Driving an industry

R C Bhargava's latest book is a step-by-step recounting of the Maruti story, but its real value lies in the many lessons that the story holds both for policymakers as well as manufacturers

Impossible to Possible: Maruti’s Incredible Success and How It Can Change India

Author: R C Bhargava

Publisher: Bloomsbury

Pages: 201

Price: Rs 799

Three men can be said to have taken the erstwhile Maruti Udyog Ltd — now renamed Maruti Suzuki India Ltd, after change of ownership — to its pre-eminent position as the leader of the Indian automobile industry with an over 40 per cent market share even today when a dozen other passenger vehicle manufacturers are fighting for a slice of the Indian consumer’s wallet. This trio consists of  the late V Krishnamurthy, founder-chairman of Maruti Udyog, Osamu Suzuki, currently chairman of Suzuki Motor Car Co, and R C Bhargava, who joined the just born company as director-marketing, went on to become the managing director and retired and then rejoined the board as chairman, a position he holds to date.

Impossible to Possible is Mr Bhargava’s third book, and the second one with Maruti’s birth and growth, at its core. His first book, co-authored with business journalist Seetha, was The Maruti Story: How a Public Sector Company Put India on Wheels. His second book, Getting Competitive: A Practitioner’s Guide, too draws many lessons from his Maruti experience.

Maruti’s success was not guaranteed — in fact, the chances of it failing were quite high. Established in 1981, when the late Indira Gandhi was the prime minister, Maruti Udyog was born as a public sector company that would make cars. The late Sanjay Gandhi, younger son of Indira Gandhi, had set up a company in the 1970s to design and build a people’s car in India, called Maruti. His venture did not succeed, Indira Gandhi lost the general elections in 1977 and a court ordered the winding up of Maruti in 1978. Sanjay would die in a flying accident in 1980, also the year when Indira Gandhi returned to power.

The company that would launch the Maruti 800 and revolutionise the Indian automobile market would be incorporated in 1981, and had nothing to do with Sanjay’s defunct company except for sharing the name.

The late V Krishnamurthy, who earned the sobriquet of Father of India’s public sector undertakings (PSU), had been tapped to be the chairman of the new company. Krishnamurthy regarded Mr Bhargava highly and had earlier persuaded the latter to join BHEL, another PSU he had helmed. He again asked Mr Bhargava to join in the Maruti journey.

Mr Bhargava could have refused — he was an IAS officer and doing well. He stood a chance of reaching the top echelons of the civil services, as cabinet secretary or secretary of one of the important Union ministries, if he did not make mistakes. Joining Maruti would mean resigning from the civil services and becoming a manager of a PSU, which many saw as a step-down. But he took the gamble.

India did not have any expertise in making modern cars. The two domestic passenger car manufacturers, Hindustan Motors and Premier Padmini, were constrained by licences and produced outdated cars. With volumes restricted, they had no incentive or advantage in modernising.

Few global manufacturers wanted to collaborate with the new Indian company either. There were simply too many problems, including red tape, and low purchasing power of people. Osamu Suzuki of Suzuki took the risk of agreeing to partner Maruti. The gamble paid off richly. Suzuki was probably Japan’s smallest car manufacturer and the Indian success story would give it volumes it would otherwise not have got. After Maruti’s listing and after the government reduced its stake, Suzuki is currently the majority owner of the firm.

The step-by-step recounting of the Maruti story, the decisions taken, and the way Suzuki stepped in is interesting but the real value lies in the many lessons that the story holds both for policymakers as well as manufacturers. How it helped build the Indian auto components industry is particularly interesting and provides plenty of food for thought.

Though the possibility of failure was very high, Mr Bhargava downplays the tailwinds that helped Maruti. Despite all the red tape, Maruti got to build a work culture very different from other PSUs. It also got the permission to build 100,000 cars annually from the start — something its older rivals did not enjoy.  The economy would not open up for another decade — which protected the fledgling company from full global competition. And, finally, it was allowed to take and retain money in advance from bookings — which gave it the cash to take many of its decisions.

But the book is useful not just for the management lessons it advocates but also from a policy point of view.

Ideally, Getting Competitive and Impossible to Possible should be read together because, despite the overlaps between the two books, they give a clear picture of what has held back our manufacturing sector and what can be done to make it more competitive.

The reviewer is former editor of Business Today and Businessworld, and founder of Prosaic View, an editorial consultancy