 "Rajiv Bajaj")
During the recent 50-day strike by workers at Bajaj Auto's factory at Chakan in Maharashtra, Rahul Bajaj, the chairman of the company, received a call from activist-at-large Medha Patkar. The workers had demanded shares in the company and a revision of the wage agreement that is valid till 2019. Patkar had called to support their demands. Rahul Bajaj passed on the message to the company's managing director and his son, Rajiv Bajaj. It would have sent nine out of ten businessmen into a tizzy. But Rajiv Bajaj was made of sterner stuff: "Their demands were illogical. Which company gives shares to its workers? We don't give shares even to the management."
Instead, he threatened the workers that he would shift production from Chakan to Aurangabad (also in Maharashtra) and Pantnagar (Uttarakhand). This, he told the workers in no uncertain terms, would call for fresh recruitment at these factories and, as a result, they would have to look for other jobs, sit at home or take voluntary retirement. The workers knew they had chosen the wrong time to strike: the automobile industry was in the midst of a severe slowdown, and the Chakan belt had seen huge layoffs. So, in mid-August, they quietly called off their strike. None of their demands was met. Compare this with the labour trouble suffered by Maruti Suzuki and Honda in the Gurgaon-Manesar belt in recent years.
The 46-year-old great-grandson of Jamnalal Bajaj is the odd-man-out in Indian business. He talks tough (as witnessed during the strike), is articulate but can be blunt - even undiplomatic at times -, doesn't shy away from a fight (more on that later), is radical in his views (he exited Bajaj Auto's bread-and-butter business of scooters) and is very successful (he runs the most profitable two-wheeler company and the second most valuable automobile maker in the country after Tata Motors). (No Words Minced)
Till some time back, he would play football regularly with the company's workers; then an injury happened and he had to stop. Now, he does yoga every morning. He is also known to devour books on Indian medicine and homoeopathy. His interest in homoeopathy was ignited by Mukesh Batra, his friend of over eight years, who runs a chain of clinics across the country. His other friends include Mahendra Singh Dhoni, who gives him regular advice on motorbikes, and Shah Rukh Khan. (Their friendship was a closely-guarded secret; then, last October, SRK tweeted that he had flown to Pune for dinner with Bajaj. The film star was recently in Pune for the launch of Bajaj's KTM motorbikes.)
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History will remember Bajaj less for his friends and more for his convictions - and how he stood by them. Change, like charity, begins at home. Bajaj didn't shy away from dismantling the successful and time-tested business model built by his father, Rahul Bajaj. His first major decision was to stop the production of scooters and focus on motorbikes. That was a time scooters were going out of fashion; motorbikes were the future.
"I use the magic of logic to take decisions. I don't take a decision based on emotion because it is fashionable to do so," he says. Bajaj says the question was whether the company should remain a domestic player, making everything from scooters, motorbikes, mopeds and step-thrus, or should it make one thing for 20 countries across the world? "You can play 10 games and be the best in Pune, but if you want to play all over the globe, you need to concentrate on one. You will never hear of a sportsman who is number one in cricket as well as in football," he says. Bajaj says that he sells 4 million motorbikes in a global market of over 40 million; so he is far from becoming a dominant player. For that, he must have a market share of 20 to 30 per cent. This requires great focus.
There were other radical changes too that he brought about. During his father's time, all components were produced in-house. Currently, 90 per cent are outsourced. This helped him cut costs. He also changed the old system where the same dealer sold two-wheelers as well as three-wheelers, though the two categories addressed very different customers. Amidst serious opposition, Bajaj managed to set up two new plants at Chakan and Pantnagar. (Multiple factories gave him the elbowroom to tell the striking workers at Chakan that he would shift production out if they didn't return to work.) While all others in the industry chase more and more volumes, Bajaj has stayed focused on profits. So much so, with the depreciation in the rupee vis-à-vis the dollar in recent months, he has not dropped prices overseas to gain market share. It's because of steps like these that Bajaj Auto's gross profit margin, in spite of the slowdown, is 20 per cent - almost double of that of its rivals. "If all companies place the pursuit of profit ahead of their greed for growth, our economy will be robust and relatively immune to inimical external influences," says he.
