For 90% of Indians, the first car was a Maruti and that was like getting a house. Maruti was like a present from a mother to her departed son. Unfortunately, Sanjay died and that was a big blow to Mrs. Gandhi. That's why she decided to deviate from all ideology, all policy and set up a car manufacturing. Nobody expected this car company to succeed. Suzuki for some reason where he saw something which nobody else saw that India was potentially a huge market in the future. That mother's dream had to come true.
Even though you have had a spotless career but you were actually prosecuted by the government for doing your job. CBI had put multiple cases on you for decades. Basically
They lasted in court for about 20 years.
Mr. Suzuki was tremendously hurt.
Yes.
He said, "I have worked with so much trust and so much commitment to India. What happened to me was largely because some politicians thought they had a right to get some benefits from Maruti. I had always taken the view that I will not allow anything to be done which will in any way harm the interests of Maruti either in the short term or the long term. My prostate cancer was diagnosed in 97. Think maybe the stress of all this may have accelerated or caused the prostate cancer. I don't know. I also believe that in this country by and large the truth ultimately prevails."
My guest today is R.C. Bhargava, chairman of Maruti Suzuki, India's biggest car company. He joined a startup that nobody believed in in an industry that didn't really exist. CBI cases, political persecution, 20 years of fighting a system that wanted him gone. But he didn't break. He didn't leave. And at 92, he is still the chairman. Today, we get into all of it. How he built it, what it cost him, and what it actually takes to do something that nobody thought was possible.
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So, for me, it's personally very exciting to talk to you, uncle, as we've decided to call you, and what I do call you in real life. I just want to start from before Maruti. You were in the IAS, you were a joint secretary. Of what were you the joint secretary?
I was joint secretary in the Ministry of Power, and then I became joint secretary in the Cabinet Secretary.
On the way you have to stop to cool the car.
So like that there are so many people who used to write to me that I've taken the car up to some pass somewhere in the Himalayas. I had a great time with this picture of them. So lots of letters like that used to come. People used to send me that we run a tour from north India to south India and we had a problem. There were so many of this kind of testimonials which kept coming in of people being surprised. They've done things which they never thought a Maruti 800 could do.
Not a car. I think they didn't think a car could do this without breaking down. So I think that's such an interesting thing that you're saying, which is that I think everybody goes in a car today and you take a car for granted. Today a car breaking down is seen as a very random, irritating thing that happens. But I remember also when I was young, when we used to go to Kandala in the Ambassador like you're saying, you had to stop and it had to cool down.
Yeah. And on your way up there was always a debate. Would my car stop or would my car not stop? There was always tension in the car. You know, it was always if you made it to the top without any problem, great. But good chance that something would happen. And of course on your way up there would be 50 cars that you would see out there with the bonnets open, the guy waiting out there for the car to cool down or like you said, fan belt, whatever, all this stuff.
You remember the monsoon period?
Monsoon was finished. The wipers didn't work.
No. How many cars would stop on the road? Because water would enter the distributor.
Yes. Right. When I went to Kolkata for this car show the first time, the journalist there said, 'Sir,' okay, let's see. When I went there a year later, we had a press conference and these same guys told me that the only car which would go to the airport during the monsoons was a Maruti 800.
It would never—the water had no effect on it because the distributor was totally sealed.
Correct. It was waterproof. So basically you were responsible for modernizing the way Indians travel, the way Indians think about cars. When I was a car user, I expected very little of the car.
And going to servicing, you had to sit around there out in the open. I still remember getting a first service sitting out in the open getting the car serviced.
When I became marketing director, I said, 'Look, I have a chance to change some of these.'
And that's what some of the more modern practices you see came about because of that.
My own experience with it.
That's called true disruption. You disrupted the way Indians think about driving, therefore you disrupted—like you said, suddenly you could have hotels and hill stations, you know, places everywhere because people could travel who couldn't travel before.
All over India suddenly it got more dispersed. Urban India, mobility increased, women could drive more. People could go further distances. So yeah, you know, the country developed more when people can go further and further, the country develops more, the roads get better, people build more roads because there are more cars. That is a truly disruptive technology.
