Rahul Bajaj on the economy, two-wheeler market
Rahul Bajaj, 74, Chairman of the Rs 28,000-crore Bajaj Group,
discusses his companies' performance as well as the state of the country
with Govindraj Ethiraj in an exclusive interview on the show
Bottomline, which airs on Headlines Today
Rahul Bajaj, 74, Chairman, Bajaj Group<em>Photo: Shekhar Ghosh/www.indiatodayimages.com</em>
Rahul Bajaj, 74, Chairman of the Rs 28,000-crore Bajaj Group, discusses his companies' performance as well as the state of the country with Govindraj Ethiraj in an exclusive interview on the show Bottomline, which airs on Headlines Today. Edited excerpts:
Q.What is the mood like in industry? How are you feeling?
A. Speaking about manufacturing, it is very difficult for things to get worse than they were in 2012. It was annus horribilis - as Queen Elizabeth characterised another year long ago. The first quarter GDP (gross domestic product) growth was 5.5 per cent, then it was 5.3 per cent. That is not good enough. Our per capita income is $1,500 or even less per annum, that of Europe, America and Japan, around $40,000. We need nine to 10 per cent growth, otherwise we can't provide employment, we can't get incomes up. Inequalities are rising all over the world.
Q. You wrote in January 2011 that you were confident the institutional mechanisms for uncovering and dealing with corruption were strong and effective...
A. I don't remember that. I don't know in which context I said that. Political parties and politicians will not allow that to happen.
Q. Do you think the cleansing you referred to then is complete?
A. Cleansing has not even started. I am talking about the business side - the corporate scams, firms being prosecuted... Where has that finished? Every day there are new scams... Some things may not be 100 per cent accurate, they may be exaggerated, but I am very clear regarding the scams that where there is smoke, there is fire... People are so sick of corruption and black money that everybody who talks against corruption and has even the slightest credibility, gets support.
Q. So, when will the cleansing end?
A.I think public opinion... Baba Ramdev, Anna Hazare and to some extent even Arvind Kejriwal and the Aam Aadmi Party... We need that kind of pressure.
Q. Can there be self-cleansing?
A. Self-cleansing by companies? Yes. But if you mean industry associations...
Q. Industry as a whole.
A. There are 7,000 members of CII, and CII must ensure they are honest and they pay taxes and don't give bribes? That's not possible.
Q. So the scam phase has not come to an end?
A. I don't think so. I wish it would come to an end, but how the hell will it? From people, I know it will never come to an end till the fear of God is in the bribe-giver and the bribe-taker.
Q. Do you feel business houses like Bajaj, which have been around for a long time and doing mostly one kind of business, are being crowded out in some way?
A. I can't speak in general. As far as I am concerned - not at all. It has paid in the long run. (It is important) to stick to the knitting. I am not like my grandfather Jamnalal Bajaj, who was a saint. But I'm very straightforward. We have some common values, some ethics. I don't pay cash money because I don't have any, whether anyone believes me or not. I don't pay cash money to politicians and bureaucrats. People say your business can't go on. (Laughing) I say, see my market cap.
Q. How do we shake ourselves out of the syndrome that afflicted us in 2012?
A. I can only talk about what we are doing in our group - in our financial services group, Bajaj Finserv, and in Bajaj Auto. We ignore the fact that scams are going on. We even ignore that we are growing at a GDP of 5.5 per cent and not eight or nine per cent. So, depending on what your industry is, you see the economy and the markets and you plan accordingly. We have the new Discover motorcycles and 125 cc Discovers and Pulsars. They are all doing very well. Similarly in our financial services and insurance... Just make your company more efficient, or else you are neither going to survive nor prosper...
Q. Your last annual report said your motorcycle sales grew only six per cent while the market grew at 11 per cent. I think you exhorted the company and management to do better.
