader in sports bikes in with 50 per cent share. Yamaha Suzuki, everyone has there. But they can’t do

In Indonesia the same products of and Yamaha are there. Pulsar is there but has only two per cent share. Products that are good products. But most of the that do not succeed are also products.

That was when I the importance of marketing.

And pray, is marketing?

It is all about the first-mover I was an engineer. I thought if I made a product, it would sell. If had a bike that gave 80 km to a and I made one that gave 87, it sell.

But in reality no one comes to buy it. This I did not earlier.

He might not have it, but was doing some of it anyway. The was a power bike at a time was making mileage bikes. It had a engine, an 18-litre fuel and delivered 12 BHP of peak power at a when the norm was 100cc, tank, and 7 BHP.

In the last years, Bajaj Auto has at least 10 different models of the Discover and Boxer motorcycles, and of its Each had to go through the test of new realisations: Is it differentiated? Specialised? Sharp?

Is it just better, or different? If the answer to all the questions is Bajaj knows he is on track to a market and not merely serve an one.If you are trying to ape someone, you only endorse that Every time I made a bike like Hero, said Hero was right Bajaj was doing the same

A lot of the new market was created outside in Africa, South America and America. Bajaj had been exports for many years and 2006/07 with Rs1,690 in international sales, which was 20 per cent of the group turnover. In it poached Rakesh Sharma, who was in Lumpur heading British ICI’s Asean business, and a structured approach to exports. then the international business has than trebled, says

It is now worth over Rs6,500 a third of the group’s turnover.

As the were made, so were the Bajaj has stayed away scooterettes, mopeds, light vehicles (which it considered at one time) and has refused to make a Pulsar. But the biggest of all sacrifices was the which the company stopped in early 2010.

That many. Bajaj’s grandfather Nayan had brought the scooter to and father Rahul nurtured it for The father has still not reconciled to the and calls Rajiv a nalayak for it.

Bajaj Eliminator

But the son is not to be

One of the very few gyans I like out of a business school is what Porter said, ‘the of strategy in any organisation is best by what it decides not to do’. So someone says I do not play any except this, it inspires the that he must be a champion in sport. That is where starts.

Rajiv believes the perception of being a specialist in comes when he tells he does not want to make The belief is so strong that he is not by Honda Motorcycles Scooters overtaking Bajaj Auto to the second largest twowheeler in India.

I don’t care if — Honda, Yamaha, TVS — everyone overtakes me in Tomorrow if TVS decides to make and cheaper mopeds, it might me one day. What matters to me is the on motorcycles. Honda should not Bajaj in motorcycles.

Nobody We have the hope, or the desire, to the largest motorcycle company. In we are still number two, is only half our size.

But how he get to No.1? True, he is number one in selling about 100,000 overseas every month, eight times what does. But in India Hero is than twice Bajaj’s selling over 450,000 a to Bajaj’s 200,000 or so. Somewhere we to take away 100,000

If we gain 100,000 and they 100,000 and with a little from Honda on the side, we can Hero’s leadership in motorcycles. will be our attempt through the Six models of the Discover are being this year, with capacities ranging from 100 to

But didn’t he at one point say that the was a … segment and Bajaj was taking its game elsewhere? For all his of strategy, did he misread the market and is now amends?

Rajiv remembers the day he that statement — 20, 2007 — but says it was not how it in media reporting. I said was a 100cc market with a leader: Hero. So for us the 100cc was I would rather work on different. We did not want to make another 100cc bike.

I have seen the kind of Suzuki, Yamaha and Honda done. It is pedestrian. Mathematically we are a 100cc bike, but it is like a bike, giving 10.2 BHP of four valves, twin and five gears.

These are not always easy to communicate in a conference.

It is also a time Bajaj Auto can afford to on the volume segment. It is the dominant in three-wheelers with 42 per cent of the domestic market and 57 per cent of Its spare parts business is to touch Rs1,500 crore in at 30 per cent operating margin, Rs500 crore to the bottom The Pulsar is the clear leader in bikes.

And the company is by far the largest of motorcycles. All these are money and have grown Bajaj share price two and a half in the last four years. The profit margin is about Hero’s (see Peerless in

And the RE60 is ready to roll.

