THE MAN

NAME: Kushagra Nayan Bajaj AGE: 27 EDUCATION: MBA from Kellogg School of Management, Northwestern University, US; Undergraduate from Carnegie-Mellon University, Pittsburgh, Pennsylvania WORK EXPERIENCE: CEO of Bajaj Hindustan since January 2001. Worked on the shopfloor of Bajaj Auto for a year in 1998-99 MANAGEMENT STYLE: Get the best people and leave the day-to-day work to professionals FAMILY: Wife Vasavadatta and daughter Anandamayi

It's only nine in the morning, but the April sun is beating down on us with a ferociousness that's surprising even for Uttar Pradesh's notorious summer. The man we've travelled some 90 kilometres to meet is standing on the edge of a vast clearing, dressed in a sky blue, collarless Benetton T-shirt, tucked into his dark blue jeans. Unmindful of the heat and dust around him, the wiry young man, his hair combed back to expose a wide swathe of forehead, is watching over an army of construction workers and big earth moving machines level what until recently was land owned by small farmers.

It is easy to tell that his is not a desired presence on the site. A gaggle of supervisors hovers about nervously, as if expecting to be pulled up over something...anything. For, the young man is known to drive his workers to the very edge in his quest to get the site, where a 7,000-tcd (tonnes crushed per day) sugar mill is to come up, completed in record time. It was only in February this year that the 200 acres of land, in village Kinnauni, 20 kms from Meerut, was bought. In March, ground was broken and work started, but already the foundation for the sugar mill's massive boiler has been laid. By the end of the year, the young man, who placed orders for the mill's machinery even before he bought the land, wants the mill up and running. As we get over with the introductions and head back to the site office, the writer catches a site manager tell one of Kushagra's aides: "Please ask the boss not to visit the site too frequently because the progress may not be evident in such short gaps."

If Kushagra Nayan Bajaj, the 27-year-old CEO of Bajaj Hindusthan, seems to be in a tearing hurry, it's for good reason. The Rs 140-crore mill, his company's third (the other two are in eastern UP), will hike the group's cane-crushing capacity to 31,000 TCD, making it the biggest sugar producer in the country, ahead of Vijay Saraogi's Balrampur Chini, which currently holds the top slot, with a capacity of 29,000 TCD. In fact, the Kellogg School of Management-graduate, and son of Shishir Bajaj, wants to go farther still. He's bid for all the 24 state-owned sugar mills put up for sale by the UP government. His competitors, in contrast, have bid for one or two mills. If he gets all of them-surprisingly, a likely scenario-Bajaj Hindusthan will become one of the top three sugar producers in the world. "It's a very aggressive posture, no other sugar company has done that," says S. Ranganathan, a sugar industry analyst with Mumbai-based LKP Securities. Asks Kushagra, outlining the scale of his ambition, "Why can't we have a Dhirubhai (Ambani of Reliance Industries) in the sugar industry?"

Sugar is Thicker Than Blood

Don't dismiss the rhetorical question as mere blue-sky visioning by some wide-eyed 27-year-old. Bajaj has done what few men of his age will dare to in pursuit of ambition. He's split the 125-year-old extended Bajaj family, where till date the scions of Kamalnayan and Ramkrishna Bajaj (sons of founder Jamnalal Bajaj) have held equal stakes in the Rs 6,700-crore group's diversified businesses that, besides sugar, include automobiles, electrical appliances, FMCG, and steel. That has been true of the group's 40-odd privately held firms, too.

Equal shareholding, however, has not meant equal control over the management of these companies. For instance, Bajaj's father, Shishir, manages Bajaj Hindusthan and Bajaj Consumercare (earlier called Bajaj Sevashram), with annual revenues of Rs 466 crore and Rs 125 crore, respectively. Uncles (and sons of Ramkrishna) Shekhar, Niraj, Madhur, and (son of Kamalnayan) Rahul manage Bajaj Electricals, Mukand Steel, and Bajaj Auto, respectively. While Madhur is the Vice Chairman of Bajaj Auto, cousin Rahul is the Chairman and until recently its public face.

"I have been passionate about business ever since I can remember. It runs in my blood."

The family fight-which has Kushagra and his father Shishir on one side and Rahul and the three other cousins (Shekhar, Madhur, and Niraj) on the other-has Bajaj Auto at the heart of it. The automobiles major is by far the biggest company in the group, accounting for 80 per cent of its revenues and 90 per cent of its profits. But it is controlled by Rahul and his two sons, Rajiv and Sanjiv. For good reason. When Rahul took over the company in 1965, it had revenues of about Rs 7 crore. But when the numbers are added up for 2003-04, revenues should top Rs 5,000 crore. A lot of that growth and the company's comeback as a maker of motorcycles must be credited to Rahul's vision and energy.

Therefore, when the time came to induct the fourth generation of the family, Rajiv and Sanjiv-who, like their other cousins, have done the mandatory shopfloor stint-got key posts in Bajaj Auto: the 38-year-old Rajiv as Vice President of Products (he became the Joint Managing Director in March 2003), and Sanjiv, 35, as Vice President of Finance (he became Executive Director in April 2004). Although both the sons are well qualified (both Rajiv and Sanjiv are engineers with degrees from the University of Warwick and the latter has a Harvard MBA to boot), their elevation meant that the other scions would not have a significant role, if any, to play in the biggest and most profitable of the Bajaj companies.

Apparently, that's not a big issue with most of the fourth-generation scions ready for family business. Shekhar Bajaj's son Anant, 27, works in the export division of Bajaj International, which itself is a division of Bajaj Electricals. Madhur Bajaj's daughter Neelima, 28, also an alumna of Kellogg, runs an in-house travel agency Hind Musafir, although she's done a stint with Coca-Cola India and, not for that reason, is considered "CEO material".

