Smart car at smart price, says Bajaj Auto

Bajaj Auto Ltd Managing Director, Mr Rajiv Bajaj, has reiterated the company’s foray into the passenger car segment with a vociferous assertion of being in the race, adding that it would come out with a “smart car at a smart price”.

“India cannot move forward when manufacturers put underpowered vehicles on the road,” he told shareholders referring to the 20HP passenger vehicle unveiled recently by Tata Motors. “We are in the race,” he said.

The flip side of putting up a plant to produce a million vehicles with an investment of Rs 150 crore (at Pantnagar) was that cash was not an entry barrier in the business. “Cars require investment of thousands of crores, are a challenge and create an entry barrier,” he pointed out, adding that this was the underlying reason for the recent restructuring of the company into five business units.

In reply to a shareholder’s query at the AGM about why manufacturing operations at Akurdi were not being shut down, Mr Rajiv acknowledged, “Indeed we would like to shut it down.” Production here had dropped from 4.5 lakh vehicles annually two years ago to around 50,000 today with 2,200 workers, while at there are 500 workers at Pantnagar. I understand an industry shutdown is not so easy. It has to be sick before it can be shut down,” he quipped.

Later, speaking to reporters, the Chairman, Mr Rahul Bajaj, played down the observations. “Our vendors have invested Rs 850 crore in the Pantnagar vendor park. Entry barrier is low, yes, when you have those vendors putting money for you. What he (Rajiv) was saying is that the ancillary industry is ready.”

He also ruled out the shutting down of the Akurdi plant with a categoric “No plant is closing”. Conceding that it was cost-effective to make vehicles in the more efficient plants at Pantnagar and Chakan, Mr Rahul Bajaj said that Akurdi could be closed down if the workers opted for the VRS that the company had offered on various occasions. “But nobody is taking it.” Referring to the production of the new motorcycle, he said that it would initially be produced at Waluj and be shifted to Pantnagar around December after stocks were built up. “The Platina from Pantnagar will gradually shift to Waluj.”