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Hamara Bajaj

During the early 1970s, when a young Rahul Bajaj, chairman and managing director of Bajaj Auto, was summoned to New Delhi by the then Monopolies and Restrictive Trade Practices (MRTP) Commission for the "crime" of producing more scooters than the number allocated by the industrial licence, an angry Bajaj was ready with his defence.

During the hearing, when competitor M A Chidambaram, the maker of the Lambretta brand of scooters, bragged that Bajaj's scooters were lighter by 6 kg than his company's scooters, the 35-year-old Bajaj hit back, saying Lambretta was worth 100 kg of silver while Bajaj scooters were worth 94 kg of gold. The hearing was a major success and went in favour of Bajaj, who was not accompanied by any lawyers.

Since then, over the last four decades, Bajaj - who became chairman and managing director of Bajaj Auto in 1972 - has become a legend of sorts. He is known in corporate circles as the man who does not mince words when it comes to any matter of national interest or echoing corporate India's woes.

On his watch, the Bajaj group expanded into home appliances, electric lamps, wind energy, special alloy and stainless steel, cranes, forgings, infrastructure development, travel and finance.

In the seventies, the Indian two-wheeler market was dominated by a few players: Escorts' Rajdoot, Ideal Jawa, Enfield, Lambretta and, of course, Bajaj Auto. This was also a time when a scooter or a motorcycle had a mind-boggling 10-year waiting period that led to a huge black market for automobiles in India.

However, in spite of the crippling licence raj, Bajaj was clear from early on that in order to survive, the company had to provide value-for-money products as compared to the competition.

In an earlier interview with Business Standard, Bajaj had said the licence raj was a difficult period for Indian companies and, from the viewpoint of India's industrial growth, was disastrous for the country. "We used to spend our time in the corridors of Udyog Bhawan instead of the factory, and became friends with many in the Directorate General of Technical Development. This was a time when it was not easy to get an industrial licence, as political equations took precedence over merit," he said.

Bajaj Auto, for instance, was pipped to the post in 1958 for the first industrial licence to make scooters and three-wheelers by Chennai-based M A Chidambaram. This was due to the then industry minister, T T Krishnamachari, who nudged Chidambaram - a dealer of Bajaj's imported vehicles at that time - to tie up with the Italian manufacturer of Lambretta scooters.

Bajaj Auto had made an application for collaboration with Piaggio, the manufacturer of Vespa. The company was soon told that Chidambaram had been given the licence and there was no more capacity available. Bajaj had to wait two years for its turn to increase production.

"We faced competition head-on and I focused on three things: cost, quality and volumes. Others failed to do so and they could not compete with us on quality or price," Bajaj said. The success of his strategy can be gauged from the fact that barring Bajaj, not a single scooter brand of the sixties or seventies survived the onslaught of the Indo-Japanese ventures.

As Bajaj Auto's profile increased, Bajaj - an alumnus of Harvard Business School's class of 1964 - was asked by the Congress government in 1986 to head Indian Airlines to help turn around the airline.

Bajaj had strongly protested against the licence raj in the 1980s and was an advocate for liberalisation. Ironically, he became infamous due to the 'Bombay Club'. In 1991, the then finance minister, Manmohan Singh, decided to open up the economy and invite investments from foreign companies. In 1993, a few Indian industrialists led by Rahul Bajaj made a representation to the finance minister for a level-playing field for local companies.

Indian industrialists said that most multinational companies were ahead of Indian businesses in the early 1990s in terms of production efficiency, technology, marketing skills and financial muscle. Local companies asked for a level-playing field with these MNCs, which hadn't been handicapped by rigid labour laws, high interest rates and poor infrastructure.

Soon after the representation was made, the finance ministry asked Indian businessman to keep quiet, but it was Bajaj who went public and was immediately labelled as the head of the Bombay Club of industrialists who were opposing the liberalisation of the economy. Bajaj says the so-called club never sought protection but only asked for a level-playing field.

As the economy was opening up, the Indian government asked Bajaj to join the Rajya Sabha and he soon came to be known as the voice of corporate India in Parliament and outside.

With liberalisation, competition increased and the sales of Bajaj's scooters started declining. Bajaj immediately tied up with Kawasaki of Japan for technical collaboration to make fuel-efficient motorcycles. By 2001, Bajaj Auto was in a crisis of sorts, with sales and profits touching new lows.

This was also the year when a storm of a different kind was brewing over the Bajaj group. Rahul Bajaj's younger brother Shishir Bajaj asked for ownership and control of the two Bajaj companies he managed: Bajaj Hindusthan and Bajaj Consumer Care. Rahul Bajaj, a former boxing champion of Cathedral and John Connon School, Mumbai, was shocked by the request for a division of family assets, but soon recovered.

By 2008, the shares of the two companies were transferred to Shishir and his son Kushagra in lieu of Shishir transferring his shares in Bajaj Auto to the Rahul Bajaj family.

In 2005, Bajaj also decided to hand over the reins of Bajaj Auto to older son Rajiv, who had joined the company in 1990. Bajaj's younger son Sanjiv, meanwhile, forayed into financial services. In 2007, Bajaj Auto's finance division was hived off and Sanjiv was made MD & CEO of Bajaj Auto Finance.

Under Rajiv - despite Rahul Bajaj's disagreement - Bajaj Auto stopped producing scooters to focus only on motorcycles, and was soon rewarded by the stock market and customers alike. Sales of bikes shot up, as did the company's share price.

Soon after the demerger, an energised Bajaj Auto started exploring external markets. It now exports 30 per cent of its motorcycles and 60 per cent of its three-wheelers. Bajaj Auto is one of the world's leading two-wheeler companies today, and a lot of the credit goes to the one-man army that fought hard and won at the MRTP Commission in the 1970s.

BA, Economics from St Stephen's, Delhi
LLB from Government Law College, Mumbai
Finished MBA from Harvard Business School
Joins Bajaj Auto
Becomes CEO, Bajaj Auto
Takes over as CMD of Bajaj Auto
Joins Indian Airlines as Chairman
Becomes Member of Rajya Sabha
Son Rajiv Bajaj takes over as MD & CEO of Bajaj Auto
Bajaj Auto demerges finance division; Sanjiv Bajaj takes over as CEO of Bajaj Finserv.