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The Rahul Bajaj Chat

Nikhil Lakshman (Tue Nov 5 10:26:04 1996 IST):

Good morning. Mr Bajaj. It's good to have you with us this morning. I do hope you enjoy the experience.

Is Mr Bajaj in?

Hello, everyone. I'm Rahul Bajaj in Delhi at 10.30 morning on November 5. I'm happy with this opportunity to interact with you.

Bill: Yes, I'm in.

Good morning, Sir. From Atlanta, Georgia, this is an honour to speak with someone who has made us proud with his achievements! Sir, as the number one in your field, I need to ask you whay are Indians always left holding the wooden spoon? Why can't Indian industry be the best?

Good morning, Mr Bajaj. I wonder if you would like to spell out your views on the foreign investment issue. You have, I understand, been a a critic of the Indian government's policies on the FDI issue. Do you believe the government's policy is not correct? Why?

Mr Bajaj, Hello!What is your position on the ITC issue? Do you believe that Indian business and businessmen will ever get out of this bend the rules warp?

Mr Bajaj,according to you what are the drawbacks afflicting the Indian industry that prevents it from coming out on top?

Mr Bajaj,according to you what are the drawbacks afflicting the Indian industry that prevents it from coming out on top?

Good Morning Sir, I want to know what you feel about the ITC issue. will this be a death knell for indian companies ??

If Shri Chbidambaram were to ask your views on giving a new direction to the Indian economy, what would you tell him?

Sorry, that should read Chidambaram...

Sorry, that should read Chidambaram...

Mr Bajaj, What with the influx of foreign automobile companies, how long do u think companies like maruti, baja will last ??

Whew!what a deluge of questions let the poor man answer!

Jaswant: Good morning Mr Srikantan. I have been for many years asking myself the same question, I guess the reasons are many. In brief the first and the major reason was the control and the regulation regime which existed in India from the 60s till 1991. Even now there is much more need for deregulation and liberalisation of the Indian economy in various sectors. However, this is not to say that the entire blame rests with the earlier governments. Perhaps we Indians and in a company there should be from the junior most worker to the Chairman do not work unitedly. Also, we perhaps do not have that commitment and ambition to be the best in the world as some others. Indians do extremly well when they go abroad in India you talk of more of our rights rather than our duties and responsibilities. Hopefuly, unfortunatley this is only a hope. Things will change for a better in the coming years.

Some India industry watchers are concerened about jailing Indian businessmen like Mr Chugh. Do you believe that the treatment of Mr Chugh is justified? Will this not alienate Indian insutry? Or is it an warning from the judiciary to Indian businessmen?

Mr Naha, it is not every day that someone of the stature as Mr Bajaj appears at a forum like this, to take questions from the laity. It is almost as if the Pope of Indian business is here!

On a more serious note, Mr Bajaj, what has happened to your automobile project? Is there a problem? Or has the King of the Road decided to stay put with two wheelers?

Sir, two queries: you say that Indians do not from worker upwards lack commitment, but how much commitment can you expect in any company where the top management is not professional but family based (as in most of India's top companies, unlike the US and Western/Japanese companies). Second: are you totally for deregulation?

Thank you, Mr Bajaj. Now about my Chidambaram question...

Mr Bajaj, What do u think will be the result of all these continuous mergers between foreign and indian companies ??

Namaste, Sir. Last week, we had your biographer on this Chat, and she vociferously defended family-run managements. She believed there was nothing wrong in someone like you handing over the reins to your sons? How can you, a Harvard grad, justify such a primitive ritual?

Mr Bajaj, where do you see Bajaj scooters 10 years from now? Will it become India's greatest brand product, like what a Merc is to cars, a Bajaj is to scooters?

By biographer, I mean Mrs Gita Piramal...

Mr Bajaj, Are there any indications of the economy coming out of its present slump what with industrial growth coming down ??

sir, why do you seriously believe that multinationals can harm Indian economy? Isn't it time we broke all shackles, rather than forever go ahead in half measures?

sir, why do you seriously believe that multinationals can harm Indian economy? Isn't it time we broke all shackles, rather than forever go ahead in half measures?

