In 2001, the World Economic Forum named five Indians as Global Leaders of Tomorrow. Today, that eclectic list of five is down to four—erstwhile head of IT industry body Nasscom, Dewang Mehta, died in April that year. Omar Abdullah is now the youngest chief minister of Jammu and Kashmir; Raghav Bahl, Television Eighteen India Ltd’s managing director, is shepherding his media empire through adverse market conditions; and the then CEO of ill-fated Enron India, Sanjay Bhatnagar, now runs a private equity fund.
The fifth Global Leader of Tomorrow, Nikhil Nanda, joint managing director, Escorts Group Ltd, has spent the last five years of this decade clearing up his company’s balance sheet. “Four years back, we had a liability in the region of Rs1,500 crore, which has now gone down to Rs520 crore, including working capital.”
Dressed in regulation corporate attire—sky blue shirt and navy suit—Nanda is already waiting for me in the coffee lounge at the Belvedere Club at The Oberoi, New Delhi. He brushes aside my apologies as I furtively glance at my cellphone to check if I am late for our 6pm appointment. “You are not late, I was early,” he says, pointing at the dial of his simple, black-strap wristwatch. “For once the traffic from Faridabad was not bad.”
Looking back: Nanda wishes Escorts could have held on to the telecom business. Jayachandran / Mint
Faridabad? “My office is at (the) Escorts R&D facility in Faridabad. I am there every day,” says Nanda as he escorts me to the more tranquil restaurant in the club’s basement.
A couple of years ago, Nanda’s company, once a leader in the tractor business, was almost written off. Without batting an eye, Nanda acknowledges this even as he orders another coffee for himself and a soft drink for me.
The company, which started out in 1944 as an agency to sell tractors in Lahore, Pakistan, became a franchisee of Massey Ferguson tractors in India in 1949 under his grandfather H.L. Nanda. By 1959, it had graduated to manufacturing tractors with technology from the Ursus factory in Poland, and followed it up with a collaboration with another Polish company to manufacture motorcycles.
The latter project would give birth to an Indian icon—the first Rajdoot motorcycle rolled off Escorts’ assembly line in 1961. Tie-ups with Ford Motor Co. and Yamaha followed, and by the mid-1990s, Escorts was a major industrial power with a list of popular brands.
And then, things started to go awry.
A joint venture with First Pacific Co. Ltd of Hong Kong to set up Escotel Mobile Communications in 1997 never really took off. The group sold Escotel to Idea Cellular in 2004. By this time, Escorts had disinvested in the joint venture with Yamaha. Nanda’s uncle Anil walked away from the family business, and finally there was the hugely controversial disinvestment of Escorts Heart Institute and Research Centre (EHIRC) to Fortis Healthcare in 2005. In a decade, the Escorts group had gone to pieces.
But Nanda calls this a temporary setback—one that every company goes through in its life cycle. “In the six decades of our existence, like all companies, we’ve had some amount of trouble. There were problems four years ago, and perhaps why those got highlighted was because the general environment all around was brilliant and we were sort of looking not-so-brilliant.” In retrospect, he says, what went wrong was the focus on diversification. Funds flowed into the telecom venture at the cost of existing businesses.
That was a lesson the group learnt the hard way. Now Nanda, the grandson of Raj Kapoor and the son-in-law of Amitabh Bachchan, has his priorities clear. He says that for the next five years all he is likely to do is explore the potential in core businesses—agriculture machinery, construction equipment and railways and automotive parts. “We had the choice of going after volumes and market share, but our priority was that Escorts must earn its respect back in terms of being a blue-chip company again. I have been there to take the abuse, the insults from the suppliers and bankers. Believe me, there is no other way of learning that is better than learning on the job.”
Besides, Nanda says, when the economy and markets are so turbulent, experimentation and diversification are the last things on his mind: “Times are lean, we all have to cut cost(s) and do what we are confident doing.”
But that doesn’t mean Nanda doesn’t want to grow. As long as there is need to expand within the group’s core sectors, Nanda says he is willing to do what it takes to explore any possible avenues. “Why should we look at anything else? Railways, tractors, construction equipment—there’s scope in these sectors for the next 15 years. It will be silly if I don’t look at these opportunities. Besides, my company has to be fit, regain its No. 1 position in the three core sectors, the balance sheet has to be solid before I look at other businesses.”
With something of a doctorate in crisis management under his belt, Nanda is unperturbed by the pessimism in the markets and industry. In fact, he says, by February 2008 his company had already started implementing a cost compression exercise with the help of Eicher Consultancy Services. Moreover, the way he sees it, India still has a long way to go as far as infrastructure is concerned. “Look at the 11th Plan. The government of India has talked about spending in the region of $450 billion (around Rs22.5 trillion) of capex (capital expenditure) to improve infrastructure. We will need machines to do that, and Escorts makes those products.”
Being a member of Bollywood’s first family could have automatically got the 34-year-old Nanda a foothold in the film industry. But glamour leaves him cold: “I wanted to be an entrepreneur. Sure, I spent summer vacations with my maternal grandfather (Raj Kapoor) on various film sets; I have seen that life up close. But I felt I did not have the talent for being an actor, nor the looks or the passion for the business.”
As we chat, he spots a copy of his children’s school magazine among my papers. His 11-year-old daughter is on the editorial board of the junior school my daughter goes to and the proud father is keen to see what his girl has published. “She told me that she wanted the kids to read this magazine because it was young and interesting and not just because they have a copy,” he says, flipping through it and pointing out his daughter’s picture. “But really, the credit for how my kids have shaped up goes to my wife. I am really there only on weekends to play monopoly or lose a few games of chess to my eight-year-old son.”
Nanda considers his marriage to Shweta Bachchan at 23 one of his best decisions. “No one forced me to get married early in life. My mentality even at that age was to stabilize, to focus, have a woman that you can grow up and mature with. I met Shweta and knew she was that woman for me.”
Curriculum Vitae | Nikhil Nanda
Born: 18 March 1974
Education: Majored in finance and management, Wharton Business School, US
Work Profile: Director, business development, Escorts Yamaha Motor Ltd, in 1998; executive director, Escorts Group Ltd, in May 2000; chief operating officer, October 2005, after he had to resign as a director from the Escorts board when it was restructured; joint managing director since September 2007.
Management Mantra: ‘My definition of being hands-on (on) the job is not to interfere with anyone else’s work. Every individual you employ must have a sense of pride in what he does and he will have that only when he is allowed to do what he has been hired for.’
A Passion He Could Not Pursue: ‘I was always keen to be a pilot. However, my grandmother forbade me from learning how to fly since my grandfather’s brother, Yudi Nanda, died in the 1950s in an airplane crash.’
Favourite Politician: ‘I think Mr Laluji has done a great job. Whatever you say, (his) performance is speaking for itself.’