The Indian Dream
The Indian Dream tells the stories of the profitable, long term thinker, risk-taker Entrepreneur because the country needs to be told that there's also a way to build long term value generating businesses in the era of VC funded hyper-growth engines. We wish to use these voices to showcase the strength of the Indian entrepreneurial spirit that forms the backbone of the nation.
The Indian Dream
From Dealership to a Rs. 500 Cr+ Manufacturing Giant: The JCBL Story | Rishi Aggarwal, MD
Masterclass on how investing in Research & Development (R&D) can lead to compounding...
I sat down with Mr. Rishi Aggarwal, Managing Director at JCBL Limited to talk about the multi-decade journey of expanding the manufacturing business. From Buses to Trucks, from Tractors to Defense Armored Vehicles, JCBL is now a key manufacturer of all types of vehicles.
From starting out as a contract manufacturer of bus bodies to manufacturing bus bodies under their own brand name to diversifying the business into 5 different industries and countless different products, this is episode is a masterclass on how to do forward and backward integration to build a large manufacturing business.
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but how does somebody who has no manufacturing expertise get into manufacturing such a complex product manufacturing happens on a long-term objective you invest today and the returns start coming in what 3 4 in today Time 5 years from now you're now in agriculture you're now in defense various other sectors how does the company take decisions on which sectors to invest in and enter no logic can beat the gut of an entrepreneur being very clear here and his gut can be wrong at times his gut can be good but ultimately it's his appetite which will make him enter a business we are not the best selling company in the country we are not the best marketing company in the country we not the best engineering company but yes we are a very good people company hiring good talent retaining them keeping them with us and making them grow with us is something that JC will excels in do you think we can be globally relevant in manufacturing first I'll start by qualifying the statement we are relevant world knows that what India can do China cannot do we are more reliable than China in pharmaceutical fiberglass that I do we are more reliable than China because it requires a process and it requires commitment it requires consistent quality which people are not confident from they're more confident from a small company like hello and welcome to the Indian dream podcast I'm your host Sid hard we are back with another episode on season 2 as you know already season 2 is going to be all about manufacturing and how India can become a manufacturing Powerhouse I know there's been a slight delay in the episode 2 coming out and just getting back into the Rhythm starting January and it be way more regular with episodes with entrepreneurs who build manufacturing businesses today's episode is with Mr Rishi awal managing director of jcbl group they're India's leading Mobility Solutions provider I will explain what that means in just a second JCB started in 1989 as a contract manufacturer to produce the bus coaches or the bus bodies that we've all been on since then not only have they manufactured bus bodies or bus coaches under their own brand name of jcbl but they've also expanded into other categories like ambulances logistic Vehicles like tankers and trucks defense armored vehicles and many more they've been able to build a large business worth a few hundred crores over the last couple of decades this is a story of what compounding can lead to compounding of Investments compounding of research and development compounding of Ambitions over the last three decades has resulted in jcbl group becoming a large manufacturing Powerhouse they have factories across the country with more than five different business lines this episode is a master class of how to do forward and backward integration on the back of a solid research and development mindset if you're into manufacturing or aspire to be in it this is the must listen episode without further Ado let's jump into the conversation welcome Mr Rishi Agarwal uh he's the managing director at jcbl group and I'm really excited to have this conversation with you about how jcbl was built about the R&D culture at jcbl about the different business divisions and how you uh sort of start these divisions let's start back in uh back when when jcbl started what was the thesis I know you were manufacturing buses for swaraj uh at that point in time tell us a little bit about how the idea came about how did you get into this uh I know it was your father who started this but would love to know the origins of jcbl so jcbl was started by my father way back in 1989 we were dealers for saaj Mazda buses at the in in caral harana state of harana uh very small dealership but my dad was always a very uh industrialist mentality person you know he kept on looking for opportunity to get into manufacturing somehow or the other so he had requested uh the saraj Mazda management the then managing director Mr Mahajan that he would like to do something in manufacturing dealership is not what he's cut out for he was more aspirational than that so one day he got an offer for San Mazda to start making buses for them because they had huge shortage of buses in the market and they could not produce enough and that started the journey that started the Journey of making a what do you call it as of setting up a plant in Punjab because s Mazda the government assisted uh Punjab government assisted unit so that started the Journey of setting us us setting up a plant in luru Punjab uh and 89 we started uh setting up the plant 91 we produced our first cargo box and 92 we produce our first bus and U from 92 till probably 2000 s Mazda was our only customer also interesting um from what you know about the story back then I know you were not as involved in the business as you are today of course um but how does somebody who has no manufacturing expertise uh who a you know dealer get into manufacturing such a complex product so my father had a prior experience of manufacturing he had set up one or two plant um in Delhi related to engineering goods and all but uh when a family division happened that side of the business went to somebody else and uh if you look at for a Trader manufacturing is a very difficult piece of business exactly because manufacturing happens on a long-term objective you invest today and the returns start coming in what three four in today Time 5 years from now in a Trader the in for a Trader mindset he needs his uh you know reward much faster every deal is a transaction you know every car that you sell is a transaction so he's trying to make money on that and so it's a very difficult mindset uh not easy to take that shift very few people can take that shift a lot of people take that shift and come back and say no B we are not cut out for that we can't invest today and look for a harvest in 5 years we want our crop to be cut every year or every month so not easy but I will give all the credit to my father he was very Industrial in nature very enterprising in nature to be here interesting so as you said the first 8 nine years uh saraj Mazda was the only customer uh but then something interesting which is also a big shift to make for um you know essentially you were uh contract man contract manufacturers for swaraj um and the shift to launching your own products that's also a shift that a lot of Manufacturers aim to take some take but can't really make it um and and very few sort of actually are able to do that transition of making their own products how did that shift happen so um you know as promoters uh I join I joined business in 96 I think one thing very clear as promoter we want we here to make a difference to the market and that's what we have always believed in if you cannot make a difference to a sector there's no point being in that sector you can't be another player in a sector so as promoters when I joined business in '96 U and we took over the day-to-day