There are other instances too of how he has turned conventional wisdom on its head. He has nurtured a relationship with Kawasaki for many years, though the Japanese company has no stake in Bajaj Auto. All the earlier Indo-Japanese motorbike partnerships - Hero and Honda, TVS and Suzuki, Escorts and Yamaha - have fallen by the wayside, often after a bitter war of words. But the one between Bajaj and Kawasaki remains steady across markets. Bajaj Auto now sells Kawasaki motorbikes in India, while Kawasaki pushes Bajaj motorbikes in key markets like Indonesia. "It is a profitable business for both of us. It is not equity but mutuality of interest which keeps a joint venture going," says Bajaj. Similarly, Bajaj, who took a substantial stake in KTM, the European maker of power motorbikes when it needed cash during the economic downturn in 2007, has assiduously ensured that the company's management works independently to churn out new products. This has helped him enter the European and US markets. Says he: "I will never take 51 per cent in KTM because I want the company to be an intellectually independent maker of motorbikes."
There has been intense speculation that father and son had serious differences over these steps. Bajaj admits his father had concerns, but those were less about the company quitting scooters and more about its dream to become a global motorbike company, considering that just seven years ago it hardly exported anything. "It was less about differences between father and son but the fact is globalisation had changed the marketplace. He wanted to have one leg in the scooter boat and another in the motorbike boat. I decided to have both the legs in the motorbike boat so that I could steer it harder," quips Bajaj. He admits that there was a difference of opinion over the new factories too. "I was asked, why set up new plants when you can expand in Pune and Aurangabad. But I wanted to bring in a new approach to manufacturing and use automation and robotics, which was not possible in the older plants," he says.
Looking back, Bajaj says such differences are healthy for the organisation. "The chairman and managing director should not have the same opinion always. A debate is always good," says he. "But you must recognise that the company has done very well financially. If the two top people in the company were at loggerheads, surely the company would have suffered." And he insists the differences haven't led to a confrontation. "As the chairman, he does not have to tolerate the managing director. Or it's not that if I was not the managing director, I wouldn't have a job." Rahul Bajaj, by all indications, isn't unhappy the way things have worked out. "Your managing director often says that while products may generate market share, brands provide pricing power and create higher profits. I am increasingly tending to agree with him," he wrote in his address to the shareholders of Bajaj Auto in the company's 2009-10 annual report.
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Cars are a different matter. Both father and son believed that no car maker in the world, except the Germans and a few Japanese, makes money. In the 1990s, both Ford and Hyundai had approached the Bajaj family to jointly make cars in the country. They were politely turned back. Then, Ratan Tata began work on a car that would cost just Rs 1 lakh: the Nano. That is said to have fired Bajaj's ambition to make an ultra-low-cost car that could take on the Nano. Bajaj says the inspiration came not from the Nano but from management guru Jack Trout. He told Bajaj that Gillette stayed ahead of competition by moving from razors with one blade to two and three. "I thought if Gillette can change, why can't I move from three to four wheels to defend my market?" says Bajaj.
This is when Bajaj tied up with Renault. Once it became clear that the Nano was not going to change the world, their ultra-low cost car project too ran aground because it wasn't found to be financially viable. "By 2009," says Bajaj, "it had become clear to us that it was going to be just another cheap and loss-making car." He admits that calling off such a project comes at a cost but it is better to decide early and cut losses rather than be straddled with an unviable product. In spite of the stillborn venture, Bajaj says he will look for no other partner than Renault-Nissan "until Carlos Ghosn (the chairman of Renault-Nissan) tells me it's off". Some good did come out of it, though: instead of a car, Bajaj decided to make a quadricycle - a simple vehicle for those who cannot afford a car. The RE60 was unveiled at the Delhi Auto Show in January 2012. It promised fuel efficiency of 35 km to a litre.
Maruti Suzuki, TVS Motors and Tata Motors together vehemently opposed Bajaj's request to the government to permit quadricycles as a new segment of vehicles in the country. So intense has been the opposition that the Society of Indian Automobile Manufacturers, the lobby group for the industry, has split vertically on the contentious issue. But Bajaj's persistence and effective lobbying have paid off: a few months ago, the government announced that it would permit quadricycles for intra-city travel, albeit only as a commercial vehicle and new norms will soon be announced. But Bajaj is not resting on this victory - he is readying for the second part of the battle. "I don't find any logic as to why it cannot be a personal vehicle. Why should millions of Indian who cannot afford a Maruti car not be given such a choice?" he argues. If that happens, many transport experts say it will open a new market for affordable personal transport.
Maruti Suzuki, Bajaj says, has opposed the quadricycle because the sale of its entry-level cars will be hit. TVS and Tata Motors, he adds, are unprepared, while his quadricycle is ready; so they want to delay the regulation till they have a product too. "So far, I have only witnessed them act out of self-interest and misplaced fears; I haven't yet heard a logical argument for denying three-wheeler users a fourth wheel," he had said in May this year. Meanwhile, Bajaj wants to test his quadricycle overseas. The possible partner could be Renault-Nissan, if it wants to.
That's another day in Bajaj's life.
