The Entrepren-Years! I want to build my own Legacy, Rajeev Karwal

Before he attended his official farewell at Maruti Udyog, Jagdish Khattar chose to travel all over India for a month and bid adieu to the dealers and vendors of the company. After all, only a few could’ve been present for the formal do at the company headquarters in New Delhi. Khattar had joined the company in July 1993 as Director, Marketing, and took over as the Managing Director in 1999. After having served as the top man for two terms, he declined an offer to serve a third term. December 18, 2007, was his last day at Maruti.

JAGDISH KHATTAR of Carnation Auto

And on January 3, 2008, his company, Carnation Auto, was formally registered. The company provides complete solutions for most brands of cars—from servicing, repairs, accessories and insurance to selling and buying new and pre-owned cars. Khattar walked into his 600-square-foot office at Nehru Place in New Delhi that day, which was big enough for five to six people. He says, “I feel like I haven’t worked a day since!”
Khattar was 65 when he took the plunge. “But why is it that you want to mention my age?” says Khattar, incredulously. “I am the same person with the same passion, enthusiasm, drive and  commitment I had even when I started my career.”

 

“My feelings, exactly,” say several others who have chosen to strike out on their own after the age of 40, a time in one’s career when one is just about getting comfortable with the job profile, looking for promotions, and getting retirement plans in place. Or you are sure that you have hit the ‘burned-out’ phase and have nothing more to offer to anyone—not even your portfolio.
But what is it that makes some people take such a gutsy—if not drastic—step, as some might say?

The push-and-pull effect

As Prof. Anjan Raichaudhuri, who heads the core team at the Centre for Entrepreneurship and Innovation, IIM Calcutta, puts it, “[The drive to turn entrepreneur arises from] both a push and a pull situation.”
For Khattar, it was definitely a case of the ‘pull’ situation, wherein his experience at Maruti made him realize that the capacity required for after-sales service was not growing in pace with the increasing sale of cars. “It was a challenge for new manufacturers with initial low volumes to set up a network,” Khattar points out. The answer was simple: plug the gap. And that’s just what Khattar set out to do.

JERRY RAO of the Value Budget Housing Corporation

For Jerry Rao, Executive Chairman, Value Budget Housing Corporation, the choice was even simpler—it was a ‘push’ scenario. Rao had held several positions in Citicorp before he started Mphasis at the age of 46. He seemingly had it all—postings from New York, South America, India and England. He built Citibank’s consumer business in the U.K. and, as the head in India, introduced credit banking, ATMs, infixed deposits, car loans and so on. “But my career wasn’t going anywhere; it had, in fact, hit a plateau,” confesses Rao.
That’s when he started Mphasis, a software company that provided applications and remote infrastructure services—and was also a BPO and KPO provider. The company merged with BFL Software in 2000, and Rao moved on in December 2008. Now, he is involved with a new venture that provides affordable housing—at age 55.

My own Legacy

 

Biding time

Surinder Kapur, Chairman, Sona Group, looks at his 18 years of working in his father-in-law’s firm, Bharat Gears, as a “training period.” Kapur had finished his Ph.D. at Michigan State University and returned to India with intentions to start his own company. “However, the red tape in the country did me in,” says Kapur, who was considering going back to the U.S. and taking up a teaching or research assignment.
Fortunately for Kapur, his father-in-law secured a license for manufacturing automotive gears and offered Kapur a job. Soon, Kapur was the company’s Vice Chairman and Managing Director. However, he always knew he’d have his own turf one day. So, when he wanted to start Sona Steering Systems Ltd. (now Sona Koyo Steering Systems Ltd.) in 1987, his father-in-law recognized the entrepreneur in him and let him go. “Look at it like this: I’ll never have to retire, and I’m happy that my son will take over,” says Kapur, “And since the journey is fun—full of ups and downs—it keeps me young in mind and at heart.”

Money matters

For Khattar of Carnation, apart from the challenge and sense of fulfillment it brings, becoming an entrepreneur was about having understood the market and its capacity.
Since the idea had taken seed while still at Maruti, he actually had a plan for investors by the time he left the company. It was also about meeting like-minded people who believed in him and his idea, and growing the company with them.

