June 26, 2017

Story of the People’s Car – From extortion to production.

Extortion, blackmail and abuse of power

The saga of Maruti cars…….

On 16 November 1970, a private limited company named Maruti Technical Services Private Limited (MTSPL) was launched by Sanjay Gandhi, the second son of then Prime Minister Indira Gandhi. He nominated himself as Managing Director of MTSPL with the second Director being Sonia Gandhi, the daughter-in-law of Indira Gandhi. The stated purpose of this company was to provide technology for manufacturing a “fully indigenous motor car”; (basically a car that was supposed to be 100% Indian in every way).

Original Maruti of S Gandhi

Sanjay Gandhi was known to be obsessed with cars and aircraft. Maintaining his family’s legacy, he failed to get a college degree, but Rolls–Royce (RR) of England must have seen some hidden talent in him, since he joined them as an intern in their manufacturing unit in the UK. The fact that he failed to complete his internship successfully is glossed over in history. Apparently, after only three years at RR he claimed that he had learnt all that was to be learnt about manufacturing cars, and this Gandhi returned to India with a dream, or so it is said.

Using every resource at his command, including the office of the Prime Minister, Gandhi started his initial production of Maruti cars in the ramshackle truck-stop area of Delhi called Gulabi Bagh; with a chassis that he manufactured himself and parts that were scrounged from the back- alleys of Jama Masjid area. A refurbished Triumph motor-cycle engine was initially used to propel this contraption.

Original Maruti assembly line

On the business front, the Gandhi family used their political power to raise funds from industrialists and traders to fund this project. Those who refused felt the brunt of the dreaded MISA (Maintenance of Internal Security Act) and COFEPOSA (Conservation of Foreign Exchange and Prevention of Smuggling Act). Thus, through threats and blackmail investments flowed quickly into the project and Maruti Limited was registered under the Companies Act in June 1971, within six months of the initial company being formed.

Three decades later Robert Vadra, son-in-law of the other Director, Sonia Gandhi of MTSPL / Maruti Limited would recreate this amazing feat of creating a fortune out of nothing.

In September 1971, with the full backing of Prime Minister Indira Gandhi’s cabinet, MTSPL was awarded a Letter-of-Intent to manufacture 50,000 cars annually. The Directorate General of Technical Development was arm-twisted by the then Minister of Industrial Development, Fakhruddin Ali Ahmed FAA Amulyaim(who was later hand-picked by Indira Gandhi to become the President of India), to issue this L-O-I against all norms.

While the L-O-I was being processed, Gandhi found a benefactor in the then Haryana Chief Minister Bansi Lal;BL ndtvwho influenced the Central Industries Ministry by recommending Gandhi’s case and assuring land, water, electricity and finance to the project.

The reason for this benevolence was that Bansi Lal was under attack at that time by his own party’s MLAs, who had submitted a memorandum of multiple allegations of corruption against him; to the President of India. Bansi Lal who was a shrewd and cunning politician, realized at the outset that the insurance of his political well-being was the younger son and political heir of Indira Gandhi.

And so it came to pass that fertile land near village Dundahera on Delhi-Gurgaon road was allocated to Maruti Limited at a throw-away price, despite the fact that the potential site for Maruti factory was within 1,000 yards of a military ammunition dump. Another Gandhi family factotum V.C. Shukla who was then the Minister of State for Defense Production, ensured that this military facility was shifted elsewhere so that there would be no hindrance to the dreams of the heir-to-the-throne. Low interest loans without collateral were extended to the project by the Industrial Finance Corporation of India, Central Bank of India and Punjab National Bank.

Laws were broken, institutions corrupted and morality was thrown to the winds to ensure that the ‘People’s Car’ dream was realized. When the then Law Minister H.R. Gokhale tried to advise Sanjay Gandhi on the legalities of this project, he was shocked by the rude response from the scion of the Gandhi family. “Mr. Gokhale, your laws do not apply to me”, scoffed the man who thought that he knew it all. With this attitude of its founding Managing Director, it was no wonder that Maruti Limited was in deep financial trouble towards the end of 1973.

As details of these irregularities leaked out, it proved to be a constant embarrassment to the government. Opposition leaders Atal Behari Vajpayee, George Fernandes, Madhu Limaye and others accused Indira of practicing the worst kind of nepotism. But this had no effect on Sanjay Gandhi. He merrily went on from one controversy to the next. Somewhere along the line, he managed to get his prototype tested at VRDE Hyderabad. It failed every test and was not declared road worthy. He tried upgrading his fully indigenous prototype, and had it fitted with a German manufactured engine with the help of the engine manufacturer. This idea also failed.