management of jcbl before the day-to-day management of jcbl was partly with us you know we had a partner in the business who we bought out in '96 we realized that JC was aspiring to build its own coach but they were planning to copy a competitors's coach and to launch it as is you know like a coach that looks like but a 2 lakh cheaper coach and I we saw that coach uh that was almost ready and we had a management discussion a very heated management discussion in house where we decided in in house means with our management team and said sorry if I copy a competitor I'm trying to tell him that tell everybody he's better than me we will not do it we will have to go back and redesign our coach on and which will be a fresh design and most of the feedbacks that came in is that will push us back by two years and uh I was very clear I didn't care I'd rather go back four years but by copying a competitor I will not become you know a number two in the industry I will not self-proclaim myself to be number two in the industry the back the max you can get to is number two right it can get worse yeah and uh so we scrapped that coach we went back to the drawing world and we realized we didn't have an R&D team we just had a copy team so we set up an R&D team we set up a engineering department because before that the drawings used to be handed over to us by sasas so we didn't even have our own drawing Department we were just Fabricators I put it that and as a result uh it took us two years what was ready in 98 we launched in 2000 as wave 2000 and uh the first bus that we launched in the um Bangalore Market was called wave 2000 which failed miserably I didn't even sell 25 of those uh in my thing it was it was very embarrassing you know we took the co to Market did a fancy show U customers came they saw they criticized and they left and uh we couldn't book any orders against competitions were sold out for a year on the launch then the second launch happened in Chennai customers didn't come only there were only three customers in who came to see the bus and uh and then I this was a passenger bus this is a passenger bus 13 sorry 10 11 M uh on a a chassis and we called it B 2000 and then we went back to the drawing board and analyzed what went wrong and we realized everything went wrong who was the customer by the way who who were the typical customers who were buying these buses the bus Transporters yeah different Transporters who were running long distance between Bangalore Chennai Bangalore Hyderabad so South is the biggest market for running these coaches and these were the Transporters who were who happily came to our show who happily came and saw the bus and uh went back and said sorry guys when I remember having dinner with one of the customers after the meet and saying I want to be number one he said Mr Agarwal the journey is too far you are um he he actually told me that's a figment of your imagination in a very kind words I cannot forget that U uh but we came back and we tried to analyze what went wrong and everything had been wrong the blast face was black which was not auspicious for the South Market the the timing of launch was wrong it was not in the best of periods uh for South the shape Market wanted a round shape and we were straight shape which was we felt was more productive ultimately Market went to straight shape but we were before our time um the Interiors were in a color scheme which did not sell very well in the tourist segment so everything went wrong uh and so we went back we went went back to drawing board it took us a year and we launched our second coach called speed elex speed luxury and we bombed the market we claimed what we wanted that coach did so well um I cannot tell you and it was probably one of the best coaches in the market for years after that and after that we never looked back we had series of models that came out because R&D was set we understood the market we had learned what succeeds in the market and so we did series of products guide wish Pride Destiny um speed I told you I I don't remember most of the names also so we did series of products and we were ranked as number one in the market or we are still ranked as number one and I'll tell you most of the buses in the market after that were copied are copies and so that was for me a moment of success when you see your competition copying your bus you know you have achieved it and uh or competition copying your features and say they have copied it so that's that's what happened with us interesting and when you say manufacturing of coaches so the the the chassis is from ashoke leand and then everything that sits on top is what you guys manufacturer yes ien Tata aisher any of these customers so chassis is a customer supplied product and we do it and uh and and so we virtually from there onwards we were considered as the best in the market maybe not the largest because we were not doing ordinary buses we wanted to be stay in a segment but yes one of the best and one of the best engineering companies and best coach manufacturers in the country interesting I want to double down on one of the things that you mentioned setting up an R&D when it didn't exist right you as you said you had a copy Department before that um and the R&D culture has obviously been core to the DNA of jcbl because of how many products you've launched since how many business divisions you've launched since tell me your perspective about R&D the mistakes that you've made when it comes to you know thinking about R&D the mindset something like this requires and the reason why I ask this is because as a country I think we are still severely underinvestigated and for us to sort of claim that manufacturing top spot or be relevant globally manufacturer from a manufacturing perspective R&D becomes one of those things that we really need to nail down so would really love to understand uh your perspective on R&D and how you went about sort of building it within the DNA so uh I think we have to first uh I'll take a step back and um R&D is about product engineering R&D is not just Aesthetics or drawing the fine lines of Aesthetics and saying oh I made something funky that funkiness has to last that product has to last the market handle the test of times so what I realized when we started doing this they were we could not find product design Engineers we could not find industrial design Engineers we did do with some team and we were we work fortunate my father has an excellent aesthetic and Engineering sense he was leading the team himself and we brought in couple of Engineers from uh Netherlands to come and support us in the first phase but we had to build a consistent R&D we had to build a you know R&D which last so when we started looking for engineers we realized that India produced very few product designed engineers and India did not have good product design engineering uh departments sorry institutes nid used to produce a couple there one or two but most of the most most what India was producing were engineers not designers and U I have I have a study I got a study done and we realized that India at that time I'm taking you back to early 2000 was producing only 350 product design Engineers a year and half of them used to leave India and go and work abroad and what we were left were with a very few numbers and we used to go into the top companies like data Motors or Samsungs or or multinational sitting in India and doing the job so for companies like us which needed to make a mark there was uh no way we could do that in absence of good Engineers as a result um we we thought what to do we we started we got in touch with nid we told them why don't your people start interning with us so we brought in a lot of nid students to come and intern with us and work with us on our coaches and um you know so why because we needed a fresh perspective also we needed a younger perspective also and uh that worked very well uh lot of international Partnerships happened with different design companies abroad that help and that helped our train Engineers to come up uh but what experience that I got from here is the engineers that were coming