Mr Bajaj, I thought you were the fastest draw in the West. What's happened?

Mr Bajaj, r u still in there? Time is running out!

Has Mr Bajaj Left The Session ??

They say you can't beat a Bajaj, but this one's stuck in first gear!!!

What do you mean time is running out? Mr Bajaj should be here for at least a couple of hours...

Jaswant: Good morning Mr Srikantan. I have been for many years asking myself the same question, I guess the reasons are many. In brief the first and the major reason was the control and the regulation regime which existed in India from the 60s till 1991. Even now there is much more need for deregulation and liberalisation of the Indian economy in various sectors. However, this is not to say that the entire blame rests with the earlier governments. Perhaps we Indians and in a company there should be from the junior most worker to the Chairman do not work unitedly. Also, we perhaps do not have that commitment and ambition to be the best in the world as some others. Indians do extremly well when they go abroad in India you talk of more of our rights rather than our duties and responsibilities. Hopefuly, unfortunatley this is only a hope. Things will change for a better in the coming years.

Why is he repeating the same answer?

hamara baja chal nahi raha hai? kay karen?

MR BAJAJ, WHERE ARE YOU?

mr bajaj, where are you?

HULLOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO

Hey guys, this is taking too long? Mr Bajaj, why are you opposed to multinationals? Are you not part of the so-called India club?

Deepak: A very important and valid question. I would divide the automotive industry in India in three sectors to answer this question. CArs, commercial vehicles and two and three wheleers. About 12 companies have come up or will come up to manufacture cars in India. Not all will survive there will be mergers amalgamations and drop outs. Those that will survive will I believe be all foreign control and owned. They may or may not have a minority Indian partner. I would consider Maruti in this category as already Suzuki in effect is managing this company and owns 50 % of the equity. The only Indian companies which may exist are HIndustan Motors and PAL. Whether they do or not, with Indian majority ownership and control, only time will show. The only other Indian controlled company manufacturing cars would be Telco, if it comes out with it's small cars. AS far as commercial vehicles are concerned, the sector will continue to be dominated by Indian companies including Telco and Ashok Leyland. Even, light commercial vehicles are primarly manufactured by Telco, Bajaj Tempo and Mahindras. The two and three wheller shows a third kind of scenario there are six major players Bajaj is the only one which has no foreign equity. The other 5 have foreign equity from Honda in 2 companies and from Yamaha Suzuki and Peugeot in the other companies. The other companies do not really matter. The six companies I have named control 92% of the Indian 2-3 wheeler market. CONTD. Of this about half there is 50% is contributed by bajaj auto and the remaining 50% by the other 5 companies. Hence, half the 2-3 wheeler market is likely to remain under Indian control. whereas the other half would be controlled by joint ventures.

Namaste, Sir. Last week, we had your biographer on this Chat, and she vociferously defended family-run managements. She believed there was nothing wrong in someone like you handing over the reins to your sons? How can you, a Harvard grad, justify such a primitive ritual?

THIS MAN KNOWS HIS BUSINESS!

Mr Bajaj, in your reply to Deepak, you said that foreign companies will take over the Indian automotive market? May the real reason is quality? After all, for years Indians were stuck with the Ambassador and Padminis, which would not even have been allowed on foreign roads? But surely quality Indian products will survivie? After all, business do start small and then grow?

Will your sons be looking at the launch of the Bajaj cars? When are they due? Is there space for still another car on Indian roads?

Will your sons be looking at the launch of the Bajaj cars? When are they due? Is there space for still another car on Indian roads?

Do you think you will be able to unite Bajaj Auto and Bajaj Tempo in your lifetime?

Arre, Shiv. Rajiv and sanjiv have to contend with Madhurbhai before they take charge of Bajaj Auto. Mr Bajaj, will you cousin lose out in the race to take charge of Bjaj Auto? Will you finally decide who will succeed you? It is a no-win situation. You create bad blood any which way.

