Its first expansion plan failed, but Atul Auto refused to give in. Soon after, the company regrouped and is now getting back in the game
It is 6 am on a Monday and the four-lane highway between Rajkot and the industrial cluster of Shapar is buzzing with activity. Like most roads in Gujarat, the stretch is smooth and has the usual assortment of cars, trucks and buses. But even in the early morning melee of office-goers and traffic bottlenecks, it is difficult to miss the rows of three-wheelers snaking down the side of the road.
Their large numbers suggest they are the preferred mode of travel for workers living far from the factory belt. And it’s easy to understand why. Not only do the three-wheelers offer a flat rate of Rs 5 for every 18 km, almost half of what state buses charge, they also drop the workers till the factory gate. Small entrepreneurs are also known to use these three-wheelers to transport a range of items, as a vehicle with a payload of 500 kg can carry as much as 700 kg.
It is in this crowded lane that Atul Auto has, quietly but surely, made its presence felt. Set up in 1992, it is in the last five years that the company has emerged as a promising automaker, focussed on the three-wheeler market.
With 37,500 units sold in the financial year ended March 2014, the numbers are still small. (Bajaj Auto sold 4.47 lakh in the same period. Piaggio is its other competitor). But as Raamdeo Agrawal, joint managing director of Motilal Oswal and an investor in Atul Auto, explains, the outlook is buoyant. “This is a simple business. Three-wheelers are the poor man’s transport and, as we are urbanising, we will need a lot more of them,” points out Agrawal.
As if on cue, Atul Auto’s revenue has grown at a compounded rate of 29 percent in the last five years. Its dealership network now has a pan-India spread. Operations have streamlined and, as the company pushes ahead, it plans to add a second plant and double its capacity to 1.2 lakh units a year by 2017.
Niraj Chandra, son of founder Jayantibhai J Chandra, is leading the rapid growth plan. As the wholetime director of the company, he realises that besides the balance sheet, Atul Auto needs to work on its mindset. The 38-year-old has taken on the onus of engineering this change. The time Niraj has invested in learning the ropes helped in this effort. In the 12 years since he joined the company, he has moved between five departments. In his latest stint, he has put himself in charge of human resources; his aim is to get people to up their game to match the growth mindset.
For instance, a senior manager was sent to a workshop on presentation skills conducted by lifestyle and self-help guru Deepak Chopra. Niraj asked another executive to attend a conference on best practices in supply chain management. “If you train your people to start thinking about growth that is sustainable and replicable, half the battle is won,” he says.
This year’s agenda includes an aggressive push into the export market. In 2013, India exported more than 3.5 lakh three-wheelers. Atul’s share: 600 units. The company plans to fix this and has started working on a petrol engine for the export market. (Three-wheelers sold in India primarily run on diesel.) “The company is working to ensure that growth is sustainable,” says Niraj.
It did stutter in 2007, due to faulty production. Now that the time is ripe to bet big, Niraj hopes that lessons learnt then will help avoid another hitch.
GETTING STARTED
SLOWING DOWN
(This story appears in the 05 September, 2014 issue of Forbes India. To visit our Archives, click here.)