to work with us the product design Engineers if they were freshers or if they were coming from the inses they were not oriented to the industry they came with theoretical knowledge the products looked funky but they did to to manufacture them was a pain and they would not last well and for those students or those individuals to adjust in an industry environment was a very difficult part um some can't come on time they find it too rigid and their creativity gets killed some uh you know find it the Shu flow too noisy to work some want music to work with some want um you know things like that it was it was very funny it was very funny they wanted uh I think they wanted a very different environment to work and they did not realize that they were joining an industry and industry has to have an industrial environment to work and um so that that that was the biggest challenge that we saw and as a result we conceived an idea of setting up the design Village um I don't know whether you are aware that group has a product design or industrial design insute running out of NOA called the design Village uh initially The Institute was supposed to be in Chand but somehow for want of better facility and better resources we located in Noida to start with we uh train product design Engineers we train industrial design Engineers they very small lot we about 400 odd students now and uh idea is that every student who comes out comes out uh with a design thinking he has he excels in design thinking and he's comfortable with the industry environment he is attuned to in cylinder one of one of the such things that ddv does is something called the TD means the design Village does is called villing where we take these students for 3 weeks uh to a remote Village in India and tell them to survive there without modern technology and idea is because the real Innovation happens in villages because they do Innovation not for fun or not for Aesthetics they do Innovation to survive they have have to live the survival depends on our Innovation there so our first few Lots we had a lot of students leave us when we proposed this they said are you joking I came here to learn design who's going to our village who's going to do villing but now it's part of our DNA students join us and they know either they have to this is going to come their way and when we started this we had a lot of debate in house on this because students were leaving the unit was the isue was not doing well but then we came to a consensus if you want to make a difference again I said as part of the group DNA we want to make a difference we want to produce students or we want to take out students of different caliber or different who can settle in an industrial environment there is no way that uh we let go of this core value of tdv so so going step by step from here I'm just sorry I took a diversion to explain you about fine that's fine we were going to talk about the design it's all good so uh by going by this thought process and trying to develop our team and uh we have we were able to set build a good team today and I'm proud that today JC bill is recognized as a very good product design house uh we not only work on our own products and designing and prototyping our own products but we also act as design house for most of the uh commercial vehicle oems in the country uh where they when they they look get a customer who is wanting a special application product s they they get that customer to us and say please design it for us and we do it it's it's armored vehicle for a international government being supplied by one of the OES or it's a ambulance being designed to be given to the Government of Nepal uh during covid by Mr Modi himself or it's a I I can go on mobile display showrooms it's is lab the is ISRO lab to um to show the rural Villages what all ISRO has done uh the museum the museum has been done by us to mobile service Vans mobile uh classrooms mobile Bank mobile ATM van uh everything has been uh we have every year we probably do what 5060 or different special application projects and uh the day we do not have a special application project projects we have a problem because then our R&D team starts breathing Circle project those we need a project need to do something Innovative so that's that's probably the DNA of jcbl now if you are not doing something new we don't enjoy to do it we don't one one part of R&D is the talent that you sort of focused on and how you had to basically build it ground up because you know there wasn't an availability of it uh but the other part is the mindset and the the way you need to look at at the investment in R&D because investments in R&D take a long time to sort of actually give you Returns on the balance sheet right um especially when you were doing it initially what was was that push back from the management team or people involved saying that we are investing so much in R&D how does this come back in terms of profits or or or you know some sort of return on it um and in general how do you look at the investment that goes into R see U I think we were on in consensus when it came to investment on R&D and that's the reason we were able to bring JC to this level and build a name for our that's one part I'm very glad the top management was in consensus always U we never thought twice when it came for investment in R&D whether it's looking for a 5x router to build better toolings when we didn't even need it or you know scanning facility or a better software or something we always invested in the right resources uh one thing um very unique about JC R&D is we just don't pure design we design to prototype so we uh our every product sees the light of the day even if it doesn't get in repeated numbers but at least one product is produced so that that that gives us a very good hands-on experience to design the next one so to say that R&D Investments come in the long run I don't agree the these are investments that you have to do and you have to build a pipeline of the these Investments it's like when you buy stocks in a stock market you buy keep on buying sip year on year so some stocks give you a return on the third year some on the fourth year some on the fifth year and that's how it is like a small example the what made us survive the bad covid month we at Co year when there was no schools there were no tourists coming to India so there was no demand for the bus is the ambulances that we designed three years back so the ambulance that we designed along with our customer as land for Indian army we got an order for that during Co period so those 700 ambulances that we executed at that time let our cash flows roll otherwise we would have been in big trouble or those ambulances that we did for Bangladesh I just spoke about during so I think it's it's an investment it's an investment and uh I'm not saying all investment will give you return but you have to build a portfolio of Investments for some some to[Music] you know hit you come back and and and when it when when it comes to the Investments is it generally a thumb rule to say x percentage of the revenues every year will be reinvested back into R&D or is it as in when you need as in when you see the market is going to head in a certain direction and we need to over invest in R&D to capture that market how do you how do you sort of take that decision our minimum investment is about 8 to 10% of our profit that we invest in R&D but it depends on a year and the demand from the customer or how the year is looking like or the potential that we see it can go even higher it can go even much much higher so but it all depends on so you look at every project as an opportunity and then you say this project will I be able to cover my cost know okay how many vehicles do I do I see the potential and then you go ahead and invest got it um I want to switch gears a little bit and and probably related to to investing in R&D is the different business div divisions that you've been able to start after the jcbl Core Business of you know manufacturing plus coaches and and different uh special application vehicles uh you're now in agriculture you're now in defense