What happened to the battle between bajaj and piaggio?

Thank u for answering my question.

What measures BAL taking to meet the international pollution standards as for as Bajaj Scooters are concerned so that the same cane be freely marketed in developed world.

Mr bajaj, where do u see Bajaj auto say in ten years

Good Morning Mr. Bajaj

Deepak: A very important and valid question. I would divide the automotive industry in India in three sectors to answer this question. CArs, commercial vehicles and two and three wheleers. About 12 companies have come up or will come up to manufacture cars in India. Not all will survive there will be mergers amalgamations and drop outs. Those that will survive will I believe be all foreign control and owned. They may or may not have a minority Indian partner. I would consider Maruti in this category as already Suzuki in effect is managing this company and owns 50 % of the equity. The only Indian companies which may exist are HIndustan Motors and PAL. Whether they do or not, with Indian majority ownership and control, only time will show. The only other Indian controlled company manufacturing cars would be Telco, if it comes out with it's small cars. AS far as commercial vehicles are concerned, the sector will continue to be dominated by Indian companies including Telco and Ashok Leyland. Even, light commercial vehicles are primarly manufactured by Telco, Bajaj Tempo and Mahindras. The two and three wheller shows a third kind of scenario there are six major players Bajaj is the only one which has no foreign equity. The other 5 have foreign equity from Honda in 2 companies and from Yamaha Suzuki and Peugeot in the other companies. The other companies do not really matter. The six companies I have named control 92% of the Indian 2-3 wheeler market. CONTD. Of this about half there is 50% is contributed by bajaj auto and the remaining 50% by the other 5 companies. Hence, half the 2-3 wheeler market is likely to remain under Indian control. whereas the other half would be controlled by joint ventures.

The lines from Delhi, from where Mr Rahul Bajaj has been answering our questions, has been lost. We are reconnecting. Please bear with us.

What measures BAL taking to meet the international pollution standards as for as Bajaj Scooters are concerned so that the same cane be freely marketed in developed world.

What measures BAL taking to meet the international pollution standards as for as Bajaj Scooters are concerned so that the same cane be freely marketed in developed world.

Mr. bajaj do you feel you can do quite as well in the car market too, after all the biggest advantage that bajaj has today is its economies of scale. the car market is a totally different ball game

Mr Bajaj, to become truly global will require funds, which you can raise from the market, Indian and global. So why don't you, or is because you are scared of losing family control?

What measures BAL taking to meet the international pollution standards as for as Bajaj Scooters are concerned so that the same cane be freely marketed in developed world.

How long will it take bajaj scooters to become India's first global brand?

Deepak: Due to trouble with VSNL I shall be brief: There are many othe questions. As I do not have a crystal ball, I do not know where Bajaj Auto will be ten years time. However, it is our aim to make Bajaj Auto a major player in the world. In the 2-3 wheller industry in ten years time. We of course intend to retain our leadership position in the Indian sub continent.

Rajiv and Sanjiv have to contend with Madhurbhai before they take charge of Bajaj Auto. Mr Bajaj, will your cousin lose out in the race to take charge of Bajaj Auto? Will you finally decide who will succeed you? It is a no-win situation. You create bad blood any which way. How will you avoid that?

Mr Bajaj, what are the drawbacks ailing the Indian industry?

ARthur: I still hope so but I doubt it. This depends on Mercedez-Benz.

What measures BAL taking to meet the international pollution standards as for as Bajaj Scooters are concerned so that the same cane be freely marketed in developed world.

Mr. Rahul Bajaj, I've just joined. Can I call you by your first name?

Do you welcome the deregulation in the automotive industry, or do you think it should be still somewhat regulated?

How do you see bajaj performing vis-a-vis the Japanese giants in the field? And especially when it comes to selling in the international market?

ARthur: I still hope so but I doubt it. This depends on Mercedez-Benz.

vespa has been phenomenal in segmenting the two wheeler market. bajaj has only followed suite and again only the extremely price sensitive indian market has helped bajaj to maintain the lead. do you take responsibility of waking up late.

