Rahul Bajaj
India
Rahul Bajaj
  • Chair, Bajaj Group (Diversified)
Born Kolkata, India, 1938. Bachelors, University of Delhi (1958); MBA, Harvard Business School (1964).
“We were in a socialist raj. You couldn’t make anything until you got an industrial license and you couldn’t make more than the license capacity.”

Summary

Rahul Bajaj was Chair of the Bajaj Group from 1965-2005 and remains chairman emeritus. The Bajaj Group is one of India’s largest business groups, consisting of more than 30 businesses. The Bajaj Group can be traced back to the 1870s when Seth Bachhraj built a successful merchant business in central India. On his death in 1906, his 17-year old adopted grandson Jamnalal Bajaj took over, building a successful cotton trading business. In 1931 Bajaj diversified into sugar refining, the company’s first industrial venture, and a small steel rolling mill followed in 1937. Baja’s sons diversified further after World War II. In 1959 Bajaj Auto was formed to manufacture scooters, in which the company became the market leader.

The interview begins as Bajaj reflects on the early history of the Bajaj Group, his family’s association with Mahatma Gandhi which started when Gandhi began considering Bajaj’s grandfather Jamnalal as his fifth son, his early childhood growing up in Wardha, and the role his family played in India’s struggle for freedom.

After graduating from Harvard Business School in 1964, Bajaj joined Bajaj Auto in 1965. In this interview, Bajaj discusses his experience with Bajaj Auto under India’s License Raj. When Bajaj Auto first received their license, they were only authorized to make 6,000 scooters per year, which as a consequence, created a ten-year delivery period and resulted in the Bajaj scooter becoming a prized commodity within India. Bajaj Auto originally partnered with Vespa, an Italian luxury scooter brand manufactured by Piaggio. In this interview, Bajaj explains that they were forced to end this collaboration in 1971 as a result of Prime Minister Indira Gandhi’s privatization programs and a ban on foreign collaborations within the auto industry. Bajaj describes the decade of the 1970s as the worst in the history of independent India for industry and states that things only started improving in the 1980s when Rajiv Gandhi became Prime Minister. With the liberalization of India’s economy beginning in 1991, Bajaj reports they were making between 70,000-80,000 scooters per month by the end of the decade.

Bajaj describes that the key to outperforming Bajaj Auto’s competitors was through a combination of excellent management, a policy of “firm but fair” towards stakeholders, keeping the cost of the scooters low even with high demand, and providing excellent quality. Bajaj explains that excellent quality came from the use of the latest cutting-edge technologies. In the 1980s, he created a research and development department, which led to new technologies and the creation of the Bajaj M50 and M80 which were step-through motorcycles.

In this interview, Bajaj discusses family management, professional management, and the importance of choosing the most competent people to lead the group based on merit. He then describes how his two sons, Rajiv and Sanjiv, have taken over the group’s management and reflects on that transition process. Bajaj continues the interview as he discusses his refusal to participate in corruption; the beginning of Bajaj Auto’s international exports to countries including Sri Lanka, Bangladesh, Nigeria, and Colombia; the differences in the rates of growth and globalization between India and China; and why India should no longer be described as “developing” but instead as “emerging”.

To conclude the interview, Bajaj reflects on some of the mistakes he feels he has made over the years, including not spending enough time with family. He explains why his son, Rajiv, made the decision in 2009 for Bajaj Auto to stop manufacturing scooters and to only focus on motorcycles. Bajaj then reflects on his time as President of the Automotive Association and President of the Confederation of Indian Industries, and provides insights on India’s Companies Act of 2013, corporate social responsibility, and the group’s philanthropic activities and charitable trusts. From 2006-2010, Rahul Bajaj was a member of the Rajya Sabha (India’s Upper House of Parliament).

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Rahul Bajaj was Chair of the Bajaj Group from 1965-2005 and remains chairman emeritus. The Bajaj Group is one of India’s largest business groups, consisting of more than 30 businesses. The Bajaj Group can be traced back to the 1870s when Seth Bachhraj built a successful merchant business in central India. On his death in 1906, his 17-year old adopted grandson Jamnalal Bajaj took over, building a successful cotton trading business. In 1931 Bajaj diversified into sugar refining, the company’s first industrial venture, and a small steel rolling mill followed in 1937. Baja’s sons diversified further after World War II. In 1959 Bajaj Auto was formed to manufacture scooters, in which the company became the market leader.