A. Yes, I did. I was not happy with what was done in 2011/12. This year (2013) will probably be flat for two-wheelers, cars will be down, and commercial vehicles are down. The only thing that has not fallen that much is the light commercial vehicle category in which we include our three-wheelers. These are doing better. There are three companies which make up 90 per cent of the market and TVS is the fourth. No.1 is clearly Hero Motors, No.2 is clearly Bajaj, especially in motorcycles. In threewheelers we are No.1. Honda, which is new, is at No.3. Honda makes scooters, which we don't. It is, in fact, much better at that. The other thing is that we export a lot of our production so in totality we are all right, we are not so bad.
Q. Was it a good idea to get out of scooters?
A. No. I don't think so. The CEO and Managing Director is Rajiv Bajaj. I see him as an outstanding young man doing a great job. He believes in focus and his definition of focus is to concentrate on motorcycles, not scooters, and he says that is why my market cap is going up. Analysts are saying the Bajaj share price is going to go up, but they don't say this about TVS, according to him. They don't say this about anybody who does everything, including Honda (which does not have market cap in India), and Hero Motors, which is into motorcycles and scooters. So, Rajiv says he is right, but I disagree with him. For 40 years I focused on two-wheelers and three-wheelers. I think there is an element of lack of confidence, the feeling that he will not do well at producing a good scooter, which can get a reasonable market share of, say, 20 per cent, and can be exported too. I may differ with him, but I defer things to him because he is a very good CEO. We keep pushing each other.
Q. Your shareholders remain committed to their investment...
A. I have not raised capital for 50 years. How much capital has Bajaj Auto raised? Less than one crore in 1966. After that, not a penny. Every year without fail we have given good dividends, 400 per cent last from Bajaj Auto. Yield becomes only two per cent because of the share prices being what they are. People have benefited due to their appreciation.
Q. So this is the outcome. Looking ahead, where will growth come from?
A. In 2013, everything will be based on government policies and I am not hopeful. If there was no politics, I would be hopeful but that would be talking nonsense - there are eight state elections to come and a general election as well...
Q. 2013 will be, as we conclude now...
A. Will 2013 be better? It can be worse than 2012... I am worried, quite frankly, because of the elections. What will be the 2013/14 Budget be like? On February 28, 2013, I will be at the central hall in the Rajya Sabha visitors' gallery to listen to Finance Minister Mr P. Chidambaram.
Q. And business has no choice but to focus on doing business?
A. I will not put it that way. That sounds very negative. Why should we waste time thinking about other things? Do what you are best at. We have motivated people, farmers, service sector people, industry people, labour and entrepreneurs. They are all motivated and raring to go. India can only go up.
Q.What is the mood like in industry? How are you feeling?
A. Speaking about manufacturing, it is very difficult for things to get worse than they were in 2012. It was annus horribilis - as Queen Elizabeth characterised another year long ago. The first quarter GDP (gross domestic product) growth was 5.5 per cent, then it was 5.3 per cent. That is not good enough. Our per capita income is $1,500 or even less per annum, that of Europe, America and Japan, around $40,000. We need nine to 10 per cent growth, otherwise we can't provide employment, we can't get incomes up. Inequalities are rising all over the world.
Q. You wrote in January 2011 that you were confident the institutional mechanisms for uncovering and dealing with corruption were strong and effective...
A. I don't remember that. I don't know in which context I said that. Political parties and politicians will not allow that to happen.
It is very difficult for things to get worse than in 2012
A. Cleansing has not even started. I am talking about the business side - the corporate scams, firms being prosecuted... Where has that finished? Every day there are new scams... Some things may not be 100 per cent accurate, they may be exaggerated, but I am very clear regarding the scams that where there is smoke, there is fire... People are so sick of corruption and black money that everybody who talks against corruption and has even the slightest credibility, gets support.
Q. So, when will the cleansing end?
A.I think public opinion... Baba Ramdev, Anna Hazare and to some extent even Arvind Kejriwal and the Aam Aadmi Party... We need that kind of pressure.
Q. Can there be self-cleansing?
A. Self-cleansing by companies? Yes. But if you mean industry associations...
Q. Industry as a whole.
A. There are 7,000 members of CII, and CII must ensure they are honest and they pay taxes and don't give bribes? That's not possible.
