Symbol of the new India: Excerpts from “Rahul Bajaj: An Extraordinary Life” by Gita Piramal
What were the challenges Rahul Bajaj faced when he took over the chairmanship of the Bajaj Group and how did he overcome them, writes Gita Piramal in these excerpts from his book
What were the challenges Rahul Bajaj faced when he took over the chairmanship of the Bajaj Group and how did he overcome them, writes Gita Piramal in these excerpts from his book Rahul Bajaj: An Extraordinary Life
Looking back, the 1970s were probably my toughest decade,” Bajaj says. The death of his father on May 1, 1972 hit hard.
“My dad didn’t just act on his instincts,” Bajaj stoically recalls those times. “He would apply his intelligence rationally and objectively to every problem, but with a touch of humanism. He had great confidence in his analytical skills. He believed in God, but his logical way of thinking assured him that he never sought the refuge of fate. He used to say that those who rely on fate don’t get much; everything we acquire is only possible through a scientific and objective approach.
“Kakaji founded and developed our business building almost from scratch,” says Bajaj. “He never got involved or spent time in the details of day-to-day operations, but he had a great understanding of business. If the need arose, he could provide such insightful ideas and solutions that none of us could have ever thought of. It is thanks to such contributions that the Bajaj Group has been able to reach such heights in such a short time.
“True to his nature, he was never bothered by success or failure,” continues Bajaj. “He only believed in action. He believed that a person should do his best to accomplish a task that had been undertaken, no matter how difficult it was. He felt that the line between success and failure is very thin. Bajaj adopted his father’s credo.
Bajaj Auto’s Board of Directors, consisting of Madanmohan Ruia, Viren Shah, Manmohan Lal Gauba, DS Mulla, Rishabdas Ranka and Ramkrishna Bajaj, appointed Bajaj Chairman. He was thirty-four years old. And he had a tough road ahead of him: the Indian economy was collapsing, the management agency system was heading towards its demise, business had to be done differently.
Facing the future
“Catch-up industrialization began in the early 1970s, recalls Deepak Nayyar, economist and academic, but it did not go far. Restrictive policies claimed they were there to protect and grow the market, but Bajaj felt hemmed in from all sides.
“I met Rahul bhai for the first time at home,” Bakul Patel remarked then. “He had come to see my husband, Rajni Patel, who was a close aide and adviser to Indira Gandhi, then Prime Minister of India. It was around 1974-1975. Rajni was chairman of the Bombay Pradesh Congress Committee. Rahul bhai came in a “delegation” with a young Sharad Pawar, then an up-and-coming politician, and Ajit Gulabchand, a scion of a prominent Maharashtra industrialist family and a budding industrialist.
“They had come to discuss a matter regarding an industrial policy issue in Maharashtra,” Patel continued. ‘It was the era of the license raj, and
perhaps they sought Rajni’s help and advocacy in presenting their case to the then Minister of Industry for redress of their troubles. As I listened to their presentation, I was struck by Rahul bhai’s power of persuasion in getting their point across. Clearly, with his good looks, confident personality and ease with words, Rahul bhai came across as the most articulate and poised spokesperson for the ‘delegation’. This demonstration of leadership qualities and advocacy power has remained etched in my memory.
For Bajaj and Bajaj Auto, the oil crisis triggered by a war in the Middle East waged by Egypt and Syria against Israel was a blow. Bajaj’s scooters ran on gasoline. He listened to the radio as oil prices quadrupled from $3 to $12. In the evenings, he watched the grainy black-and-white television signals of Air Doordarshan, relayed from the Bombay television station to Poona and launched on Gandhi Jayanti on October 2, 1973.
The oil crisis led to double-digit inflation in India as well as a global recession. “In the mid to late 1970s, India was left behind by China,” Bajaj told Datar. “China’s GDP, in the 1970s I believe, was about the same as India’s. But under Deng Xiaoping, China decollectivized agriculture, opened up to foreign investment and allowed entrepreneurs to set up businesses. India’s economic growth rate averaged around 3.5% per year. The year 1980 was a revelation: according to World Bank data, 1980 saw India’s real GDP growth drop to minus 5%.
Corruption was endemic. The State Trading Corporation, a public sector company, for example, in the 1970s, made money in some pretty weird ways. “Foreign diplomats stationed in New Delhi could import cars through the company,” describes economic historian Tirthankar Roy, “cars that would be sold second-hand to Indians. The business was very profitable for all concerned. Diplomats got the cars they wanted, the state got tariffs of 200-300% and given the boring design and inefficiency of Indian cars, used cars sold at a price above the original price, the benefits of which the company pocketed. .’
“Piaggio and we wanted to renew the agreement for at least five years,” recalls Bajaj, but arrived was not an option. “In the 1970s, the government of Indira Gandhi did not renew a single collaboration agreement in the automotive industry, as in many other industries. We have known a period of extreme socialism.
The license-permit raj did not mean that there was no competition. In the 1970s there were half a dozen motorcycle manufacturers with Ideal Java, Enfield and Rajdoot in the lead. The Lambretta continued to lag in the scooter category. The technologically autonomous scooter and moped segments enabled two new entrants in the scooter segment and three in the moped segment.
The Foreign Exchange Regulation Act (FERA), introduced on January 1, 1974, had a more widespread effect. The law was formulated to regulate foreign exchange and impose strict regulations on certain types of payments, foreign exchange and securities transactions, and transactions that indirectly impact foreign exchange and the import and export of foreign currency. The restrictions caused technological stagnation, following which few new products or companies entered the market since this segment relied almost entirely on foreign collaborations for technology.
During the currency rush in the mid-1970s, the Indira Gandhi administration introduced a system of priority allocation of scooters against a currency transfer equivalent to Rs 5,000 per scooter. Under this scheme, 18,200 “bajaj 150” scooters were launched up to March 31, 1975, “thus enabling the country to earn foreign exchange of more than Rs 9 crore”, Bajaj wrote to shareholders with some satisfaction. The following year, the government reserved 24,000 “bajaj 150” scooters to be released under this program. “This will result in an additional contribution by the company to foreign exchange earnings of Rs 12 crore,” he added. etc. . .
Development Finance Czars
“I first met Rahul bhai at the Akurdi factory in the late 1970s, where I had gone to assess a loan proposal. He may not remember it,” described Kundapur Vaman Kamath. “I saw a smart, quick-witted, quick-witted and easy-to-engage young business leader. As a young ICICI officer in the 1970s, I looked up to Bajaj Auto as a symbol of the new India. I I was impressed with the company’s can-do attitude that produced a scooter so desirable to the Indian public that it had a waiting list of a few years.
The concept of finance and development planning as an ideology arrived in India.
Extract of Rahul Bajaj: An Extraordinary Life by Gita Piramal, courtesy of Penguin Random House
Rahul Bajaj: An Extraordinary Life
Random penguin house
Pp 288, Rs 799