um you're now in U various other sectors how does how does the company take decisions on which sectors to invest in and enter um and how longer period do you sort of keep in mind in terms of return on certain some investment you said three three to five years uh in one of the questions earlier but uh I'd love to know how you think about going into different business divisions yeah um let me start uh by saying nothing no logic can beat the gut of an entrepreneur I'm I'll be being very clear here and his gut can be wrong at times that can be good but ultimately it's his appetite which will make him enter a business I can show you entrepreneurs where you have thousands of data supporting that the product has to be the industry has to be uh you know invested in then but he will find one line item which says there's a risk here and he will stop there and the other side an entrepreneur will look at Thousand negative lines and then look at one positive still this this government change is going to come policy change I might it is worth the risk so there are multiple factors one is a promoter gut second is how many resources that you have third uh your aspiration and organization Vision so our journey has been very logically ploted if you look at we started with a Mazda bus we went into a luxury bus because that was the call of the hour we used that development to develop small luxury bus Which is the market we still rule because we felt that market was much more had much more volume to offer than the large luxury and uh like luxury school buses we started that segment in India nobody knew what's a luxury School Bus uh luxury school bus then we went into multiple special applications now we are doing motor homes as part of this project one day tataa Motors approached and said would you do you want to do armoring vehicles and nobody knew a about armoring in JC and I'm talking about 15 years back we said yes we will do it something new something exciting why say no to it yeah we did the uh first armored uh vehicle for tataa motors for the Indian defense The Troop Carrier and we made that for 15 years we still make them and obviously different versions of it but we do make them that's how we got into arming some one day um when the Cargill War happened and government of India realized that they needed a 4x4 ambulance to take that gradient we were approached by S Mazda that we need to make a 4x4 ambulance will you do it yes do it that got us into the ambulance business and U so you know it's our ability not to say no a to the customer need or and also being exciting about excited about uh any new product coming our way that go got us into different versions of JC in a different part of JC then came in a uh manufacturer from uh France which said I we want to make specialized deep mining tippers and I remember in that meeting uh first dad said who makes tippers it's a lowend product who makes it but then we said we said specialized tippers what is special about them oh we will be using a material which nobody else uses in India called hard dos which will make us tippers different than the others so what was the key were different and different is what we caught on and we set up a plant in Chennai to make tippers we were the largest Tipper manufacturer in South India till last year when we decided no it has now again become a very generic product let's move on from here we know we are not making a visible impact we just being a pro pure fabricator it doesn't make sense so that's our bodybuilding journey and during that Journey we had the Privileges of visiting the one of the best plants in India in the world and learning from them which made us made our lines more efficient we understood uh volume production we understood U you know what offline and online means we understood how standardization is important how picturization is important so this was the JC Bill Journey but when we were doing this we realized you cannot make a good coach purely by making a good coach there's so many Aggregates that go into a coach that is a seat a fiberglass uh components locks hint window frames and if you do not have that capability you will never be able to make a coach good coach and a volume was so low that nobody wanted to make them for us as a result what you did you went to APM Malaysia bought the technology to make a good seat set up a seed plant you went to stati form France get the technology for make fiberglass set up a fiberglass plant you uh went to a a German company to pick up and picked up the lock technology from them and I'm saying picked up is not reverse engine picked up you went to them and negotiated or you went to a Italian company said let I want to learn Interior Systems what is how do how do I learn that so that's that was a journey and so and then there were different indicators to that Journey a different uh which which I will thank God God Almighty to point us to the right direction or make to make us do the right decision there when we were making seats we were doing doing a captive 100% seat plant and we were supplying our buses with our seats and um our buses were so good and our seats were so poor that and we were not selling our buses without our seats that customer used to buy our buses go back throw the seats away put the fresh seats from the market and use it so one day I was on my customer trip to Chennai I visited a customer and he said come Nish I'll show you something he took me there and there were heaps of my seats lying there what are these why are they they're broken he says no your seats are so poor and I have to live I have to live with them what do I do I said what do you mean he says you don't sell your buses without seats I buy your buses with seats and I throw your seats away and then I buy local seats and put them in the buses I was very disturbed because a he was telling me on my face that I'm making poor quality seats B he was telling me that I did not care for him I did not understand his wishes it was two pointers for me I went back I had a discussion in in house and we decided that we will allow other seats or we will let our seat quality go up so one of the decisions that we came up is we cannot have a 100% captive incer which is dependent on JC operations so we went and said 40% of our seats have to be sold outside they have to compete in the market then only we will do otherwise if we cannot sell 40% of our production outside we cannot have that division in house that started that is to say unless you can compete in the market you can't really make build a high quality if you can't compete in if you can't sell it to somebody else you can't live on the legacy of the brand yeah come on that's not right so we set up a new company called Mobility Solutions limited and we started and we had so much trouble I will tell you customers bought our seeds and return back bought our seeds and return back we exported fiberglass to us the container came back and the second lot rejected third lot rejected and that's where we bought in the technology the APM Malaysia came in uh staty from uh France came in to support us I'm proud to say that today MSL is a company in it in itself and it is its dependency on jcbl which was targeted at 60% is only 5% oh 95% of our production we sell outside and as a result we are the best fiberglass company in the country we're supplying to Alstrom we're supplying to General Electric we're supplying to ICF RCF we have our components in vhat trains we have our we are currently catering to Chennai metro lnno metro uh Sydney Metro Mumbai Metro uh Mexico Metro we supplying fiberglass to them and when when was this company started Mobility Solutions limited 2004 okay so 20 years now 20 years now and now but for a very long time it was a cap captive in silvery right and we started looking out in probably 2008 or something like that so that's that's that was the birth of our fiber class division seating division component division um and Sheet Metal division because we started by supplying to JC B and then we said let's Capt go and capture the market now um in the next phase uh we realized that there was a lot of work