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Bajaj Tempo to carve out new divisions

V Phani Kumar

Bajaj Tempo, the Abhay Firodia-controlled diversified auto manufacturer, has decided to create divisions out of existing businesses to impart greater focus and accountability. It has now kicked off the implementation of this programme.

The Pune-based company, which manufactures three-wheelers, multi-utility vehicles, tractors and light commercial vehicles, is planning to improve its efficiency, in view of the "evolution of the domestic industry".

The "divisionalisation" programme of the company has been recommended by consultancy and audit firm PricewaterhouseCoopers.

Abhay Firodia, chairman & managing director, Bajaj Tempo, said: "PricewaterhouseCoopers has completed its initial study, and now the implementation process has begun. The purpose of the divisionalisation is to increase the synergies between our divisions, while improving accountability."

"The reorganisation of our businesses is expected to be completed in about 3-6 months. Although it will improve our efficiency, it is difficult to estimate the savings that are likely to accrue on account of the divisionalisation," he added.

Firodia, however, denied the possibility of spinning off any of the divisions into separate companies, reasoning that all the company's businesses were part of the automotive industry.

Bajaj Tempo is also planning to re-align the functional hierarchy in the company, wherein all major operational areas - marketing, purchase, R&D - will have only one divisional head, to whom the heads of the respective business units will report.

The company, which currently does not enjoy leadership in any of the segments in which it has a presence, is planning to steadily improve its marketshare following the completion of the restructuring. It is also planning a vendor rationalisation programme.

During 2000-01, Bajaj Tempo had registered losses of Rs 173.5 million on a turnover of Rs 6.150 billion, largely due to closure of its Akurdi plant for a month and a heavy provisioning towards depreciation, in addition to poor market demand.

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