So would you say that Maruti also, because of the supply chain that you created, this massive back-end industry, really built what is the modern car industry today in India?
I think it was the fact that there was this kind of a component industry in India which attracted all the global car manufacturers to India when liberalization took place and cars were delicensed. You look around and you'll find very few, if any, other industry where all global manufacturers have come to India. And this is largely because the biggest concern of foreign manufacturers is supply chain in India. We have never seriously worked to strengthen and improve the quality of our supply chains. And supply chain is the heart of manufacturing. If you want to develop your industrial base, you have to develop your supply chain.
Got it. So you know, as the chairman or managing director of Maruti, you also innovated a lot and disrupted a lot of managerial practices. You forced managers to use the same toilets as workers and eat the same canteen food as the sweeper. That's even today a crazy thing to do. Can you tell us more about that decision and how that happened?
As I said, the primary object was how to build a team. Now if you are going to tell workers that you are my partners and you are as important as anybody else in the company, which is true actually.
Any component is as important in the product as any other component.
Yes. One bad small component will bring the machine to a stop.
Then you have to treat people to believe that. If you distinguish between people on grounds of hierarchy, in terms of what they eat or where they go to the bathroom or what clothes they wear, how do you bring about this sense of equality and partnership? If you have a team in football or cricket, don't they all have exactly the same conditions? Clothes, dressing room, staying, everything, same principle.
So that applied in Maruti also. We started having open offices. So instead of everybody having their own room and all three, four, five air conditioners and all that, I said, why sit in a big hall, you'll be disturbed? They said okay, we'll make small meeting rooms where if you have to do some secret work, go and talk to the guy secretly there. But otherwise why should you not be doing your work in the open? Why should your work be confidential from others? And I told the officers, you guys need less calories because you're doing less work as you become fat.
Yeah. So it's better you eat the same food, less oily, less fried stuff.
Eat what the workers eat.
And what did the officers say when you told them?
In the beginning, some of the senior guys who came to us, general manager type of guys or from other companies, they wouldn't do this.
And they started bringing their own lunch and they started a lunch box?
Mr. Krishna Murthy said, 'Lock the room. Take away the air conditioner.'
That lunch room they made for themselves.
Right. Right. And what about sharing the bathrooms?
That was from the beginning, that there will be common bathrooms.
Because in a manufacturing floor, the only way to have clean bathrooms is to have a common bathroom.
There's no other way you can do it.
That is not the way. You're right.
You see that in any office.
In the airports also. Airports everywhere.
Yes. You have to have common parts.
Yes. It's true. You came from the IAS which is a very hierarchical institution, and in Maruti you started dismantling the hierarchy. Where did this impetus come from?
It's part of the system of reducing cost. If you look at it logically, why should a paper go through four levels before a decision is taken?
You have, you know, in public sector you have these levels where the executive joins let's say at L1 or P1 or whatever it's called, then P2, P3, and the manager is some P5 and then general manager is P8 and there are people at each level signing papers. Why? It's waste of time, waste of money, delays, all of it costs.
You're trying to bring down cost, so we said we'll have a flat hierarchy.
We'll have a department manager and below that everybody is equal. You can be in different pay scales depending on your seniority. But it doesn't mean that your seniority means that you have to get people with less years of service reporting papers through you.
Right? You report directly to the department manager or the general manager.
Got it.
Flat hierarchies are accepted everywhere in the world as the right kind of thing to do. This hierarchical system in offices is terribly wasteful.
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You know what's very interesting—that you were running a car company without being a car expert, and before you did this, you didn't know anything about cars more than the average person except that they break down a little bit. So you had all these technical people working under you who obviously knew much more than you. Did you ever have imposter syndrome? How did you manage to lead all these different people without having that domain expertise?
No, I'm wondering why more people didn't ask me this question in the past—that here you were a total generalist put in charge of running a car company. Nowhere in the world I think will you find a generalist who becomes the managing director of a car company.
I think the answer was that firstly I was quite willing to ask all the technical people, 'Okay look, I don't know this. Tell me, explain why you do this.' Now you'll find if you ask a technical person why you do this, he has to become very clear in his thinking as to why he is doing it. And then you ask him what about the cost, what about the alternative, so they start thinking differently. And when they saw that my questions would ultimately lead to some improvement, they started in a sense respecting me because they see this guy can understand what we tell him and then he asks me questions which make me think more.