But Kushagra, who joined Bajaj Hindusthan as CEO in March 2001 soon after Kellogg, did not want to play second fiddle. So when he wanted to grow his own sugar business, he found that the family's cross-holdings were proving to be a big hurdle. Says a source close to the family: "Kushagra wanted to be his own man and had several plans for growing his business, but he had to constantly get his ideas vetted by the other shareholding members of the family." Such an arrangement did not appeal to Kushagra, who has been nursing ambitions of making it big (globally, no less) in the sugar business. "I have been passionate about business ever since I can remember, it runs in my blood," says Kushagra.

THE COUSINS* Two of Kushagra's cousins are well-settled, while the two others are yet to make their mark.

Rajiv 38, son of Rahul Bajaj, is Joint Managing Director of Bajaj Auto Sanjiv 35, son of Rahul Bajaj, is Executive Director of Bajaj Auto Anant 27, son of Shekhar Bajaj, works with Bajaj International, the export arm of Bajaj Electricals Neelima 28, daughter of Madhur Bajaj, works with Hind Musafir Agency Pvt Ltd., a group travel agency *Only those involved in family business

What followed was a bitter split in the family. About two years ago, Kushagra raised the banner of revolt and convinced his father, who is the Chairman and Managing Director of Bajaj Hindusthan, to untangle his holdings. That meant Shishir would sell his equity holdings in all other Bajaj group companies, including Bajaj Auto, to his brother and cousins, while buying back their holdings in Bajaj Hindusthan and Bajaj Consumercare. However, Shishir and his brother Rahul (who had the support of his three other cousins) couldn't agree on the valuations and the terms for settlement.

Outside help was sought. First, Maharashtra politician Sharad Pawar was brought in to mediate, but he could not break the ice. But in June 2003, the Swadeshi Jagran Manch leader, S. Gurumurthy, came in and brokered a deal. Accordingly, BT learns, family confidante Dhirubhai Mehta drew up a memorandum of understanding that was signed by both the parties on February 26, 2004. As per the MoU, Shishir Bajaj is to get Rs 200 crore for exiting Bajaj Auto and the other group companies that he does not manage, and an additional Rs 50 crore from the family's charitable trusts. But just when the deadline for implementing the award (April 26, 2004) was approaching, Shishir demanded an additional Rs 40 crore, which, BT understands, is due to the increase in the share price of Bajaj Auto since the MoU was signed (the stock is up from Rs 500 to Rs 900). When BT went to press, the fight seemed set to go to the courts.

Ask the rival Bajaj camp for its opinion of Kushagra and it will tell you that he is aggressive, arrogant, and irreverent. In other words, quite a contrast to father Shishir, who is said to be mild-mannered and "happy go lucky", in the words of one family member. Apparently, a family member says, Shishir hardly speaks at board meetings of the group companies, implying that Kushagra is the chief negotiator for his side in the family dispute. Outside of work, Kushagra keeps a low profile and prefers to spend time with his wife of five years, Vasavadatta, (sister of Kumar Mangalam Birla), 18-month-old daughter, Anandamayi, and his newly-acquired pug. Among his friends is Amar Singh of Samajwadi Party whose help may prove critical in his bid for the state-owned sugar mills in UP.

A Monstrous Sweet Tooth

Whether or not the fight goes to the courts, Shishir and his two sons (the other, Apoorva, 23, is studying to be a chartered accountant and also works for Bajaj Hindusthan) should get anywhere between Rs 250 crore and Rs 300 crore. Where will this money go? Into sugar. Kushagra wants to be in no other business because he thinks there's plenty of opportunity here alone. For instance, sugar consumption in the country is expected to grow 4 to 5 per cent every year to reach a per capita consumption figure of 27 kg by 2014. To meet that demand, the industry will need to create an additional annual capacity of 3.2 million tonnes to supplement the existing 20 million tonnes. So Kushagra's focus is on expanding his sugar business, either through new mills, like the one coming up in Kinnauni, or through acquisitions of state-owned or private mills. Sugar being a commodity business, the idea is to make money from huge volumes like what Reliance has created in petrochemicals.

There are 530 sugar mills in the Rs 25,000-crore industry. But few of the barons seem as focussed as Kushagra. "We think only two companies will make it big in the sugar business: Bajaj Hindusthan and Balrampur Chini," says Ranganathan of LKP Securities. Part of the reason is that only these two are intensely focussed on sugar, while the other players such as Dhampur Sugar and EID Parry, also dabble in non-sugar businesses such as power (bagasse, a sugar byproduct, serves as feedstock). No wonder, then, the investors are more focussed on Bajaj Hindusthan and Balrampur Chini. In just the last one year, the former's stock price has soared from Rs 72 to Rs 559, while the latter's has jumped to Rs 407 from Rs 105.5. One reason is the projected sugar shortage. The other is their ambitious plans. "For his age, he is far more intensely focussed and he also has tremendous tenacity," says Gaurav Dalmia, a Delhi-based investor and a cousin of Kushagra. "The way he has worked through the family split is an example." In fact, in the past few months, at least eight research houses have initiated coverage on Bajaj Hindusthan, indicating their faith in the company.

But isn't sugar a 'non-sexy' commodity business compared with two-wheelers, where his cousins are building their fortunes? Kushagra's answer: "Software became sexy because of Infosys, petrochemicals because of Reliance, and now power is sexy because of Reliance Energy. In another five years, sugar will be the sexiest industry." He has already poached key employees from rivals such as Balrampur Chini, and claims to have received 11,000 applications for the 400 openings at the sugar mill coming up in Kinnauni. What these men, like Bajaj Hindusthan's new set of eager shareholders, will want to know is simple: Whether Kushagra is as competent and mature as he is impatient.