happening in defense thanks to government's making India initiative and we said we were doing so much work for defense but we're doing it in a very scattered form so it was decided to move all that business into a company called ADSL and look at defense production as a you know different initiative in itself and that that gave a birth to ADSL four years back and U where we are where we I'm proud to say we have developed so many uh good projects for the Indian defense um to our credit is the first uh the first um heavy drop system hydraulic loading platforms drones um we have refurbished some old equipment coming from Russia 70 years back and supplied it back to them parachutes I can I can go on and why I was I took a pause in the middle is I was thinking what I can say and what I can't platform that was the reason I took up was am I at Liberty to take names on the projects that I have done but it's endless the projects are endless today that we are doing there because again the DNA of innovation always stayed and one thing Team new for any Innovative project they will get an approval to to pursue they they do not have to worry about it so that gave us ADSL birth now uh bus industry has a very typical scenario where we have work eight months in a year and four months is offseason and so off season the plant stay stay and on season we produce and when the plants are idle you end up eroding uh 90% of your profitability in those four idle months so as a result we were thought of that what else can we do and then we realized we were sitting in the tractor bu of India in Punjab and we do not do anything with the tractor industry whether it's supplying them components and that's where the tror agriculture implements came and it was not an easy Journey for us we supplied products to the market they failed we went recalled the product back understood what's wrong it took us a year again on the drawing board and we again supplied the product again and we realized our costings were wrong we were too expensive for the market because of the earlier failure we had overdesigned the product then we again went back to the market this is our third launch to the market I'm telling you lot of groups will drop the project and go on move on but I was confident we can do a good product and if I have to move on from a project I will rather move on after I know I have designed a good product and say it's not commercially viable then move on when I am a failure I can't carry that tag with me so uh that's that's how it is so this is how our Innovation Journey or our manufacturing Journey kept on going okay so there are two parts to you know I I specifically mentioned about the scaling up and and how you um got on to different business divisions and now it's very clear on how you thought about it and how everything is sort of connected even though from from the outside it might not look like that but everything was sort of connected internally in in how you enter these decisions or these businesses but there are two parts to it one is the people that you need to run this bigger show so many different companies so many different departments uh so many different you know uh areas that you're targeting and then the capital I'm going to talk about both uh in in you know double click on both of those but let's talk about people uh in the industry that you're in both the white collar and the the blue colar you have you need need a lot of those people uh from a top management perspective across different companies and also to run a lot of these factories uh what's been your principles that have helped you sort of build the right team together at both levels so jcbl believes in a principle and we say that everywhere is when inspired Minds come together miracles happen uh and I think we truly believe in that statement I can safely say that uh we are not the best selling company in the country we are not the best marketing company in the country we not the best engineering company in the country but yes we are a very good people company hiring good talent retaining them keeping them with us and making them grow with us is something that JC will excels in how how do you find the right talent because one of the things that when you speak to manfacturers in general is is the complaint that they have about the Indian labor force and you know the people and the entitlement and all of those things very common to hear in the business ecosystem right I I I was not talking about the blue colors right now I was talking about the white color first so the fact that JC Will Group currently is what 12 companies and maybe five or six of our CEOs have been with the group for more than 20 years and they started their Journey either as assistant managers or manager operations and they have been groomed uh four of them are managing directors of the group right now and uh then they are operational head and their business heads and who have stayed on you can come here and see the Legacy team I think average Legacy of top management would be what 13 year plus or 13 14 year plus that talks about the fact that we retain our talent and we invest on our talent otherwise most of these people will touch their peters's principal and have to drop out much early or stay at at a level uh but uh now comes hiring a talent I think uh from it has been our philosophy in most of our businesses we don't we can't do it in every but that we want to bring 80% of our top management from underneath we have to groom 80% of top Management in house so we have lot of leadership development programs going on we hire a lot of people directly from universities we hired U we there's a lot of there's a process of igp internal job placement where a person can be shift can choose to be shift between different companies of the grob uh so things like that is what gives us our talent you know the aspirants can come up and I think people who come up the ranks are the more uh loyal ones to the organization and the stick on and their ownership to the organization much stronger now coming to the blue cers that's a very serious challenge today U I'm finding uh you know skilled Manpower is a serious challenge um I think that's probably one of the roadblocks uh everybody is seeing so one of the ways of countering that is automation you know looking for better equipment going for higher productivity uh that's that's what we are doing but yes if you ask me is that a roadblock yes that's a roadblock today what do you think is the core problem is it lack of Skilling opportunities or lack of intent to get skilled lack of intent to work in Industries what do you think is the core on ground problem I think all it's a complex problem um our education system is not Skilling very well the skill programs are not being opted for by people the the skill centers are are not being opted for the right right by the people who want to be industry the um the rural support programs are so strong right now the motivation to move out of rural uh or migrate to industri is less the opportunity to stand in a store and sell in an air conditioned environment and get your basic sustainance right is easy then to stand in a industrial environment where you you have to face the heat and hot and cold weather and um harshness of the environment is less you know the is more demotivating that so the multiple factors there I think but one core issue is our education system the people who are coming out from universities or not University say the I'm we talking about blue colge the I and the um diploma holders are not skilled enough because the industry education interaction is very low what they're teaching is not what I need and what I need they don't know you know that interaction is where uh what is is missing today given the population do you think you know there is obviously the intent problem the you know people don't want to move out of the rural but given the population if we get the Skilling part of it right which is teach what's needed do you think that elevates the problem at least by 60 70% on just getting the scaling right 100% the problem will be solved for good and we will be sorted