We fixed everything else, Bajaj. Now we can put the larger part of the behind the one segment we did not have the to address so far. Someone say better late than some will say we left it too

Time will tell.

we created the Pulsar in 2001, it was a risk. But we knew what we doing. We could sense was lacking in the market: Abraham RD whiz Photo: Rachit


Abraham RD whiz

Bajaj had tied up Kawasaki in 1984. But those were not very successful. We not able to harness the full of the tie-up. We earned a poor in the market due to quality issues, manufacturing to service.

Yamaha for performance and Hero Honda for economy; we stood for nothing.

Not an equity partner that the technology, such as Honda for gave us the opportunity to learn. we got was technical drawings from The process, the why and the how, and the manufacturing not transferred completely from

We made mistakes, but we learned.

Hero will not know why do something, they will know how. As long as are making the same products will be fine. The day they out to do something different, it would around and bite them.

will be no one to answer their

When we created the Pulsar in it was a contradiction to a typical 100cc It was the result of a discussion in which the MD let’s do the opposite of what stands for.

It was considered a We had consultants who analysed the business and Kawasaki had a 175cc engine of the that was licensed for production. Why are you in a new platform of engine, they

It was expensive technology.

People who saw it on said the bike looked too Some agencies who did the market said the size of the tank be reduced. But we knew what we doing. We were avid ourselves. The MD rode a M900 I had a Yamaha RX100.

We could what was lacking in the market.

The was the last bike we made Kawasaki technology. It came in Today it goes by the name of and uses an engine derived the Pulsar.

Digital Twin Ignition (DTSI) is the technology we to fight the stigma performance suffer from: poor economy. Two spark plugs are in big cars, which have cylinders and big bores. We put two spark in a motorcycle cylinder.

DTSI 15 per cent more fuel and 12 per cent more power.

We a patent on DTSI, but the more thing is that in the minds of the DTSI is Pulsar and Bajaj. If does it, it would only us.

Bajaj Auto’s Chakan


The well of Indian manufacturing groaned in when a strike broke out on 25 at Bajaj Auto’s Chakan near Pune. It would make the slowdown worse. But had not reckoned with Rajiv

Bajaj was convinced that the workers already had a good going. They got annual and a good jump every and a half years. Their for shares at a heavily discounted was just not acceptable to a company does not give shares to senior management.

After 40 Bajaj took the unusual of giving the workers a week to end the Else, he would shift of the production out of Chakan to his other in Aurangabad and Pant Nagar. The ended a day after the deadline.

leaders tried to save with the pretexts of the slowdown and the season.

The strike was withdrawn After a few days of the strike, we to produce about 1,900 at Chakan and 1,200 to 1,300 in So there was no real loss in says S. Ravikumar, Head of Development.

I think everyone has that when Rajiv something, there is a high he would go ahead and do it.

We have nothing from Hero to us worry about them. I am concerned about the Chinese: Sharma


Bajaj had into exports for many We closed 2006/07 with Rs crore in international sales, was 18 to 19 per cent of the group turnover. Its to the bottom line was less that.

Since then the business has more than We are now in 25 countries and almost 90 per cent of our business is in countries where we are No.1 or 2. The international business is over Rs 6,500 crore, a of the group’s turnover. We have an to go to 50 per cent of the group’s top line and line, and clock Rs 10,000 in turnover.

Rajiv [Bajaj] had an entrepreneurial play in Nigeria, the market in Africa. We were money there initially, but to take on the Chinese. In early Chinese motorcycles got banned in 300 towns in their home overnight. All the local manufacturers and there were many rushed overseas at marginal pricing.

This coincided economic and political stability into many African like Nigeria, Kenya and and some countries in Latin Public transport in those is woeful. We could not compete the Chinese on price alone, but a of improving purchasing power and desire for a better product our proposition more attractive.

Our that we can become the leader in a with low purchasing power was in Nigeria. In 2005/06 we sold at 20 per premium to the Chinese in Nigeria.

We had come in and made losses on motorcycle sold. Today our to the Chinese is almost 50 per cent and we over 40 per cent of the market in Even Honda, which Nigeria two years ago with a motorcycle, is priced seven to per cent lower than us. The is our main model in Africa. It has a lot.

The African market is entirely moto-taxis. The Pulsar is the model across Latin outside Brazil. Two years passed since Hero its international plans.

We have not much from them to us worry. The Chinese are still 50 per of the markets we address. I am more about how to annihilate them.

are better now; five ago the Chinese had 80 per cent of the market.

by Jyotindra Dubey

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