Khattar’s seed capital came from the sale of a couple of his properties and a loan. His initial investment of Rs. 108 crore came from the Azim Premji investment firm, PremjiInvest (Rs. 80 crore), and IFCI (Rs. 28 crore).
The company has recently been sanctioned a loan of Rs. 170 crore from Punjab National Bank. The company is on an expansion spree and recently opened its 14th hub at Karnal in Punjab.
“Maybe because I had worked for big brands, I realized what the SME sector was lacking,” says Karwal of Milagrow, who had started thinking about the idea nearly two years before it took seed. However, funding was not an option that Karwal was ready to look at. “Funders will want financial gain, and although the company broke even from the first year itself, financial help can spoil the DNA of a company like ours,” says Karwal, who has put in Rs. 80 lakh from his own savings.

Sona Group’s Surinder Kapur inherited Rs. 50 lakh from his father. And a loan of Rs. 1 crore from his brother and an investment of Rs. 40 lakh from Maruti gave him a jumpstart. Through an IPO in 1988, Sona Group raised another Rs. 240 lakh.

For Jerry Rao, it was about looking at the next big thing. He had understood the importance of technology when he was running a technology center for Citi. With a friend from the banking sector, Rao took the plunge with Mphasis after raising $5 million. His new venture, Value Budget Housing Corporation, may well be an apt answer for today’s times. With plans of making houses that cost around Rs. 7 lakh, Rao is looking at a client base of millions of Indians. One of his main criteria for starting this business was to work in the domestic segment. “No overseas travel was my other condition,” says Rao.

SURINDER KAPUR of the Sona Group
More than monetary benefits

For most of those who turn entrepreneur at or after 40, the incentive goes beyond monetary benefits. “I was virtually risking everything except my apartment in Mumbai. But I knew that if I failed, I would get a job or teach at a university,” laughs Surinder Kapur. At least he had a teaching assignment he could fall back on. For Karwal, it was more important to do things in an ethical way and make a difference to the Indian SME sector. “I just want to earn enough to have a comfortable life,” he says.

Khattar is not eyeing rich monetary gains,either. “I spent over 28 years as a bureaucraton a government salary, and at Maruti. I was a professional without significant net worth. For nearly a year, I was working at Carnation without taking home a salary,” he says, “But I also believe that if one works with good intentions and sincerity, there will be results,” he says, cushioning the blow.

Lessons learned
Prof. Raichaudhuri advises that one should try to build on what one already has: “Having excellent know-how and know-who of a sector works very well when you are starting out; it will stand you in good stead.” For Khattar and Kapur, it was not just about the knowledge and feedback of what was lacking in the sector that did the trick. They also cashed in on the goodwill and the networking they had acquired when at Maruti and Bharat Gears, respectively. “Not only did I have good relationships with those in the ancillary sector, I also earned a good reputation with financial institutions and with government officials,” reveals Kapur. He adds that the knowledge of customer relationships and partnerships with workforce he had acquired while in the U.S. was invaluable, too.

Having worked in four startups and scale-up companies, three turnaround and business process restructuring firms, and one operational excellence assignment in 23 years, Karwal knew enough about how things should be and where they should be different. “I have traveled the journey from being a sales executive to a CEO. Trust me, I know the potential of the SME sector and what it lacks,” says Karwal.
Although Khattar agrees that several successful stories take seed in college campuses, wisdom and experience work when it comes down to brass tacks. “[These qualities] bring about more confidence among the stakeholders of the venture, especially if you are looking for external funding.”

Having worked for a score of years, if not more, before one turns entrepreneur works well with regards to networking and a sound knowledge of the sector and companies—but it might not be so easy to take the plunge. “While a few grey hairs may mean wisdom and experience, failures at that age may affect you more,” feels Prof. Raichaudhuri, “Your ability to get up, dust yourself and move on is not as good as when you were younger.”
Khattar concludes on a more positive note, “I started my innings at Maruti when I was 50 and became an entrepreneur at 65. Let’s see what my 80s have in store for me!”