Viswanathan K's Thoughts

Sometimes, indulging your child’s whims can set off a change in policies, writes Montek Singh Ahluwalia in Backstage . One such example was the establishment of Maruti Udyog Limited (MUL). It was established to realize Sanjay Gandhi’s dream of producing an affordable people’s car. The Planning Commission and the Finance Ministry opposed it – cars were a luxury item, why spend on that? Indira Gandhi approved nonetheless. “(Unintentionally, MUL) helped change attitudes on many important aspects of industrial policy.”   First, it forced us to accept our limits. Yes, we could manufacture a car, but we were nowhere ready to design one. The hunt for a collaborator began. “This also opened the door to a more relaxed approach to the import of foreign technology in other sectors.” Why Suzuki was selected is amusing. No other Japanese car manufacturer was interested. Suzuki though was open to talks since they were still a motorcycle manufacturer and had just introduced a small car...

Maruti faced a chicken and egg problem. To create a mass market car, it needed an ecosystem of vendors and suppliers. But without a mass market, there weren’t too many vendors or suppliers. To add to that, Suzuki didn’t trust Indian vendors to supply good quality parts, and feared it would dilute their brand. Government regulations for PSU’s, like changing vendors every couple of years, acted as a disincentive to vendors to invest into any company. So Maruti tried partnerships with vendors. It started the concept of testing parts for wear and tear, a new concept back then! Vendors didn’t understand the term “quality”. They thought better specs meant better quality. Maruti had to educate them that quality meant exact matching of specs for almost every piece. Root cause analysis was taught to vendors, at Suzuki’s insistence. Eventually, vendors jumped onboard sensing that they were on the cusp of something big. Maruti introduced vendor rating systems, a norm these days. It informally a...

In a country where cars for the masses was still a novelty, Maruti faced many problems. Like transporting cars. The Railways were not interested in customizing for transporting cars from factory to dealers. So it got done by trucks. Causes for damages during transportation were identified and fixed. General insurance taken for such damages was stopped and instead paid by the company: this acted as an incentive to find, fix and prevent damages. Maruti soon launched the Gypsy. It was a big hit, replacing the jeep among Delhi Police. It became the preferred vehicle of the Indian Air Force and later the Army. In 1987, Maruti started exporting cars. To Hungary. Why Hungary? Because Maruti wasn’t sure if they’d meet stricter Western standards yet. And also, India had a trade deficit with Hungary; this would help adjust that to some extent… In 1989, when they passed the tests in France, “that was a day of rejoicing”. It was sold as the Alto. It soon became the largest selling car in...

The Maruti Story by RC Bhargava is written the way a Western guy would write: a fast-paced narrative, the right level of detail, never boring and yes, with pride in having done something that was very hard. A great read, in short. Sanjay Gandhi was interested in making a people’s car, ever since he apprenticed at Rolls Royce from 1964 to 1967. His own company named Maruti got nowhere before he died. After his death, a new PSU was formed by Indira Gandhi with the same intent… and the same name. Formed in 1981, its mandate was to get cars rolling within 2 years. A private company head was appointed CEO and chairman, something unheard of for a PSU. An Indira relative, Arun Nehru, was appointed the pointsman for the project. The message in all this? This wasn’t just another PSU; so politicians, stay away; and bureaucrats, don’t get in the way. Multiple foreign car manufacturers were considered for partnership. But the terms, the target price point, the need for a small car, the ...