Getting classified as India’s best traded stocks is always the ultimate incentive to be in the Sensex. Concurrently, when a stock drops out of the Sensex, very few have the wherewithal to make it back. B&E commentates on those few which did claw their way back..
The growth of the equity market in India has been phenomenal over the past two decades. In fact, right from early 90s, the stock market has witnessed heightened activity in terms of various bull and bear runs. While in the 90s, the Indian market witnessed a huge frenzy in the steel sector, it’s real estate that has caught the fancy of the investors recently. And not just sectors, stocks too have fared on the whims and fancies of the so-called investors. Result: Only a few could survive the test of time, and the rest went into oblivion. Interestingly, there were also those who made a comeback from the grave. Blame it on the strategic outmanoeuvres or the sheer investor sentiment for their dismissal, but one thing is sure – they fought hard to regain their seat among the 30 bellwether stocks that constitute the Sensex.
It was 2006, when Bajaj mysteriously decided to ignore the entry-level motorcycle segment and started focusing on the premium segment to grab higher margins. But the new strategy fell flat on its face. Not only did the move open gates for its arch rival Hero Honda to take a seemingly unassailable and massive lead, it also dampened the investor sentiment. Subsequently, a company which had once narrowed down the difference in monthly unit sales between itself and Hero Honda to a mere 30,000 units (in May 2006), was forced to remain content with just the low-hanging fruits. In fact, as of January 2009 the difference was 244,334 units. In the process, Bajaj had lost (on March 14, 2008) its prestigious tag of being a constituent of Sensex. In the past when we have met Rajiv Bajaj, MD, Bajaj Auto, he had accepted this strategic mistake, “The biggest mistake we made was that we didn’t focus on the 100cc segment. And since most of the volumes come from that segment, we lost market share to Hero Honda.”
2009 thus turned out to be quite an eventful year (and also a remarkable one) for Bajaj Auto. To start with, Bajaj once again surprised itself and the industry by making a comeback into the entry-level segment with the launch of of the 100cc variant of Discover. The company followed this up by announcing its exit from the scooters segment and its decision to drop the parent brand from its product portfolio. The last two decisions once again set tongues wagging in the industry and caught many offguard. But by the end of FY2010-11, Bajaj Auto was standing tall and even the critics were offering its light-spirited, yoga-loving MD grudging admiration. The company reported a revenue of Rs.170 billion last fiscal and its net profit soared to Rs.36 billion at a whopping growth rate of 41%. Even the company’s bike sales crossed 3.3 million units in the last fiscal, showing a stellar growth of 35%. All this at a time when input costs were hardening and inflation picking up. Well, there was yet another reason to cheer about. The company had made a re-entry into the BSE Sensex (on December 6, 2010).
It was 2006, when Bajaj mysteriously decided to ignore the entry-level motorcycle segment and started focusing on the premium segment to grab higher margins. But the new strategy fell flat on its face. Not only did the move open gates for its arch rival Hero Honda to take a seemingly unassailable and massive lead, it also dampened the investor sentiment. Subsequently, a company which had once narrowed down the difference in monthly unit sales between itself and Hero Honda to a mere 30,000 units (in May 2006), was forced to remain content with just the low-hanging fruits. In fact, as of January 2009 the difference was 244,334 units. In the process, Bajaj had lost (on March 14, 2008) its prestigious tag of being a constituent of Sensex. In the past when we have met Rajiv Bajaj, MD, Bajaj Auto, he had accepted this strategic mistake, “The biggest mistake we made was that we didn’t focus on the 100cc segment. And since most of the volumes come from that segment, we lost market share to Hero Honda.”
2009 thus turned out to be quite an eventful year (and also a remarkable one) for Bajaj Auto. To start with, Bajaj once again surprised itself and the industry by making a comeback into the entry-level segment with the launch of of the 100cc variant of Discover. The company followed this up by announcing its exit from the scooters segment and its decision to drop the parent brand from its product portfolio. The last two decisions once again set tongues wagging in the industry and caught many offguard. But by the end of FY2010-11, Bajaj Auto was standing tall and even the critics were offering its light-spirited, yoga-loving MD grudging admiration. The company reported a revenue of Rs.170 billion last fiscal and its net profit soared to Rs.36 billion at a whopping growth rate of 41%. Even the company’s bike sales crossed 3.3 million units in the last fiscal, showing a stellar growth of 35%. All this at a time when input costs were hardening and inflation picking up. Well, there was yet another reason to cheer about. The company had made a re-entry into the BSE Sensex (on December 6, 2010).
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
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Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