for next 10 years I think that's our biggest strength our population is our biggest strength and we have to I mean isn't that a relatively easy problem to solve no no I'm sorry I'm sorry uh you know it's it's a years of education system that we are following in you know it's a years of mindset that need to be changed the working has to start from the rural level working has to start from the level when a child reaches his fifth or sixth grade or seventh grade you know that's small Skilling exercises in the school um the you know I'm just saying I'm not an educationalist please bear with me with the fact but I'm just saying this has to be blended into the DNA of the youngsters who are coming out this has to be blend in the thrill of creating something has to be injected there which is which is missing today I also feel like over the last 10 years the focus on software engineering because of the it boom IT services boom led to so many people just pursuing that regardless of the the fact that they were mechanical engineers or civil engineers ended up going to infosis or a bunch of these places and now they're realizing one you know the initial pay might have been good but the growth isn't um and versus in manufacturing in a lot of these places I think the initial pay might be one of the factors that they look at without seeing the overall trajectory and say no this is not the job that I want to do uh but the growth potential growth of like be becoming a production manager becoming a a leader within the within the company and as you said you have a lot of those people who've risen through the ranks to actually now Executives right is that is that not exposed enough to the people and which is why they've sort of you know like a heard we've gone to gone and done software engineering in in lacks and lacks said you have to understand Indian manufacturing cycle is just beginning H for this our manufacturing cycle was also stagnated how many Greenfield projects did we see true how many it is beginning the people who are already in the industry will see a big rise salaries and when they the youngsters will see that there will be a visible shift from uh you know it as you said to this like I said um uh this is a year of civil engineers and mechanical engineers again this is the decade sorry of civil we still have to build the nation we will require more civil engineers we will require more Architects we will require more it people were seeing the growth and they were seeing the growth the kids were going there you know it's a demand and Supply thing yeah today when Manufacturing is growing and we don't find good people in now I'm coming to white color we don't find good people so what will happen the demand and Supply will cause their will give them exponential rise and when people will see that they will be a like a pendulum it keeps sort of yeah so many episodes where you have a person working with you for 10 years and he'll come and tell you you know my son just passed out from college and infosis has given him him a package more than me and Ive worked all my life and that was true that was true how will be a young motivated to then join manufacturing right you know so what will happen is it will come down rationalize a little with uh Ai and everything coming they will rationalize a little more manufacturing will go up and the flow will happen like this so I I that's what I think I'm not uh an expert at it but that's what my common sense is to me makes sense uh you mentioned something about India's manufacturing sort of you know cycle starting now um do you think we still stand a chance with where China is uh do you think we can be globally relevant in manufacturing and if so what does it take from here I I first I'll start by qualifying the statement we are relevant in global manufacturing it's not maybe real small but we are relevant right and because there are sectors of the industry where world knows that what India can do China cannot do we are more reliable than China in Pharmaceuticals more reliable in right you know areas so we are in fiber in fiberglass that I do we are more reliable than China because it requires a process and it requires commitment it requires consistent quality which people are not confident from CH they're more confident from a small country like not small a small company like jcbl so I'm just saying today when g g makes it their locomotives in us most of my companies go Direct on their line and I am single source to them in most of those components that's so we are not IR relevant we are relevant but we are sector-wise relevant right yes if you want to scale up to size it it will happen government's focus is right they're pushing that uh PLS schemes and everything they're pushing it right U it's a how do I say in the Dynamics we have to we will be very foolish to miss the bus this time everything is Right everything exactly I agree I agree and probably the last time we'll get a chance I if this time we missed the bus we will be foolish we would have done something very nicely wrong to to have missed the bus people are looking at an alternative our labor is cost is already still low our demography is very nice um we have a great relationship we are a neutral Power Center in the world today U the government is bringing right policies I think everything is going right right now I I remember 90 um 8 when I when to go to abroad go abroad to get a collaboration or something my presentation start why India why JCB now the first part of the presentation is not required was why India they know they say tell us what you want so we have positioning is right I'm just saying we will have to be very very foolish self go irrelevant otherwise nothing can stop are uh manufacturing I'm very bullish I'm very bullish as a person yeah and then is the idea then to say look at sectors and look at opportunities that China can't already do well rather than trying competing with them on like the likes to likes right for example electronic sector uh some of the electronics they're so far ahead that entering now and trying to build capacity or or get to that level might not make sense but look for niches that China is not good at today where the industry is moving and try and focus on that exactly exactly we have to find our own Nish we have to find our own we cannot make China irrelevant us becoming relevant does not mean China will become we cannot make China irrelevant come what may uh in this entire uh metrics so we if we have to do that and we have to be uh we have to find our own Nish we have to find the sectors that we can excel in and then bring all our Focus toward those sectors so so um sir tell me something let's say somebody's 23 24 25 maybe some Capital Access to some Capital maybe maybe not as much but if you were to put yourself in those shoes and want to get into manufacturing now how do you even start finding what that niches right because a lot of these younger people might not have that breadth of experience or the family background to say okay you know we we should get into this um and I would think we will need a lot of these first-time entrepreneurs to actually get into manufacturing rather than relying on you know the existing uh businesses how would you go about figuring that out so I think finding your Niche or finding what you want to do will be a very clear factor of the capital that you have in hand and the skill that you have employed for a first time entrepreneur um I think the best way to start is to be a tier two or tier three supplier to a nich company and then moving forward I would I would do that that's the safest bet uh I will approach a company like uh there so many elect companies coming today I approach them as a tier two supplier so many drone companies help us understand what is tier two supplier tier two supplier is like supplying to an OE where the front-end product and marketing is held by somebody else until unless you have a niche technology that you are selling there's no point going straight to the market and trying to Market a product I rather have a front end um you know somebody else doing the like Ola Ola is