Industrialist who exited telecom to keep tractor on track

RajanNanda, chairman and managing director of tractor maker Escorts, passed away on Sunday at the age of 76. Nanda had joined Escorts in 1965 when he was 23 and became the chairman in 1994 after his father HP N and a, who had founded the company, stepped down.

N and a’ s death comes at a time when the tractor maker is firing on all cylinders, thanks to three consecutive years of normal rainfall. The company more than doubled its profit in the last fiscal year to ~3.44 billion. Nanda’sson Nikhil, currently the managing director, is actively involved in the business.

N and a died at the Med ant a Hospital in Gurgaon. Incidentally, Med ant a was founded by renowned cardiac surgeon Na resh Trehan who once used to run the Escorts Heart Institute& Research Centre owned by Ra jan. The Nandas sold the Delhi hospital to Fort is for ~5.85 billion in 2005 to bring down the debt at Escorts, the flag ship company. But healthcare was not the only business that N and a exited. He used to run cellular services in west Utt ar Pradesh, Haryana and Kerala under the Es co tel brand, a51:49 per cent joint venture between Escorts and First Pacific Company of Hong Kong.

However, the telecom business demanded regular in fusion of funds to continue expansion and coverage. N and a had no problem in pumping regular money till the tractor business was doing well. But he faced challenge sat the turn of the century as three back to back rainfall deficit years hit tractor sales. The competitive environment in tractor market was also changing with the entry of new players, including multi nationals.

The viability of expensive G SM( global system for mobile technology) mobile business came under question when the government allowed mobile telephony based on CD MA (code division multiple access) technology. Operators got CD MA licence free with the basic telephony licence. N and a had no choice but to sell the telecom business to Idea Cellular in 2004, atalossanda debt. At one point of time, the group’ s total debt had swelled to ~10 billion.

A decision to sell the healthcare business followed. Besides Delhi, Escorts’ healthcare division had a hospital each in Far ida bad and Amritsar and one under construction in Jaipur.

Escorts had two joint venture partners--J CB and Ford. JCB, the partner in construction equipment manufacturing, walked out to set its own shop once it managed to get permission. The joint venture with Ford was to make Ford tractor sin India. But Ford sold the business to New Holland, which decided to set out on its own in India. Escorts had also exited the two wheeler joint venture with Yamaha under which it used to make the famous Rajdoot motorcycle in the late eighties.

One of the testing times in N and a’ s life was when Swraj Paul attempted a hostile take over of the company in 1983. Paul picked up shares from the open market and once had as take bigger to the promote rs’ share of just 7.5 percent. Nanda, then president at the company, negotiated the issue with Paul’ s brother, Jit, over multiple meetings and worked out are solution. The crisis had lasted for three years.

It is interesting that N and a tried his luck in multiple businesses but real is ed the need to focus on the core, whichis, tractor besides construction and railway equipment. Once an adversary, Swraj Paul expressed shock on N and a’ s death .“My heart felt condolences to all of the family. May god give them the courage to bare this irreparable loss ,” he tweeted.