Q. So the scam phase has not come to an end?
A. I don't think so. I wish it would come to an end, but how the hell will it? From people, I know it will never come to an end till the fear of God is in the bribe-giver and the bribe-taker.
Q. Do you feel business houses like Bajaj, which have been around for a long time and doing mostly one kind of business, are being crowded out in some way?
A. I can't speak in general. As far as I am concerned - not at all. It has paid in the long run. (It is important) to stick to the knitting. I am not like my grandfather Jamnalal Bajaj, who was a saint. But I'm very straightforward. We have some common values, some ethics. I don't pay cash money because I don't have any, whether anyone believes me or not. I don't pay cash money to politicians and bureaucrats. People say your business can't go on. (Laughing) I say, see my market cap.
Q. How do we shake ourselves out of the syndrome that afflicted us in 2012?
A. I can only talk about what we are doing in our group - in our financial services group, Bajaj Finserv, and in Bajaj Auto. We ignore the fact that scams are going on. We even ignore that we are growing at a GDP of 5.5 per cent and not eight or nine per cent. So, depending on what your industry is, you see the economy and the markets and you plan accordingly. We have the new Discover motorcycles and 125 cc Discovers and Pulsars. They are all doing very well. Similarly in our financial services and insurance... Just make your company more efficient, or else you are neither going to survive nor prosper...
In totality Bajaj companies are all right, not so bad: Rahul Bajaj
A. Yes, I did. I was not happy with what was done in 2011/12. This year (2013) will probably be flat for two-wheelers, cars will be down, and commercial vehicles are down. The only thing that has not fallen that much is the light commercial vehicle category in which we include our three-wheelers. These are doing better. There are three companies which make up 90 per cent of the market and TVS is the fourth. No.1 is clearly Hero Motors, No.2 is clearly Bajaj, especially in motorcycles. In threewheelers we are No.1. Honda, which is new, is at No.3. Honda makes scooters, which we don't. It is, in fact, much better at that. The other thing is that we export a lot of our production so in totality we are all right, we are not so bad.
Q. Was it a good idea to get out of scooters?
A. No. I don't think so. The CEO and Managing Director is Rajiv Bajaj. I see him as an outstanding young man doing a great job. He believes in focus and his definition of focus is to concentrate on motorcycles, not scooters, and he says that is why my market cap is going up. Analysts are saying the Bajaj share price is going to go up, but they don't say this about TVS, according to him. They don't say this about anybody who does everything, including Honda (which does not have market cap in India), and Hero Motors, which is into motorcycles and scooters. So, Rajiv says he is right, but I disagree with him. For 40 years I focused on two-wheelers and three-wheelers. I think there is an element of lack of confidence, the feeling that he will not do well at producing a good scooter, which can get a reasonable market share of, say, 20 per cent, and can be exported too. I may differ with him, but I defer things to him because he is a very good CEO. We keep pushing each other.
Q. Your shareholders remain committed to their investment...
A. I have not raised capital for 50 years. How much capital has Bajaj Auto raised? Less than one crore in 1966. After that, not a penny. Every year without fail we have given good dividends, 400 per cent last from Bajaj Auto. Yield becomes only two per cent because of the share prices being what they are. People have benefited due to their appreciation.
Q. So this is the outcome. Looking ahead, where will growth come from?
A. In 2013, everything will be based on government policies and I am not hopeful. If there was no politics, I would be hopeful but that would be talking nonsense - there are eight state elections to come and a general election as well...
Q. 2013 will be, as we conclude now...
A. Will 2013 be better? It can be worse than 2012... I am worried, quite frankly, because of the elections. What will be the 2013/14 Budget be like? On February 28, 2013, I will be at the central hall in the Rajya Sabha visitors' gallery to listen to Finance Minister Mr P. Chidambaram.
Q. And business has no choice but to focus on doing business?
A. I will not put it that way. That sounds very negative. Why should we waste time thinking about other things? Do what you are best at. We have motivated people, farmers, service sector people, industry people, labour and entrepreneurs. They are all motivated and raring to go. India can only go up.