But how do you—you know, just to understand your mindset, because many of us are in situations where we are a little bit out of our depth. How did you navigate?
Like any job. When I became agriculture production commissioner, I didn't know a thing about agriculture, animal husbandry, sheep breeding, forestry, fisheries. I was still the secretary of the department, I had to deal with all the technical people so I had to learn these things. One of the, I would say the key to doing any job is your willingness and your ability to learn. And to learn, you must be able to tell people, 'I don't know. Explain to me.' If you start behaving as if you know from the beginning, you never learn. You have to shed your ego and tell people that look, I want to understand this, please tell me. I found this in all walks of life, whether it was in the electricity ministry, whether it was in agriculture production, wherever I worked. This willingness to tell people and ask them to tell you—you have to be able to learn quickly, you have to be willing to understand, you have to be able to analyze.
Japan's manufacturing capability is built on collective responsibility, like you said—the worker, engineer, manager all feel every cog is part of the machine equally, which is a very radical concept in a country like India where we love hierarchies. How did you actually change that in Maruti? How do you change people's minds?
It's all discussing with them the question of cost.
It all came down to cost. You brought it down to very efficiency.
Cost. Every company we had earlier, I had seen, public sector, all have a quality inspection department.
What does a quality inspection department do?
Locate the mistakes made by the worker.
And then somebody has to correct it.
Some mistakes are missed because a human inspection can never be 100%.
They go to the customer also.
If the worker was to make it right the first time, you avoid this whole quality inspection.
Prevent the mistake by empowering.
How much money do you save?
If the vendor correctly makes his products, packs them correctly, the right number, the right quality, you don't have to have any inspection at your end. We used to have a large department of vendor inspection, a big store of storing spare parts, big inventories for days on end. Over time, we did away with all of that. We don't have a store except for imported parts. Local parts, we barely carry three hours of inventory because everybody needs to do his job. Then you bring cost down. You can't be competitive if you pack extra cost at different levels in different ways.
And everybody does their job because you empower them.
So if you find a defective part on the line, stop the line, say this part is defective, I won't give it up. But you also have to motivate them because they were concerned with maximizing the number of saleable cars made. They had a bonus relating to the number of saleable cars made.
So the fewer mistakes you made, the less rework there was done.
So I'm just trying to understand what would be a analogy there or lesson for people today. You have so many entrepreneurs in India employing people on all different levels. One is of course treat everyone equally, and how do you motivate everyone, every cog in the machine, to pick up the slack?
Fundamental motivation—I talked about the soft motivation, treating them and respecting them as human beings. You can't treat some employees as if they are socially, educationally inferior to you. That's not right.
Treat them as such. The second is that if as a result of their efforts you're making more money, use some of this money to improve their lives also. They should see in a transparent way that some of that benefit is actually coming to them. Got it? See, if you're running say at 100, everybody's happy. The management is making profits out of 100. If I can increase by doing a different management system from 100 to 200 and if I share 20 out of that to the workers, I still have 80 more.
Who's losing out of this? But workers coming late, not working seven and a half hours in a shift, taking longer lunch breaks, absenteeism—all of this costs.
Having a leave reserve is a cost.
If you don't have absenteeism, you don't have leave reserve. So you reduce cost.
Right. You know, I worked in a company in Germany many years ago which had a factory floor also—it was compact disc manufacturing. So I spent some time on the manufacturing floors in Germany for a year basically. And I saw that in India, the Indian middle class in general aspires to an IT job or something, a white collar job, not a blue collar job so much. But in Germany and in Japan, which were two great manufacturing countries, that's not the case. A manufacturing job is a great job to have also. So how much of India's manufacturing gap is actually a status problem dressed up as a policy issue?
