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SUGAR DADDY
Kushagra Bajaj, a scion of the Bajaj clan, has drifted from the empire and is carving out his own fiefdom in sugar. Will he be India’s new commodities king?
By Nupur Handa in Mumbai
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He hails from one of India’s best-known business families with a lineage stretching back 125 years. Yet it’s ironic that it
took a family feud in this illustrious B-family to bring Kushagra Nayan Bajaj into the spotlight. Son of Shishir Bajaj, the
27-year-old runs the two companies his father—cousin of Bajaj Auto’s Rahul Bajaj—inherited, Bajaj Hindustan and Bajaj
Consumercare. With yearly turnovers of Rs 466 crore and Rs 125 crore respectively, they are modest businesses and a small
sliver of the Rs 6,700 crore group founded by Jamnalal Bajaj.
But modest though his inherited empire may be the youthful and driven Kushagra has rather extravagant ambitions for it. And
he wants to get there at Warp Speed. Put plainly, he wants to become the country’s largest producer of sugar in what is
estimated to be a Rs 25,000 crore industry, in the process emerging as a formidable presence on the international commodities
market.
It was barely three years back
that Kushagra joined
Bajaj
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Hindustan as its CEO. Fresh out of the
prestigious Kellog Management School in the US and armed with a
B-School badge, he galvanized his employees and resources, giving
the moribund
work style the heave-ho and infusing with youthful energy a company that was stuck in idle mode in order to extract sugar.
He achieved that target. It wasn’t the sort of thing Kushagra trumpeted in
newspaper ads or in 30-second television spots, but importantly
he had muscled his way into sugar’s big league.
That was just for starters. Insiders talk about Growth with a capital G ever since Bajaj took over the reins. Be it good
old-fashioned organic growth or the quick but expensive acquisitions route, it didn’t matter. Kushagra set the ball rolling
at a frantic pace. Bidding for the 20-odd sugar mills that the state of Uttar Pradesh recently put up for sale, or
commissioning a new sprawling plant with a crushing capacity of 7,000 tonnes per day plant near the town of Meerut in Uttar
Pradesh, Kushagra is driving himself and his team equally hard.
Despite his youth and lack of hands-on experience in the sugar industry, there’s no doubt that he’s picked the right
industry. Sugar as a commodity holds great potential in the coming years. In India, per capita sugar consumption has been on
the rise—growing by 5 per cent a year—and is projected to reach a significant 27 kilos within the next 10 years. With current
production hovering around only 20 million tons, analysts project a deficit of 3.2 million tons. That’s the kind of
supply-demand divide that Kushagra and Bajaj Hindustan are dying to leverage.
Going by his track record, it’s unlikely that the young Bajaj will give up easily. Said to be of an independent temperament,
he’s determined to have things his way.
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Look at how he tackled a crippling funds crunch and the lack of focus that the group was plagued with when he took over. In
his characteristic go-getter fashion he spotted a automobiles, electrical appliances, fast moving consumer goods and even
steel. But despite a diversified presence, it is automobile major Bajaj Auto that continues to be the star performer,
contributing a staggering 90 per cent to its bottom-line.
Delinking from the family, would involve his father Shishir |
who’s currently the chairman and managing director of
Bajaj
Hindustan, selling his equity holdings in all the other
contention-as is often the case in deals of this magnitude
is the
price. Despite prolonged negotiations and the intervention of family friends, the deal, which would free up resources for Kushagra’s expansion, is yet to be concluded. While the exact price remain confidential, after swapping all the cross
holdings, the deal’s expected to net Kushagra and his father a cool
Rs 250-300 crore.
That’s the kind of money he’ll need to stay alive in the slugfest that’s the Indian market. Already Rs 140 crore is said to
have been invested in the new plant coming up near Meerut.
Kushagra knows that his if his business model collapses, he’d be toast. With the competition comprising biggies such as
Barampur Chini, Oudh Sugar and Dhampur Sugar, can Bajaj Hindustan live to tell?
Perhaps. For one, there’s focus. Unlike the 530 other sugar mill owners across the country, many having a presence in
non-sugar related areas, Bajaj Hindustan is keeping all its eggs in one basket. It’s early days yet but the rewards—should
his going-for-broke strategy succeed—are indeed mouth watering. Industry watchers say that if Kushagra bags the sugar mills
he has bid for in Uttar Pradesh, that alone would catapult him into being one of the three largest sugar producers in the
world.
But while the company is on a PR tear to tell the world that it is reinventing the sugar industry, Kushagra is beware of the
hype and the hokum; he knows that sweat still counts. And indeed he has sweated every rung of the ladder. He has worked on
the Bajaj Auto shop floor and seen the formidable Rahul Bajaj—Kushagra’s uncle—take the turnover of the company from single digits to close to Rs 5,000 crore. He can’t aim lower.
All this has brought the feisty Bajaj firm right under the arc lights. Investors are happy and the markets have sent the company’s share shooting up nearly eight times in the past year.
If Kushagra knows one thing for certain, it is that in an industry that’s been through the wringer during more than a decade of liberalization, the easy money has long been pocketed. But with the magnitude of the stakes involved, the sultan of sugar is prepared to fight for every inch of market space.
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