RC Bhargava stood first in the civil services examination of 1956. But that’s not the only reason his fellow bureaucrats look up to him; he has become a model for all those who want to make a smooth transition to the corporate world. Having joined Maruti Udyog in 1981, he became its second managing director in 1985 (V Krishnamurthy was the first), was appointed the chairman & managing director in 1990, and held the post till 1997.
Last year, he came back to the company as its chairman. He is the man who has been with the company from inception till now, but for a gap of a few years in between, and therefore in a good position to recapture the story of the company whose first car, still being driven by one Harpal Singh, will complete 25 years this December. Danny Goodman caught up with Bhargava to do just that. Edited excerpts:
Why was Suzuki chosen as Maruti’s partner?
In the early eighties, the government had already zeroed in on Volkswagen to partner with Maruti in India and VW Golf was the chosen small car for India. But we knew Golf was pricey for the Indian market. They even came close to picking an 1800cc car of Renault. These were decisions taken without conducting market research. We asked for more time and went first to Europe and then to Japan scouting for partners. In Japan we had talks with Nissan, Mitsubishi, Daihatsu and lastly with Suzuki. None of these companies was willing to bring 40 per cent equity into India.
For them it was a risky business. Only Suzuki was willing to bring in 26 per cent equity with an option to raise it to 40 per cent. And Suzuki’s 550 cc Fronte was the winner. Which became the precursor to the Maruti 800.
How did you manufacture the early Maruti models?
Before we could manufacture cars we had to learn lessons in shop floor cleanliness. We were ready to assemble cars in October 1983. But the Suzuki engineers said “no”. The director of production, A Shinohara, said the shop floor was dirty and had to be cleaned.
He picked up a bucket of water and a mop and started cleaning the factory floor himself. All of us followed. For a whole week, all that we did in the factory was clean the floors.
How did you source components?
The early Maruti 800 cars had an import content of almost 97 per cent. Only 3 per cent was sourced locally and these were the tyres and the batteries. Even though it did not fit the bill, we took the batteries manufactured domestically.
With localisation targets of up to 93 per cent within five years of our operations, the need arose to develop vendors from the scratch. It was a challenge those days to attract entrepreneurs with no experience in auto component manufacturing to invest in tooling, machinery and in new technologies. To boost their confidence we gave them land on rent at our own complex and supplied them electricity from our captive power station.
We concluded joint ventures with some of them like Sona Koyo. Suzuki’s engineers helped the new manufacturers with automation and concepts like just-in-time manufacturing. Best of all we guaranteed them profits. Suzuki hadn’t done anything like that before.
After a dream run for almost a decade when Maruti 800 was about to be phased out, it is said that you opposed it?
Sometime in 1992, when Zen was introduced, some people in Suzuki wanted the Maruti 800 to be phased out. I reasoned that both 800 and Zen had their respective places. You can’t replace one with the other. Mr Suzuki (the founder of the company) agreed with me and thus the production of Maruti 800 has continued so far.
Did you face political pressures in running the company?
There was no interference. As long as Mrs Gandhi was there nobody dared to interfere. Sure the first batch of Maruti cars was released on the birth anniversary of Sanjay Gandhi, that’s December 14, 1983, by Mrs Gandhi herself. Arun Nehru, a cousin of Mrs Gandhi’s, who was then the managing director of Jenson & Nicholson, was brought in to help us. He facilitated things in the government.
Were there doubts in your mind when you decided to join Maruti Udyog in 1981?
Between 1979 and 1981, I was the director of commercial operations in BHEL (Bharat Heavy Electrical Ltd, a state-owned manufacturer of capital goods and machinery), and Krishnamoorthy was the chairman. People advised me against joining Maruti since it was perceived as a highly political project that had no future. I was sent on deputation to Maruti for three years. But I chose to remain there, giving up IAS. Both of us were determined to make Maruti Udyog a success. There are no regrets.