I think our engineers and our supervisors even haven't had enough experience on the shop floor at work. One of the innovations we made in Maruti which was resisted by many was that we started promoting workers to become supervisors. The objection was workers are unionized, supervisors are not supposed to be unionized. If the same worker becomes the supervisor how will discipline be maintained? These were the usual objections, none of it remained valid. The person who became a supervisor was extremely effective in training the workers, teaching them what to do because he knew what the work was. The workers respected him. And it's wrong to think that if he was a worker, he will always remain irresponsible. I think what we need to change is a mindset about workers. If you start talking to workers, educating them, treating them like they are part of your total family of production people equally as human beings, there's a huge difference. They are basically similar human beings. In fact, much of the improvements which happen in a factory come from the people who are actually doing the job because they know where improvements are possible.
Right? And does that still happen in India a lot?
All the time. Last year I think we made more than a million suggestions which were implemented. We saved over 400-odd crores. You have to make the worker feel that if he makes the company do better, he will also do better.
That's basic to this whole concept of manufacturing.
Uncle, now I want to move a little bit more. You know, in your amazing life of how many years, if I may ask?
91 plus. Amazing. In this amazing life that you have, I want to talk a little bit more about the adversities that you faced because it's through our adversities that we learn so much as well. Even though you have had a spotless career and with 100% integrity, but you were actually prosecuted by the government that you were part of for doing your job. The CBI put multiple cases on you for decades. Basically...
They lasted in court for about 20 years.
20 years. You had 20 years of CBI cases. Can we discuss why that happened?
It's always financial benefit in some form.
Mostly what politicians ask for. The bottom line of all that is a financial benefit. You know, government's decisions are not always shaped by logic or rationality. The political aspect of government is very important for people in the government. What happened to me was largely because some politicians thought that they had a right to get some benefits from Maruti, Maruti vendors and others. I had always taken the view that I will not allow anything to be done which will in any way harm the interests of Maruti either in the short term or the long term.
And that brought me in conflict on various issues with some of these politicians. And that's where the CBI cases started. These cases were ultimately the result of political factors. They were not based on fact. They were not based actually on any law which could be upheld. And that is what the courts did ultimately. They threw the cases out without framing charges because they said even assuming what the CBI has said in their charge sheet is valid, if you accept all of that, even then no crime is made out.
That time Maruti was the most outstanding public sector company, one of the few companies which was actually making substantial profits, giving dividends.
And that same company, we were accused that you're favoring Suzuki.
That's one of the things which, for purposes of somebody wanting to get himself promoted after I retired, he was trying to show that Suzuki was not a good partner, should get somebody else as a partner and all that. The company which built Maruti, which brought it to the stage of making it the dominant company in India, had this kind of allegation. Mr. Suzuki was tremendously hurt.
He said, 'I have worked with so much trust and so much commitment to India, and this is all political.'
Right. And you see how it happened—once the settlement was made, fortunately the government changed and Mr. Sikandar Bakht, he was the industry minister, he realized that there's no way a car company could be run by a government, there's no way a car company could just be handed over to somebody else to run. The whole technology, manufacturing, everything is different. So he went back and gave Suzuki control and you see what's happened to the company.
So in this case there was never an allegation of personal gain or theft?
That is the beauty of the whole thing—that in all these CBI cases there's no personal gain or any kind of personal motivation.
So what did you feel, uncle, when these cases happened? Because CBI cases are a very scary thing for most people.
I knew enough about government to recognize what it was.
Fortunately, I had the full support of Suzuki. I also had the knowledge in my own mind, my own satisfaction, that I have done nothing which was wrong. In fact, all that I have done has been in the interests of the company which I'm serving. I also believe that in this country by and large the truth ultimately prevails. I have confidence and I had the support of my family. Of course, all of us were worried. I mean I would be lying if I said we were not worried. It was...
Because you had the government against you on one side and you had Suzuki defending you on the other side. A foreign company was defending.
Never happened in the world anywhere, I think. So a foreign company was defending...
For a foreign company to defend a national of the company where they're working.
I don't think it's ever happened.
Against the government. I don't think it's ever happened and it should never happen again.
Yes. Like you said, this was 20 years—it dragged on in the court and all that stuff, which is a long time.
When pressure like this becomes long-term, you know, it's like chronic litigation, you know, reputation to some level, you must be feeling it even though you've done nothing wrong. How did you cope with it?
I think all those who were dealing in Maruti—I don't know what they internally thought about the matter, but externally I had no problems in my work within the company. No problems.
