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Rediff.com  » Business » Bajaj Auto completes restructuring

Bajaj Auto completes restructuring

July 06, 2007 11:43 IST
Bajaj Auto, the country's second largest two-wheeler maker, on Friday announced the company's new structure with five broad strategic units under different heads but remained silent on which unit would chart the route to its much-anticipated four-wheeler.

"The company will not comment on the new four-wheeler with regard to the restructuring initiative," said executive-director Sanjiv Bajaj.

On May 17, Bajaj Auto announced a three-way split with three separate companies looking after automobile, finance and new businesses. Two new ones, Bajaj Holdings and Investment and Bajaj Finserv, have been created. The two-wheeler businesses will be transferred to Bajaj Holdings, which will be renamed Bajaj Auto.

Under the plan unveiled today, the company will appoint three chief executive officers for the three units while the other two will be run under their existing heads.

S Sridhar, vice-president, marketing and sales (two-wheelers), has been promoted as the CEO of the two-wheeler business unit while R C Maheshwari has joined the company as the CEO of the commercial vehicles unit.

Vice-president (engineering) Pradeep Srivastava will head the engineering unit as its president while Abraham Joseph will continue to head research and development. The company has launched a hunt for the CEO of the international business unit. The transition will be completed by August 1.

According to the group, the restructuring will have no bearing on Rajiv Bajaj, the managing director of Bajaj Auto, or his brother Sanjiv. "The new CEOs will directly report to Rajiv Bajaj," said Rahul Bajaj, chairman, Bajaj Auto.

Said Rajiv Bajaj: "The objective is to transit from the relatively narrow functional definitions to more integrated and cross-functional working with clear focus on business results and brand values."

Of the five segments, the two wheeler, commercial vehicles and international business segments will be the special business units (SBU) and will have separate revenue structures. Each of the newly appointed CEOs will be responsible for top line, business growth and profitability in their respective business units.

The company will go for nation-wide commercial production, three years after it unveils the prototype of the car at the 2008 Auto Expo. The company has earmarked Rs 750 crore (Rs 7.50 billion) for the four-wheeler production plant to manufacture 40,000 to 50,000 vehicles annually.

For the last financial year, the company generated revenues of Rs 7,869.9 crore (Rs 78.69 billion) from its two-wheeler business while the three-wheeler category accounted for Rs 2,227.8 crore (Rs 22.27 billion).

Total income from exports for the company stood at Rs 1,690 crore (Rs 16.90 billion). The company has assembly operations in many countries, including Nigeria, and a new one is expected to come up in Indonesia.

BAL's net profit for the full year ended March 31, 2007, stood at Rs 1,237.10 crore (Rs 12.37 billion), recording a growth of 10.13 per cent against Rs 1,123.27 crore (Rs 11.23 billion) posted during the same period last year.

Rising input costs, among others, hampered the sales growth of the company during the last quarter, resulting in a net profit drop of 11 per cent at Rs 308.31 crore (Rs 3.08 billion) against Rs 346.97 crore (Rs 3.47 billion) reported during the corresponding quarter of the previous year.

BS Reporter in Mumbai/Pune
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