Marathi Big Boss : Ajay Bhagwat

Translated by Akash Deshpande

Welcome to the Marathi Big Boss program. Through the medium of this program, we seek to remove the inferiority complex that exists in Marathi society, the misunderstanding that a Marathi person cannot become an excellent businessperson, that he cannot manage commerce. And through this medium we encourage the effort to increase productivity and commerce. Hence we meet persons who have taken their business to global levels. Amongst them, one name is Ajay Bhagwat.

Ajay Bhagwat has grown his business Renu Electronics to 100s of crores of Rupees worldwide in many countries. Today we are going to discuss with Bhagwat-sir what qualities are needed to become an excellent businessman and how to organize the activities keeping that in view.

Ajay Bhagwat, founder of Renu Electronics, a leading company in industrial electronics. Even though he is from a middle-class family, through his father he learnt not to do just a regular job. After completing his studies in America, he returned to start Renu Electronics. World-quality production is the specialty of Renu Electronics. Not only that, Renu Electronics has started a factory in the aggressive manufacturing climate of China, and developed a program for competing in the Chinese market.

Sir, welcome to the program.

Namaskar.

Your education is from IIT. In 1985 you graduated from IIT, got a scholarship and went to America to pursue Masters. In 9 months you completed the Masters program and got an excellent job. So why did you decide to return to India and start something of your own?

My father worked in the Electricity Board, and from a young age he told us to do something on our own: create jobs instead of doing a job. Having grown up in such a climate, right from the start it was in my mind to build some business of my own. In America, after education, I did do a job for a short time to get experience, but having been promoted quickly to a powerful position, I thought if I stay here much longer it will become very difficult to leave all that and return to India. The intoxication of money and job is difficult to leave after some time. Hence, after working only for a year or so I returned to India, and without trying for a job anywhere immediately started my business.

Sir, you started your company in the industrial space and built it as a production factory. Companies have to figure out which market to target. You always held the whole world to be your market and decided to export your products. Why did you decide to sell your products in other countries?

Rather than thinking of it as selling abroad, I have always thought of the global marketplace, and India is automatically included in it. So from the first day I said we should do something that applies worldwide and gives us the global market. Even while I was in America and studying there, every day I spent a few hours learning and analyzing who does what where, where I could get a good opportunity, if I make something who will buy it. While doing this, I spotted an opportunity in America itself. Since no one else was making the product, I thought we should do it. And once we got started, I thought why target only America? Why not Europe? Why not Japan? Why not all the other markets? Why not India? So from the first day when we started the design we kept this in mind.

Sir, you said you saw the opportunity in the American market, you took it, and decided to take it up as a business. You have industrial products. What is the nature of your technology and what opportunity do you have in the global market?

Look at a machine in a factory. The information needed by the machine operator, the repair technician, the operations manager, is collected on specific interfaces to the machine. The operator needs to specify to the machine to produce a hundred units, or the manager needs to find out how many of the hundred were produced without defects, what was the down time of the machine, if it stopped working what was the reason – we started manufacturing the interfaces needed to gather such information from the machines. When I was working in America, I myself was searching for such products, for manufacturers of such products, and then I realized that no one was manufacturing such interface products that could work with different machine controllers all over the world. Hence we decided to make such products. This field is different because unlike the home or commercial environment, the industrial environment is much more hazardous, the temperatures are more extreme, humidity can be high, there can be electrical noise, there are many constraints and standards, special considerations are needed for safety. We learnt all of these aspects as we designed our products. Hence our company is known throughout the world as complying with all the standards, possessing all kinds of certifications. Today there’s no market into which we cannot sell because of noncompliance to the standards in that market.

Sir, you have a product. We see a lot of service industries in India. But your unique position is to make products. We have seen service industries scale up, such as BPOs. But we don’t see the mentality for product industries. So why did you select a product industry?

