Bajaj, Honda In Verbal Non-Poaching Pact

Bajaj Auto and Honda Motorcycles & Scooters India (HMSI) have, in a rare gesture of corporate camaraderie, entered into a verbal agreement not to poach each others' employees and dealerships.

Further, the two companies have also started sourcing components from each others' suppliers, in spite of their professional rivalry in the two-wheeler market.

Confirming this, Rajiv Bajaj, president of Bajaj Auto told Business Standard, "There is a gentleman's understanding between HMSI and us that we will not recruit from each other, or poach each others' dealerships. We have, however, exchanged one dealership with mutual consent. We had a meeting with senior executives from HMSI, wherein we decided to rival basing on our competencies. We do not want to grab each others' people and dealers and create chaos in the market place."

This is probably the first time that two companies competing with each other in the same market sphere have decided against creating bad blood by poaching each others' resources.

For example, the same verbal agreement escapes Hero Honda Motors, the joint venture between Honda Motors and the Munjals' Hero group.

While Bajaj Auto is the largest two and three wheeler player in the country, HMSI, which recently launched its first product -- the Activa -- is a wholly owned subsidiary of the Japanese auto giant, Honda Motors.

What's more, the two companies seem to be open to, and have started sourcing components from each others' suppliers, forsaking their professional rivalry and reaching for new heights of corporate goodwill.

"We have gained in technology by going to Honda suppliers, and they have gained through low costs by coming to our suppliers. We do not believe in artificial constraints," Bajaj added.

The Gurgaon-based HMSI is currently in the process of establishing its dealership network in the country.

The company is planning to set up 54 dealerships across 43 cities by mid-August this year. On the other hand, Bajaj Auto has over 400 dealerships in the country so far.