The interview begins as Bajaj reflects on the early history of the Bajaj Group, his family’s association with Mahatma Gandhi which started when Gandhi began considering Bajaj’s grandfather Jamnalal as his fifth son, his early childhood growing up in Wardha, and the role his family played in India’s struggle for freedom.

After graduating from Harvard Business School in 1964, Bajaj joined Bajaj Auto in 1965. In this interview, Bajaj discusses his experience with Bajaj Auto under India’s License Raj. When Bajaj Auto first received their license, they were only authorized to make 6,000 scooters per year, which as a consequence, created a ten-year delivery period and resulted in the Bajaj scooter becoming a prized commodity within India. Bajaj Auto originally partnered with Vespa, an Italian luxury scooter brand manufactured by Piaggio. In this interview, Bajaj explains that they were forced to end this collaboration in 1971 as a result of Prime Minister Indira Gandhi’s privatization programs and a ban on foreign collaborations within the auto industry. Bajaj describes the decade of the 1970s as the worst in the history of independent India for industry and states that things only started improving in the 1980s when Rajiv Gandhi became Prime Minister. With the liberalization of India’s economy beginning in 1991, Bajaj reports they were making between 70,000-80,000 scooters per month by the end of the decade.

Bajaj describes that the key to outperforming Bajaj Auto’s competitors was through a combination of excellent management, a policy of “firm but fair” towards stakeholders, keeping the cost of the scooters low even with high demand, and providing excellent quality. Bajaj explains that excellent quality came from the use of the latest cutting-edge technologies. In the 1980s, he created a research and development department, which led to new technologies and the creation of the Bajaj M50 and M80 which were step-through motorcycles.

In this interview, Bajaj discusses family management, professional management, and the importance of choosing the most competent people to lead the group based on merit. He then describes how his two sons, Rajiv and Sanjiv, have taken over the group’s management and reflects on that transition process. Bajaj continues the interview as he discusses his refusal to participate in corruption; the beginning of Bajaj Auto’s international exports to countries including Sri Lanka, Bangladesh, Nigeria, and Colombia; the differences in the rates of growth and globalization between India and China; and why India should no longer be described as “developing” but instead as “emerging”.

To conclude the interview, Bajaj reflects on some of the mistakes he feels he has made over the years, including not spending enough time with family. He explains why his son, Rajiv, made the decision in 2009 for Bajaj Auto to stop manufacturing scooters and to only focus on motorcycles. Bajaj then reflects on his time as President of the Automotive Association and President of the Confederation of Indian Industries, and provides insights on India’s Companies Act of 2013, corporate social responsibility, and the group’s philanthropic activities and charitable trusts. From 2006-2010, Rahul Bajaj was a member of the Rajya Sabha (India’s Upper House of Parliament).
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Video Clips by Topic

Social Responsibility

Rahul Bajaj, Chair of the diversified Bajaj Group, criticizes the Indian government's Companies Act in 2013 which mandated that large companies had to spend 2 per cent of their pre-tax profits on defined areas of CSR.


Innovation

Rahul Bajaj, the Chair of the India-based diversified business group Bajaj Group, discusses how he missed anticipating the change when India’s market moved from being primarily a market for scooters to one of motorcycles between 1998 and 2001.
Keywords: India, Innovation


Corruption

Rahul Bajaj, Chair of the diversified business group Bajaj Group, describes how a government minister in India approached him for a favor, which he refused.
Keywords: India, Corruption


Family Business

Rahul Bajaj, Chair of the diversified Bajaj Group in India, explains the different strategic visions of family managers and professional managers by considering the incentives and loyalty of each with reference to his own firm.


Government Regulation

Rahul Bajaj, head of the India-based diversified business group Bajaj Group, talks about the days of License Raj in India before 1991 when Bajaj scooters had a ten-year delivery period. He discusses how people had to either book the scooter the minute a girl was born or buy it on the black market, as it was a necessary part of the bride's dowry. 


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Additional Resources

Additional Resources

Interview Citation Format

"Interview with Rahul Bajaj, interviewed by Srikant M. Datar, July 8, 2014, Creating Emerging Markets Project, Baker Library Historical Collections, Harvard Business School, http://www.hbs.edu/creating-emerging-markets/."