Unfortunately, what you say is very true. There are very few companies in the country that do the kind of work we do. Ours is the first company in Pune’s Electronic Hardware Technology Park, and probably the first or second company in the country. Unfortunately, there are very few such active companies today, but ours is one of them. After returning to India, I was involved in several different types of companies. I invested in several companies. I was on the board of directors of several companies. But this company’s specialty is that we make our own products. We decide what to do, which features to implement in the product, how to position the product, and accordingly by using our own investment we design and manufacture the product. The main reason for this is what we call scalability – in a service company, if your turnover today is 1 crore, and you want to double it to 2 crores tomorrow, you need twice as many people, twice as many resources. In products however, while you need more initial investment and it’s more difficult, scalability is possible. Today even with just a few people, we can increase production. And the joy of doing so is also different – first we see our product working in front of our eyes, and then it works in any part of the world. Once I saw our product in Brazil. Another interesting story was when I saw our product right here near Chakan – there’s a big car manufacturing company where I was in a meeting. They gave me a factory tour and I saw our products in that factory. I thought, we don’t sell our products to this company. Then I realized that our products were made in Pune, sent to Holland, and from Holland a German machine maker took them, and that machine was installed 15 km away from my factory in Pune. There’s a different joy in seeing your product travel all over the world and return to your own backyard. Out team also likes this a lot – engineers, production people like working in products rather than in services.

Sir, while we are talking about products, and about electronics and electrical equipment, we cannot bypass the subject of China. In recent times, cheap products from China are attacking the Indian marketplace. Manufacturers in India have lost confidence and are looking to exit their businesses. You are manufacturing products for the global market. How do you view Chinese products and the Chinese market?

Chinese products are definitely a form of competition and there’s fear. Their cost structure is lower than ours, and they have better infrastructure. To tell the truth, I view the Chinese products as an opportunity. In the last year we studied the Chinese market thoroughly, and this year we are starting production and sales in China. The Chinese market is huge. I look at these things as an opportunity – they are selling into our market, we can sell into theirs. The question is of competition and cost, but you have to realize that in China just as cheap products are sold, good products are also sold. It’s just like in India, someone buys a Rs. 100 shirt and someone else buys a Rs. 2000 shirt. Each shirt has its own market. China’s market is so big that I feel there’s opportunity for all kinds of products. Hence we planned to sell products in China and give them competition in their backyard.

Sir, you said you are starting production in China.

The logistics costs of shipping product from India are high, and even though China is a member of WTO the cost of locally manufactured product is less than the cost of imported product. The trade barriers are serious, and since the market is big, it doesn’t bear that cost. First we are going to make electronics in India and assemble the product in China. What we see in India, we are reversing and applying to China – giving them their own medicine. First start assembling in China, and then step by step add value in the local market.

Sir, we were discussing the Chinese market and competition and the global market. You accepted it as a challenge and an opportunity. When you started your business – you had graduated from IIT, you had an excellent job in America, you would have easily got an excellent job in India. In that situation, from your family or from the surrounding social class – relatives, friends saying, “you have studied well, why don’t you get a good job, why take risk” – this kind of mentality – did you encounter it?

From home, like I said before, from my parents I always got encouragement. They never said that now that your education is complete, please support the household. They always encouraged me to pursue whatever path I chose, and if that was for growing a business they were united with my purpose. After marriage, my wife also always encouraged me. Many times there were moments when I thought whether it is necessary to do what I am doing, there’s so much hard work. In the beginning there was a lot of extra work because in those days I was the only one doing that kind of work and hence even for simple jobs if I needed help, it was not clear where I could get it: where to do testing, if special skills are needed, whom to ask. Then my wife, and my children also – they knew that I would travel for many days, spend long hours at the office, I would routinely be at the office till 1:30 or 2:00 in the morning. In those days the Internet was not prevalent. Hence we had to go to the office to operate the fax machines, for example. A lot of time was spent away from home. But no one made me feel that it was not right. In fact, everyone came and helped me. Once in the early days, I remember we were making a shipment of hardly 200 or 300 units. Everyone – my father, mother, wife – came to the office to help. Today we ship thousands of units a day, but in those days making just a few units per month was difficult. Everyone gave me encouragement. Other people from time to time would ask if there’s a need to do all this work, that I could get a good job, why go through such privations in life. But in my mind I was confident that this was the best way and we kept doing it.

Sir, today some students get excellent education and then there’s family pressure, social pressure, and they turn to a job. But for those who have the desire to become a business person, what advice will you give them. While turning to business, how to prepare your foundation.

First of all, you have to look at business with your eyes open. We see two things. Some youth gets an idea in his head and without thinking through rushes headlong into business. When he fails, other youth around him become discouraged about entering into business. At the other extreme, some youth gets a good idea but because of fear or pressure doesn’t do anything about it. We see both kinds of cases. Hence you should turn to business with open eyes. What this means is to understand what we need to do to make a successful business, what preparedness is needed to do the hard work involved. If you consider all of these factors and then enter into a business, success will surely follow. If you jump into business without thinking of all these things, it’s like jumping into the water without knowing how to swim.

