The only indulgence that Prasan Firodia likes to talk about is getting behind the wheel and heading out of the city with his family—wife Sejal and twin 10-year-old sons, Ameya and Anant.
The managing director of Pune-based Force Motors Ltd, which powers one in every two Mercedes and BMW cars and sports utility vehicles (SUVs) seen on Indian roads with its engines, refuses to comment on whether he relies on a family office to manage his wealth and investments.
“I wouldn’t like to talk about personal finance issues please,” is all he says.
“We are a conservative family. I have always seen people in my family work very hard and understand that nothing comes easy,” says Firodia, when asked about his preferred savings instruments and indulgences.
“The conservatism reflects in the business,” says the third-generation scion of the Firodia family that makes pick-up trucks, tractors, vans and mini buses under the Traveller, Trax and Gurkha brands and critical engine parts under Jaya Hind Industries.
Force Motors and Jai Hind Industries, headed by his father Abhay, have been debt-free all along and, as a matter of principle, have preferred to raise money through internal accruals, says Prasan Firodia.
Born into a family in which most discussions centred around business, it was natural for Firodia to join the family business in 2002 and take the legacy of his father and grandfather Navalmal Kundalmal Firodia forward. He took over the reigns of Force Motors in June 2009, when the world was just recovering from the financial crisis.
Commercial vehicle makers were just coming out of a decade-low slump; Force Motors was not unaffected. Over the next few months, the 38-year-old MBA from European Business School, Regents University, London, not only steered the company out of troubled waters but also charted a new path for the then 52-year-old firm, re-orienting its focus from being a product-centric company to a market-focused one.
Barring a few hiccups—an unsuccessful attempt at breaking into India’s competitive SUV market with Force One, a premium SUV, in 2013, and a failed joint venture with Germany’s MAN Truck and Bus AG for entry into the heavy-duty truck segment—the company has been riding high under Firodia’s leadership. Force Motors’ market capitalization over the last eight years has zoomed 3.74 times to around Rs5,274 crore, while net sales grew to around Rs3,068 crore in fiscal 2016-17, up from Rs749 crore in fiscal 2008-09.
Force announced in 2011 that it would sell its 50% stake in Man Force Trucks Pvt. Ltd to MAN. The process was completed in 2013.
Kavil Ramachandran, executive director, Thomas Schmidheiny Centre for Family Enterprise at the Indian School of Business, Hyderabad, says that with competition and complexities having grown manifold, the challenges for third-generation entrepreneurs are greater. “It’s no more just about being the son or daughter of a billionaire or the lineage,” he says. To be able to survive and scale bigger heights, the third generation has to be extremely competent and professional and respect these qualities to retain and attract talent, adds Ramachandran.
Firodia attributes the free hand that his father gave him in running the business for his evolution as a professional with the ability to take the business to newer heights.
“On a few occasions, he (father) could see I was headed in a wrong direction, but perhaps he wanted me to learn from my mistakes,” he says. There have also been disagreements, says Firodia, citing an example: the positioning of Force One, which was launched as a premium SUV. While Abhay wanted to position it as a people-mover in the mass segment, Prasan was in favour of premium positioning in the personal transportation segment.
Firodia regrets the way their SUV’s entry panned out but he acknowledges the learning opportunities it provided for a company that used to make only rugged utility vehicles or light commercial vehicles.
“It took us into a segment where the aspirations are very different,” he says, pointing out that the entire process of managing the front and back end is different in the personal vehicle and commercial vehicle space. It helped the company introduce advanced safety features, such as an anti-lock braking system (ABS) and electronic brake-force distribution (EBD), in commercial vehicles at a time when it was unheard of.
Having learnt its lessons, Force Motors now plans to remain focused on the commercial vehicles segment. Its presence in the personal transportation space will be limited to the niche segment through models like Gurkha—a no-frills utility vehicle meant for off-roading. “It (the SUV market) is a very competitive market and the product life cycles are very short. Price points are getting lower by the day, so it is something for the big boys (large companies with scale and experience) to play with,” says Firodia.
Force Motors also plans to strengthen its engineering and manufacturing capabilities—something that has earned the firm engine-supplying contracts from luxury car makers. While its association with Mercedes Benz India Pvt. Ltd as a supplier of locally manufactured engines is 46 years old, it won the mandate from BMW India Pvt. Ltd in 2014. The high-margin engine business accounts for three out of every ten rupees earned by the company.
Over the years, strong engineering infrastructure and capabilities created by Abhay Firodia have helped the company leverage this to support other original equipment manufacturers (OEM) in the hi-tech power train business. “It is a matter of great pride that we are the only company in the world that has a tie-up with both Mercedes and BMW for producing their power train,” says Firodia.
Name: Prasan Firodia
Designation: Managing director, Force Motors Ltd
Education: MBA from European Business School, Regent’s University, London
What is your money mantra? I have always seen people in my family work very hard and understand nothing comes easy. We are a conservative family. The conservatism reflects in the business.
Name: Abhay Firodia
Net worth: $2.6 billion
Source of wealth: Automobile manufacturing
Education: Doctor of science from Rajiv Gandhi Proudyogiki Vishwavidayalaya (State Technological University), Madhya Pradesh
Brief: Abhay Firodia is chairman of Force Motors, maker of vans, pickup trucks, SUVs and tractors, which has been run by his son Prasan since 2009. Formerly known as Bajaj Tempo when it was a joint venture with the Bajaj family, it was founded by Firodia’s late father, Navalmal Firodia, in 1958. The family fell out with the Bajajs in 1968 after a bitter feud. He continues to hold stakes in Bajaj companies. His privately held Jaya Hind Industries, which has a joint venture with French auto parts maker Montupet, supplies cylinder heads to Ford from its factory in Madhya Pradesh.[“Source-livemint”]