already investing millions and billions but I rather be a supplier to Olaf first and then expand my vertical uh myself uh you know backward or forward over the period of time but that's that's that's the I think that's the easiest and until unless again I'm I have a unique technology which I feel and I'm confident that I will be able to Market that's a very different story yeah um inherently manufacturing is a is a long-term game right you have to plan for 10 15 20 years to to see that success that might the Ambitions that you might have will take will take a long time to sort of get there yeah it is it is yeah I'm just saying it's it's like building the block step by step yeah either do you have a huge Copus of money where you go full hog and say I will do go and do the works that's the China model you know they will yeah borrow they will have state subsidy they will have but they will go and set up what they need for next 10 years in one go M and then they will use that scale to enter the market that's that's what that's their way of doing it that's not the Indian way of doing it Indian way of doing is we build it step by step we will go so step by step is first align yourself to a good principal a good partner start your journey and then see how you can innovate to become better and how you can you know verticalized or you can you know deep dive that's that's the way I would do it if I have to start fresh got it uh do you think trade fairs and all these exhibitions in in this sector uh matter a lot to sort of get exposure on what's Happening a lot a lot if somebody who's heading day-to-day operations or starting up or even running a show he has to walk all relevant shows related to his industry I still do it I still like to be part of any booth that we set up you know if we are part of the trade show internationally I still want to be there though now I've started missing a lot of them because of you know time constraints and all but otherwise there was a time I used to be part of every Booth not because I enjoyed being there but because you get the firsthand customer knowledge you get firstand experience from competition and you know what's happening in the market they cannot be a better uh catchup to the industry then those three days are a trade show got it and I think one year area sorry I'm yeah you know that's one area where Indian government also has to uh do a lot of catching up we are we are in we have we have improved our shows like our defense show has become better our hair show has become but our in relevant industry shows have to become and relevant industry shows have to be organized better and to ensure the right customers internationally approach us our Industries have to be given more opportunity than just a small booth in a show in H over or somewhere have to be given more opportunity more support more subsidy so that they can showcase their products that's the only way an msme can reach abroad and that's the only way an MSN can grow MSN does not have the resources to go and set up a huge Booth or you know showcases their product range and a small Booth does not get them that credibility that gives them a pres so that's that's where also we will have to look at got it one of the things that you mentioned about Capital which is you know relevant both for your jcbl SC scaleup journey and also somebody who's starting up new especially for your jcbl scaleup journey and this will be a good segue to understand what are the capital options available for manufacturing because in the startup ecosystem we see a lot of those Venture Capital funding which is not you know which is not directly translatable in manufacturing in your scaleup journey what was the source of capital was it mostly the profits that were being reinvested from one business division to sort of stand the other business divisions along with debt or uh were you sort of you know there were other sources as well so in in a uh it started with the promoter funds and the bank and it's still promoter funding and the banks and we have no cross Holdings so whatever promoters invest are from their own personal we or the company grows on its own uh with it own internal resources but one thing very unique about us is we are very frugal in nature we're very very cost conscious in nature we're very very frugal uh as promoters our personal drawings are bare minimum because everything that we earn is reinvested in making the business grow and we have very strong cost controls among our divisions also it's like uh MSL makes seats they come to jcv if MSL starts supplying them expensive then competition JC will stop buying from them so that keeps MSL on toes to being more efficient and when they efficient for jcbl they efficient for the rest of the market also and so that's that's how it is our cost controls are very very strong we have mapped custodian to every cost center so every cost there's a relevant or there's a custodian handling a cost center so that uh you know he can control like there's nothing that goes wrong he knows in his cost of so we control our cost very well not just in our manufacturing businesses but our trading businesses also or across that's that's and there's nothing uh no substitute to that to Good Financial discipline nothing no subsid to that any amount of sub any amount of funding can go waste if you don't have a good financial management 100% um and when you say frug Frugal I think it's also misconstrued or misunderstood to apply then using that logic to say we're not going to invest in R&D or we going to sort of cut corners in quality right they're very different things when it says frugality as a DNA versus you know quality and and and R&D still topnotch yeah so like I said our DNA is R&D we spend on R&D we spend on our it backbone we spend on our data centers where you have to spend you have to spend and where you have to bring in the best you have to bring in the best like hiring hiring people you have to hire what you can hire the best but uh but there areas where you can cut corners and there are areas where you should cut corners and that's that's what I and also controlling the cost uh it's not just monitoring the cost is is a right word also monitoring the cost is a better word as you were going through that scaleup Journey I'm sure debt also you know the bank debt also played a role in in supporting it uh all these lessons that you now you know in as principles or part of the DNA did it come from Financial setbacks on like Financial you know mismanagement that happened or or the promoter group sort of uh seeing you know how the funds were misallocated or was that something that that was from day one we have had our own learnings as I call our own tution fees that we paid in our journey um but there was some discipline that came in as DNA from our Legacy like telling a bank account on daily basis was a DNA that I inherited from my father when they came in and he said first thing the bank accounts have to tell you every day there's nothing called a bill bill reconciliation statement and we had learned Bill reconciliation statement in our masters and I said come on everybody does this and no you want to do it do it every day I need to know what my bank balances are on a daily basis I cannot so I'm just saying there certain things that came to us maybe it was their learning from the past that uh made it a rule for the organization on the other side uh they were learning that we did like before Layman brothers or 2008 the group barely did any government business we were only into private segment and OES and the market crashed and when Market crashes OES and private customers are the first ones to go away and the government still keeps on pumping money to support the economy or they still a buyer but we didn't have government as customer and that was our learning there and then we said sat down and said no I need 30% of my business to come from the government agencies so that at least I survive we had no exports and that's why we said no we need to develop exports I'm think those are the journey that you cross and again on financial management there are times that