Sir, you had education from IIT. You also completed Masters. And you had at least some work experience. You entered product development, turned to manufacturing, and brought the product to market. Sometimes it so happens that someone graduates from IIT or another good engineering college, has a good idea, even has a product in hand. But the question arises, what about marketing, how to sell this product. Selling is extremely necessary. You may have a good idea, but how do you sell it. So for this selling, what do you need to do.

First of all it is important to realize that one may not be able to sell it. I learnt this very early. I started the business alone. We had no one for sales and marketing. In fact, we did not have any people for different activities. So, then, which battles to fight? We decided first to fight the battle of design, then the battle of production, and finally the battle of the market. When we were fighting the battle of design, we looked for others who could help us in manufacturing. When we found we couldn’t get help from others, then we entered production. Then we turned to the question of sales and marketing. We identified companies that needed to make our products. We said to them, we are willing to have you sell our products under your name. But all rights belonged to me. The intellectual property belonged to me and hence we could enter the market at any moment. Many times people make the mistake of relinquishing the intellectual property rights and depending on a single company. Since we did not make that mistake, when we were ready, we could bring our products to market and sell them directly. It is very important to realize when we are ready. Many times, if you enter when you are not ready, it’s like wasting money. We also have wasted some money in this way. For example, when we invested in sales in the European market, we realized that the difficulties there are different. So we took a step back and said we will go there when we are ready. Two years ago we restarted the Europe business. It is necessary to learn from these experiences.

In Marathi society we say there is an inferiority complex or a misunderstanding that has become prevalent that we cannot do this. But through personalities such as yours we sense that yes, we can attain enormous success in business. For those who want to enter business, they have a new idea they want to commercialize, what’s your advice to them?

Like I said before, look at the opportunity with open eyes. Focus a lot on figuring out whether it is a good opportunity – what we call idea validation. Me thinking that a product is good does not entail that the customer thinks the product is good. After talking with a few people it becomes clear whether an opportunity is good or not. Once you are confident that the opportunity is good, and you are dedicated to it, then whatever is needed to be done for that opportunity, you must do. If it’s necessary to raise capital, then raise capital. The most important part of building a business is the team. My good fortune is that my team is excellent. I travel so much, but I never feel like I don’t know what’s going on in the company when I am not present. All of our people, operations, engineering, finance, systems, HR, all the people have developed so well that they understand what vision I have for the company. Building this is very important. Many times, in Marathi people, I have sensed this problem that a Marathi person cannot build a good team. If we work on that, I don’t see any reason for the Marathi person to fall back.

We have discussed with Ajay-sir what is needed to succeed well in business. The lesson is to live and develop together – build a team and conduct business through that medium. You are a brilliant technologist and you have a good idea, but you don’t know how to sell it – so join forces with someone who can sell, include someone who can manufacture your product. With all this we can take a product to the global market and win the competition. For the advice you have given to increase productivity and enterprise in Marathi society, thank you Marathi Big Boss Ajay Bhagwat.

Advertisements

4 thoughts on “Marathi Big Boss : Ajay Bhagwat

  1. Ajay, Meelan (another great guy), and myself used to sit on the same bench for classes at Ruia College. After that we went to IIT-Bombay. I cherish this long association and we can all be very proud of Ajay’s success.

    Here’s a small anecdote which will show how India was then and how it has changed now, and what Ajay had to go through to get to where he is. Around 1988-ish, I was in Pune and Ajay was getting going with his venture. I accompanied him to the bank to explore financing options. Ajay made his pitch: I have advanced technology for which I have customers in the US, and I want to manufacture products in Pune to export abroad. The bank manager replied: I don’t understand this business model. We fund businesses that import technology and knowhow from abroad, and sell into the local market. Hence we cannot fund you.

    In that climate and with that kind of a countercurrent, he grew Renu Electronics on personal grit, dedication, and vision.

  2. Product development and marketing is one kind of culture. But what about R&D to develop new products? What are Renu’s views or policies in that respect? It is not just the question of being at the cutting edge of technology; it is the question of futuristic products.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s