Design flaws in Gandhi’s Maruti car ranged from vibrations to steering problems to brake failure. Despite this, the Minister for Heavy Industries T.A.Pai granted an industrial license to Maruti on 22nd July 1974 for producing 50,000 cars. Pai was arm-twisted to do this by one R.K. DhawanRKD IG who started his career as a government typist but within a few years was the Personal Secretary to Prime Minister Indira Gandhi, as well as her confidante; who used his position to control flow of information and access to the PM. Interestingly, he would be a suspect in the investigation of the assassination of Indira Gandhi, with the investigating commission stating that ‘the needle of suspicion significantly points to his complicity or involvement’ (in the assassination). Dhawan weathered this storm and is currently a senior politician of the Congress (I) party.

As financial losses mounted, the wizard of ‘People’s Car’ started another company – Maruti Technical Services (MTS), which was heavily funded by the failing Maruti Ltd. MTS then floated a third company, Maruti Heavy Vehicles which acquired scrapped road-rollers, refurbished them with a paint job and sold them as new. States ruled by the Congress party were forced to buy these road-rollers at atrociously high prices.

Politics interfered in this stuttering saga of Sanjay Gandhi’s dream project. His mother’s party was booted out of power in the 1977 general elections. The newly empowered Janata Government initiated an Inquiry Commission headed by Justice A.P.Gupta, and based on his reports; on March 06, 1978, the High Court of Punjab and Haryana ordered the winding up of Maruti Motors. The dream was dead via court order.

The Congress party came back into power in 1980, but before the Maruti experiment could be resurrected; Sanjay Gandhi in his unique style that ignored good advice, decided to perform aerobatic loops in a two-seater aircraft over Delhi’s Safdarjung area, lost control and crashed to his death.

Post his demise, Indira Gandhi decided to revive the project. Maruti Udyog Ltd was incorporated through the efforts of Dr V. Krishnamurthy, and was established in February 1981; though actual vehicle production commenced only in 1983, in Joint Venture with Suzuki Motors Japan.

It must be specified here that Suzuki Motors of Japan had absolutely nothing to do with the political, economic or legal malfeasance(s) of Sanjay Gandhi, his mother or the Congress Party. 

After the death of Sanjay Gandhi and on the request of his mother, it was Dr. V.Krishnamurthy;download a highly respected bureaucrat who was Secretary in the Ministry of Industry till 1980, that did the spade work to evaluate various global car manufacturers, to find the right partner for the People’s Car of India. Suzuki Japan was the ultimate choice. Dr. Krishnamurty was appointed as the Chairman and CEO of the new entity Maruti Udyog Limited in 1981, and the rest as they say, is history.

The actual production started in 1983 with the introduction of the Maruti 800 car which was based on the Suzuki Alto Kei/SS80, (pictured in red color) which was at that time the most advanced car in Asia.

In 1984, the Maruti Van with the same 3 cylinder engine as the 800 was launched.First Gen SS30_SS40 MarutiFirst Gen Indian Maruti 800

Maruti Van India is 7th gen Suzuki van

In 1985; the Suzuki SJ410, 4WD off-road vehicle with a 970cc petrol engine was launched. This was renamed the ‘Gypsy’ in India, 220px-Maruti_Gypsyand was designed with a longer wheel-base than the original SJ410.

Suzuki also introduced the Pick-up mini-truck in India, Suzuki Carry L30 pickup truckbut that turned out to be a market flop.

The irony of the whole sordid saga is that the 100% Indian designed and manufactured ‘People’s Car’, started its journey in India as a 100% Japanese imported car, since the first few hundred vehicles of the car and van were fully assembled imports.

Initially, 74% of the company was owned by the Government of India and 26% by Suzuki Japan. As of May 2007, the Government sold its complete share holding and no longer has any stake in Maruti Udyog.

And there we have it, the saga of total failure to popular success; as witnessed by history.

Pic Courtesy: (1) & (2) – Times Content, (3) & (4) – Wikipedia, (5) – BBC, (6) – The Hindu. All vehicle pics – Suzuki Japan and Maruti Udyog websites.

Compilation: @sanjaymatkar on Twitter