The Industrialist's Mistakes

A number of people in India must have heard the name Walchand Hirachand but had no idea who he was, other than the fact that he was an industrialist. He was the founder of the Walchand Group and his most important contributions to the country were establishing India's first modern shipyard, first aircraft factory and first car factory. He was the man responsible for the introduction of the wildly popular Premier Padmini car in India. His company also founded Hindustan Shipyard Limited and Hindustan Aeronautics Limited. But what is interesting in his story is how he ventured into a business he had no idea about, and with no planning but somehow managed to get away with the mistakes he made, every time.

A contractor by profession, Walchand Hirachand started out on his own at this at the age of 20, not heeding the advice of his family elders of joining the family business. This action proved to be beneficial for him as this is how he made his initial fortune. After making a good amount of money Walchand Hirachand decided to venture into other businesses. However, his investments were motivated by mere interests and enthusiasm rather than knowledge and research on the particular industry.

The mistakes that I am talking about are regarding his decisions of entering into the passenger shipping industry and of the many decisions that he took after he had made the mistake of entering the aforementioned industry in the first place.

Walchand Hirachand had established the Scindia Steam Navigation Company Ltd. to enter into the passenger shipping business. This idea of entering into shipping had originated by chance. While returning to Bombay from a trip somewhere in North India, he bumped into a particular Mr, Watson, a senior executive at Crompton. It was he who had mentioned that the Maharaja of Scindia was selling a steamer which he had purchased at the time of the First World War. Mr. Watson also informed him that ship was available at a price of Rs. 25 lakhs, which was not just reasonable but in fact a bargain. Walchand Hirachand had been told that at the cheap investment cost of Rs. 25 lakhs and due to lack of steamers to Britain he could get back his investment within 1 to 2 years. Excited by the prospect of getting into the shipping industry, Walchand Hirachand managed to arrange for the funds, to buy the steamer, very quickly. In fact, he was so excited about this new venture that when his train reached the station at Bombay he sent his wife home, while he himself immediately went to inspect the steamer.

Every business requires proper planning before commencement. It is these plans that guide the management on how to move forward. But in his excitement, Walchand Hirachand decided to jump straight into the starting part and skip over the crucial planning. He had absolutely no idea about the industry. After the purchase of the steamer Walchand Hirachand realized that that market monopoly was held by a British company called British India Steam Navigation Company (BI) and they would go to any lengths to stop anyone else from entering the market.

Walchand Hirachand knew he had to make repairs to the ship sooner than later. Without any planning, relying solely on word of mouth he decided to get the repairs done in Britain, as someone had told him it would be much cheaper and faster to get it done there. Walchand Hirachand immediately started taking bookings for the ship’s first sail to Britain after which the repair work would start. Again, a mistake he made was not taking advance for the bookings. This proved to be a mistake since all the people did not show up on the sail date and the company had to suffer a huge loss, as the sail date of the steamer couldn’t be shifted.

Upon reaching Britain, it was with great difficulty that Walchand Hirachand managed to find someone who would make the necessary repairs. BI was a well-known and reputable company back in Britain as well, the owners and management of BI were extremely powerful too. No one wanted to get on their bad books, that too for some new company from India. It was after some time and a lot of searching and requesting that Walchand Hirachand managed to find someone who was willing to do the repairs, that also only because he held a grudge against the head of BI, James Mackay. Walchand Hirachand also never planned out the repairs process properly. He did no research on the time or the cost estimation at all, at any given point of time. The steamer was taken to the Britain since someone had told him it would cost him just Rs. 1.5 lakhs and 5 weeks to get the repairs done as opposed to Rs. 10 lakhs and 6 months in India. However, the repairs ended up costing Rs. 7 lakhs and 5 months to be completed. Add to that the loss the company suffered due to not taking advances and the no-show by the passengers during its sail from India, the company would have been better off getting the repairs done in India itself.

However, Walchand Hirachand did learn from his mistakes. He ended up being very successful in the shipping industry managing to wrestle a 26% market share from BI by the time he died, in 1953. For example, while taking bookings for the steamer’s sail back to India, Walchand Hirachand made sure that he took advances from the passengers. Other than that, he also used this experience to start some other, new, business ventures which were successful. However, some of these companies were nationalized by the Indian Government after Independence while some companies couldn’t manage to sustain after the death of Walchand Hirachand, including Scindia Steam Navigation Company Ltd.

To sum it up, not everyone will be as lucky as Walchand Hirachand was. It is essential to plan out each and every thing before it is executed. Planning also lays the foundation for the future of the company. It can be clearly seen that Walchand Hirachand’s companies didn’t survive after him. This was because he may have planned out the future courses of action of his companies, after learning from his initial mistakes, but he never really planned the future of his companies. This is a lesson that can be learned from one of India’s top industrialist’s during his time.