Kamini: Many, lack of competition till a couple of years ago. Inadequate infrastructure, high interst rates an a inflexible labour policy.

You are tying up with Benz? That's news to us!

Family owned businesses inevitably split up? Look at the Bajaj for instance? so will bajaj auto split between Rajiv and Sanjiv?

Mr Bajaj, can you tell me why Indian industrialists cry so much? A few years ago, the bemoaned the lack of freedoms that curbed their entrepreneurial spirit? Now, they ask for protection from MNCs. When will they learn to stand on their own two feet?

What changes would you like to see in Indian laws to make Indian companies globally competitve, especially as regards labour policy?

shiv: It is not easy to compete with Japanese 2 wheeler manufacturers. The problem is not cost of production or volume of production. Bajaj Auto is the lowest cost of the 2-3 wheeler in the world with international scale of operations. However, in technolocy, whether product technology or manufacturing technology we are behind. Hence, we are strntghing our in house R & D department and importing technology from various research organisations all over the world. We hope to be internationally competitive soon. However, we will need to develop a distribution network and brand equity in the important two wheeler markets in the world.

Mr. Bajaj why are indian businessmen always cribbing about a level playing field, after all a level playing field is a very subjective term or is it just a substitute for more regulations?

"Thanks" for the reply. Glad to know that you will be strengthening the R&D, something most Indian companies are not even aware of. But will not going into automobile prodution at this stage see a diversification from your core competency -- two wheelers? Why not go in for mobikes, etc.

Mr Bajaj, I have an ally with the same question. Why do Indian businessmen complain so much? They were always scared of foreign competition, which is one reason why India did not allow foreign companies in (the other being Nehru's ideas); now again you guys are running scared? when will all this end?

Vikrant: Piaggo who make Vespa scooters are specially today a very good company. However, their joint venture in India LML which has been in existence for over ten years still sells less than 25,000 scooters per month. Bajaj Auto sells over sevety thousand scooters per month in addition to scooterates, motor cycles and three wheelers.

Rahul, A lot is being talked about CORPORATE GOVERNANCE. So many cases are coming up in press on flauting the corporate norms at the cost of small investors. Take the case of Escorts group. The recent restructuring exercise they undertook did undermine the interests of FIs and small shareholders. Even the house of TATAs are no exception. The high premium Right Issue by Tata Sons to its group companies is the case in point. Tata Sons will be utilising this money for raising its stake in its group companies. And now they are talking about charging the royalty (sorry! Mr. Tata calls it a FEE) from those companies (Like TISCO, TELCO) who have nurtured the TATA brand over the period. You are heading the CII team on the subject of corporate governance. Do you think all this are justifiesd. Where are we now? How can we improve?

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Who is going to succeed you? When?

Mr Bajaj, are you avoiding my question, and Vikrant's?

Naresh: Atleast I'm not running scared. The best in the wiorld in the two wheeler have been in India for over ten years. My market share in 1986 was about 37% Last year it was 46%, however, every country in the world supoports its industry. Every country in the world, especially, like a large country like India would like to have it's own MNCs rather than only subsidaries of foreingn MNCs. This requires a certain regulatory envoirn,ment for obvious reasons the developed world needs less protection for their industries. Still, see what is happening in France today with regard to the sale to Daewoo of a Thompson division

Shiv: As of now we have decided to put the car project on the back burner. As suggested by you, we are concentrating on developing new models of scooters, scooterates, motorcycles and three wheelers.

Rahul, In recent years the Politician-Industrialist nexus is catching the attention. This nexus is robbing the poor taxpayers money. Can the corporate heads say no to the powerful polititians? What is needed to break this nexus?

What impact will projects like the MRTS which has been given the green signal have on the two wheeler and four wheeler markets? after all the two wheeler market is thriving on poor public transport systems..

Rahul, please answer to my questions.