you commit mistakes and then you go back and see what did what did I do wrong here and uh it's like maybe over spending on manufacturing on on construction over spending on construction uh or taking certain decisions of you know probably moving onto a robotic production on a low volume thing and realizing that cost cost is coming for for is per unit is going up not going down but those are learnings and tutions that you will bear you know along the way essentially the game is to not take that big a risk that you go bust right everything that is digestible you have to take that risk and some will pan out some will not pan out yeah agreed agreed AG we have to be you have to know what you can handle you can what what you can digest actually and but you know again I think whatever you may do in life you will hit those you will make those mistakes and those mistakes whether they will become your learning for the next next time the same formula comes or it is just slow you down or make you risk a worse is a call that you have to take it that's a very important uh lesson there I think uh I've actually seen this in my life where people who started got into manufacturing or any kind of business if they saw a setback a harsh setback in the first two three years of their existence some people actually became so risk averse that even when the things were right they weren't able to press press the accelerator and actually double down right versus what you said just take it as a learning and then still be ready to take that risk when when the time comes yeah well I I I say the success only comes to people don't not that who are lucky but people who can you know who are successful or who have done good job or who are lucky but success comes to a person when Who falls down and gets up and says bring it on yeah what's next for me you know your ability to get up after a failure defines your success I some of the examples for the group is we were so we as promoters we were so used to running localized plants where we were where we used to go every day sit every day run every day that when we set up a plant in Chennai we lost money for 5 years five years we lost money because we could not handle the systems we were not there as promoters and you know we could not and and it was a new geographical location it was a new demography it was different mind language and it was terrible but those that learning stayed with us now if I have to do another plant somewhere it's so easy for me to do I know what I did wrong and we entered a new sector then manufacturing I don't know whether you know that we were in pharmace IAL before we just sold a when we entered that there a sector not known to us and first I went in I tried to learn how to run a Pharma unit I said come on then I went back and said no my strength is management my strength is not running a pharmaceutical unit so let me go back to my core area so I'm just saying and that's what helped us in diversifying into so many different areas today we have ayic Brands today we have uh different businesses that we do is why because we concentrate what our core strength is that is management we are not the farmer Specialist or we are not the Insurance Specialist we are not we we are supposed to manage that's our job so I'm saying it's it's how you take your learnings when you move forward yeah cuz the chai plant could have been in the fourth year you shut it down and say never again never am I starting uh a manufacturing facility outside of my local region or the other thing is let's figure this one out because if you can figure this one out then you know you can go out and do it anywhere else so I I I shifted a old team member from north to south to run the unit and he was a he's now the managing director there and first thing I told him I said My worry is not that I will lose money in ch My worry is if this shuts down I will never be able to up a multilocation plant and that's not what I want to do you you're getting getting where I'm coming from and absolutely and that's he he was here today and we were just talking and just that stayed on with me say so you put a responsibility on my head not for the plant but for the group's future of expansion and uh and this plant is doing very well he's he was able to turn it around but he said I can't even tell you the the responsibility that you gave me when you said all these things and that's for the fact that's what I believe in if it would not have been a success it could have been a mental block in my head or probably the family's head where I said can I set up a plant in guj like come on you couldn't run in Chennai what will you run inat yeah even I think it also becomes a part of the company's DNA right when you're again sort of taking a beted there are you know mmers inside the organization right and then you don't put your best foot forward and it becomes a self-fulfilling prophecy yeah um okay so in in that same sort of context of capital um do you think when it when it comes to new manufacturing sort of capex Investments apart from the existing sort of you know standing business houses um the sources still remain the same technically right the promoter funds and debt or or do you think there is an emergence or there is a need for an emergence of a different kind of uh Capital to be infused in in manufacturing we talking about uh if you're talking about punding or going public or or even even at a lower level some sort of a uh I I don't want to call it Venture Capital because the kind of business model they have doesn't work for manufacturing but uh the initial startup Capital uh apart from I guess government subsidies are technically technically one of them um but it has to be it Still Remains debt and promoter funds right largely debt promoter funds punding um or International partner funding strategic partner funding I think these are the tell me a little more about the international uh partner funding because I've I've heard this from a few people and I think that is very relevant for where we stand in India given the fact that we don't have a lot of these Technologies to to manufacture so what is happening is uh lot of inter we have not deployed These funds till now but we not even use these funds till now but there are lot of international companies looking at manage uh setting up manufacturing units in India but when they want to set up manufact they want a local partner to handle the local problems they do not they think they are they will not be able to manage the local issues well so they need an international partner and that's where a Strategic investment comes in and those customers not just bring in technology they also bring in the customer book because they buy back Arrangements uh so it's it's it's it's a beautiful uh area to get into it's a but um it's a chicken and egg story you know for a fresh startup person uh why would somebody invest in him and how will he find somebody until unless he's either has has a skill set or knowledge which is very unique in nature which those people want or already has a business where he can say okay fine you already are doing it let's uh like one of my um cousins uh he he runs a casting unit and U he has been approached by an international saying why didn't you set up another unit I will give you an upfront support and I will buy back your production for next five years I'm just saying so that that those are those strategic tie-ups which uh will come and are coming in India because everybody's looking at India currently as a uh additional source CH under the China plus one philosophy correct yeah got it um yeah I think uh I think we've gone through most of the question sir this was deeply insightful I'm so so glad that I got a chance to talk to you about your jcbl journey and about your learnings across the board which are very key for you know people to learn when it comes to setting up manufacturing and and making us even more relevant at a global scale when it comes to India as a as a manufacturing Hub thank you so much for taking the time out and thank you so much for sharing all of this with us thank you sir thank you thank you