Business - Maruti;Chequered History

The media has taken note of the silver jubilee of the launch of Maruti cars in India; much has been written about the role that the initial model (Maruti 800) and the venture itself did to engineer the birth of a modern automobile industry in India, and to usher in modern manufacturing practices and technology. All of that is true, but Maruti’s history goes further back than December1983—to 1971, when Sanjay Gandhi’s already controversial project to make an indigenous small car for the common man was the focus of the Opposition’s election campaign.

Subsequent revelations showed that funding for the project came from Cabinet ministers and politically-inclined businessmen and that the prototypes, allegedly indigenous handiwork, had completely imported engines. The project had no hope of getting anywhere, Sanjay died in a plane crash, and liquidation proceedings followed. Some businessmen who had been known to Sanjay were hoping to get the defunct company on the cheap because of its valuable real estate in Gurgaon. To prevent that, Indira Gandhi nationalised the company, and an entirely unplanned, public sector car project was born.

In the first sensible decisions taken in the history of the company, V Krishnamurthy was made the chairman and managing director and his successor, R C Bhargava, a key member of the initial management team. At the company’s first board meeting, S Mulgaokar of Tata Motors argued that the company should be making trucks, not cars, as that was the national priority. When the board insisted on cars, Mr Mulgaokar resigned. Some years later, when Tata Motors too wanted to make cars, the secretary in the department of heavy industry told company officials that he would give the required clearances if Mr Mulgaokar resigned from Tata Motors too, as he disapproved of car projects!

The minister for industry was keen on tying up with Renault for making a medium-sized car. That was soon nixed, but the search for an appropriate car made slow progress. Most international car companies showed little or no interest in the Maruti project. Months after nationalisation, a project partner was still proving elusive. Then, when Osamu Suzuki, on a flight to India for a two-wheeler project, read a magazine report on the project, he asked his officials why Suzuki was not bidding. Within weeks, an agreement was signed—and then began a long series of steps by the government to give Maruti favoured treatment. Tax rules were re-written to keep down the cost, private firms who wanted to make small cars were not allowed to do so because they would compete with Maruti, Arun Nehru was put on the company board and had a say in who would get the much sought-after Maruti dealerships, and eventually what rolled out of the Gurgaon car plant 25 years ago, on Sanjay Gandhi’s birth anniversary, was not the wholly indigenous small car that he had promised, but a fully-imported Japanese one. Today, of course, Suzuki makes more cars in India than it does in Japan. All of which goes to show that happenstance and serendipity should not be discounted in industrial success stories and automobile legends.