Mr Bajaj, Thank you for your reply. As an Indian I will be proud to see India's first MNC and global product, and it may well be a Hamara Bajaj. But certainly not if it comes through government manipulation rather than free competition. Regarding the rucus in France, France has always had a nationalistic outlook, which perhaps explains why they have less MNCs than US, UK, Germany and Japan. Is there not a lesson for India in this, that free markets promote MNCs, and regulated ones stiffle them, even in the host country?

Vikran, excellent question!!

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Raj: I cannot do justice to your question on corporate governance in the short time now available to me. Unfortunately this is my last answer today. I regret, I could not answer many questions which I would have enjoyed doing as we lost quite a bit of time due to getting disconnected from VSNL. Perhaps, we shall get a chance to chat again in two to three months time. I personally have strong views on what is proper and what is not while running a public ltd. company. I'm not talking of laws. These in any case must be followed and violators punished. However, laws cannot cover all actions of politicians, businessmen, bureaucrats etc. All of us behave in a manner in which the society as a whole behave. AS it is said, People get the government they deserve. Similarly, a society and the investors get companies they deserve.WE all have to improve. However, while allare equal under law. One should not try to find scapegoats to be populist.

Do you have anything to say about what one has been reported in the news -- ITC raided and corrupt; Reliance, Videocon paying bribes on behalf of politicians? Indians have always mistrusted businessmen as being selfish and avaracious, and this proves it

Do you have anything to say about what one has been reported in the news -- ITC raided and corrupt; Reliance, Videocon paying bribes on behalf of politicians? Indians have always mistrusted businessmen as being selfish and avaracious, and this proves it

Raj: I cannot do justice to your question on corporate governance in the short time now available to me. Unfortunately this is my last answer today. I regret, I could not answer many questions which I would have enjoyed doing as we lost quite a bit of time due to getting disconnected from VSNL. Perhaps, we shall get a chance to chat again in two to three months time. I personally have strong views on what is proper and what is not while running a public ltd. company. I'm not talking of laws. These in any case must be followed and violators punished. However, laws cannot cover all actions of politicians, businessmen, bureaucrats etc. All of us behave in a manner in which the society as a whole behave. AS it is said, People get the government they deserve. Similarly, a society and the investors get companies they deserve.WE all have to improve. However, while allare equal under law. One should not try to find scapegoats to be populist.

Thank you Rahul. I understand the limitation of time and hope to get an opportunity to talk to you on the subject of Corporate Governance sometime in near future.

Mr. Bajaj, please give us your views on non-voting shares. The funds raised through non-voting shares could be used for funding capital expenditure while the internal accruals could be utilised by some promoters to buy-back shares (when it is allowed). Thus indirectly or in a round-about manner, the funds from non-voting shares could be used for buy-back of shares. Your views please.

Mr RAHUL BAJAJ, MANY THANKS FOR APPEARING ON THE REDIFF CHAT. WE DO HOPE TO HAVE YOU ONCE AGAIN WITH US AFTER TWO TO THREE MONTHS, AND HOPEFULLY, VSNL WILL CAUSE LESS TROUBLE THEN. THANK YOU ONCE AGAIN.

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THANK YOU, EVERYONE FOR CHATTING. I REGRET I COULD NOT ANSWER MANY QUESTIONS . PERHAPS, WE SHALL GET A CHANCE AGAIN IN TWO TO THREE MONTHS. THANK YOU, ONCE AGAIN AND GOOD BYE.

Mr. Bajaj. Are you related to Niraj Bajaj of Mukund Iron? You had told 'Business India'that import of machinery has been facilitated by the new reform process. Will it (the procedure) stay for good. Have you considered Bajaj motorcycle? How do you evaluate new product proposals?

Mr. Bajaj. Are you related to Niraj Bajaj of Mukund Iron? You had told 'Business India'that import of machinery has been facilitated by the new reform process. Will it (the procedure) stay for good. Have you considered Bajaj motorcycle? How do you evaluate new product proposals?

Photographs: Atul Chowdhary