Tuesday, May 30, 2023

Obituary: When Corporate India Rode On Hamara Rahul Bajaj

Obituary: When Corporate India Rode On Hamara Rahul Bajaj

The outspoken industrialist emerged as a voice of corporate India when Indian businesses feared the uncertainty of large foreign investments and took corporate concerns to the political leadership

Rahul Bajaj

Known for speaking truth to power, Rahul Bajaj was the first industrialist of significance who had the courage to tell home minister Amit Shah that the industry was scared of sharing its problems with the government. In an Economic Times Awards function in 2019, which had Shah, Nirmala Sitharaman and Piyush Goyal in attendance, Bajaj said “In the UPA II government, we were able to criticise anyone … But we don’t have the confidence to criticise you.” Despite the claim, he stayed a bold and forthcoming voice of the corporate world till his health permitted him.

A grandson of Mahatma Gandhi’s industrialist comrade Jamnalal Bajaj, Rahul took over the leadership of Bajaj Auto in 1965 when the private sector was not exactly seen as an ally of the people of India. Of course, Rahul had an unmatched legacy whose intent could not be doubted easily, he still had to negotiate a business environment that was circumspect about giving a free rein to private businesses. But, Rahul Bajaj was soon able to make a name for himself and the scooters he sold in his family name in the socialist India.

His acumen as a leading businessman was recognised by the Atal Bihari Vajpayee government when he was conferred with the Padma Bhushan award in 2001. He was elected to the Rajya Sabha as an independent MP in 2006.

Few years ago he had retired from the day-to-day activities in the company, giving the reign of the company to sons Rajiv and Sanjiv. In 2020, Bajaj gave up the position of the executive chairman in the group and allowing his sons to run the business fully. Bajaj is counted among the longest serving chairmen in corporate India, under whose leadership Bajaj Auto's turnover grew from Rs 7.2 crores to Rs 12,000 crore, making it the country's leading scooter and two-wheeler selling company.

The Chetak of Indian Industry

Bajaj’s most famous scooter brand—Chetak, eponymous with Maharana Pratap’s war-horse—was launched in 1972. Modelled on the Sprint model of Italian origin Vespa, Chetak was known for its large wheels. With a waiting period of 10 years due to production restraints in India, it sold for double the showroom price in the open market. With a limited middle class in the India of 1970s and 1980s, families booked the scooter as soon as a girl child was born for gifting it on her wedding. The company connected with middle class Indians with the catchphrase of “Hamara Bajaj” (our Bajaj) in all its commercials which showed Indian families choosing its scooters across the country’s geographical and cultural diversity.

In the 1990s, Bajaj and its scooters faced challenge from motorcycle companies like Hero Honda, bringing a cultural shift and forcing the company to focus more on the upwardly mobile vehicle. By 2009, the company decided to stop making scooters and focus only on the new-age mobikes under the brand name Bajaj Pulsar and CT 100 among others.

This was a period of great churning in India, especially its corporate journey. Finance minister Manmohan Singh was opening the Indian economy to foreign companies fast, which unsettled India groups. Bajaj emerged as their voice in taking on the government of the day. He would argue that the Indian corporate sector could collapse under the weight of foreign companies which are flush with almost unlimited funds. He faced flak from free market economists both inside and outside the country for being a protectionist.

Corporate historians believe that the concerns of the Indian industry were genuine, as they were given little time to prepare for this monumental change. The government too paid attention to this criticism and took a long and slow road to economic liberalisation, allowing the Indian corporates to adapt and strike collaborations with foreign partners. The Bajaj Group also survived and survived well to be a market leader in the sectors it operated in.

Patriarch in a Feuding Family

Over the years, the Bajaj Group diversified into finance, insurance and consumer care, allowing the family of Rahul Bajaj’s brothers and cousins to focus on their areas of interest with Rahul at the helm of the group. But in 2001, the Bajaj Group witnessed a family feud that threatened the future of the 70-year-old business empire. The feud involved brothers Rahul and Shishir and cousins Madhur, Shekhar and Niraj. It took seven long years and involvement of the country's most influential politicians like Sharad Pawar to broker a truce between warring brothers over the distribution of family assets.

In 2007, the board of Bajaj Auto Ltd approved a demerger scheme, splitting the company into three separate entities with the creation of two new companies. The decision was taken after years of infighting between Rahul’s cousins, which had made it difficult for the group patriarch to manage the company. Under the split, Bajaj Auto's auto manufacturing business was demerged into Bajaj Holdings and Investment Ltd (BHIL), while other strategic businesses, such as wind energy, financial services and insurance, were demerged into Bajaj Finserv Ltd (BFL).

While the auto manufacturing business was given to Rajiv, the elder son of Rahul Bajaj, other strategic businesses were handed over to Sanjiv, Rajiv's younger brother.

But Rahul Bajaj wanted the world to believe that everything was fine. To give out the message that he still was the supreme leader of the ship, Bajaj had said, "I will be the chairman of all the three companies. It is not a split of Bajaj Auto.” To keep the family together, Bajaj ensured that even in split, all the brothers held stake in each other’s companies through a complex web of share-transfer devised by the board.

But Bajaj was not happy with the split and kept pursuing the brothers to come together as a family. Between 2018 and 2019, the Bajaj brothers signed a family settlement agreement to share the stakes in each other’s companies involving transactions worth Rs 8,863 crore in trading as many as 52.8 million shares of various group firms, according to a Mint report.

The brothers decided to have Rahul Bajaj as the leader of all group companies, with cousin Shekhar explaining the bond that the Bajaj brothers shared despite the feud of close to two decades. “The whole thing has a long-term logic. We don’t know what happens to our children and grandchildren. But, we know we want to be together. We are trying to see how we can strengthen our relationship," said Shekhar Bajaj, chairman of Bajaj Electricals.

In Rahul Bajaj’s death, it is not just the Bajaj family that has lost a patriarch, but the corporate world has lost its voice, a voice that could talk to the government on an equal footing.