Corruption is bad for business, says Suresh Vazirani, Managing Director of an award-winning hi-tech company.
You are in hospital with a life-threatening illness. Malaria, say, or TB or hepatitis or, God forbid, HIV/Aids. The doctors need to diagnose exactly what you've got. And they need to know fast. They take a sample of your blood and run it through a state-of-the-art blood biochemistry analyser. Such machines can do up to 600 tests in an hour, for over 200 blood diseases. They save lives.
In India, the market leader in manufacturing high-tech blood diagnostic machines is Transasia Biomedicals, based in Mumbai. The brainchild of Suresh Vazirani, the company's foundations were laid in 1985. Today it is a global player with exports to over 30 countries.
Three years ago Vazirani received first prize in the National Exports Award for advanced technology from Prime Minister Atal Bihari Vajpayee, who also presented Vazirani's wife, Mala, with the National Quality Award for the leading biotechnology company.
What especially marks out the Vaziranis and their company is their courageous and dogged stance against corruption. Vazirani says they have never paid a paisa in bribes. Avoiding corruption takes up more of his time than any other issue, he says, and his company employs two lawyers full-time to fight the cases that arise. When, for instance, he wanted to install a fountain in the lunch area, two government officials demanded a $100 bribe for a licence. Yet no such licences had been issued for 20 years. It took his lawyers four years in the courts, costing $4,000, to deal with the case.
Vazirani's interest in life-saving technology must have been his karma, says his wife Mala. For in his heart he had really wanted to be a doctor. But his parents sent him, one of seven children, on a scholarship to study electrical engineering at Nagpur University.
His parents had fled from Pakistan at the time of Partition in 1947, bringing nothing with them. As a young man, Vazirani had blamed the politicians for his family's deprivation and for corruption. Therefore, he says, he regarded it as his right to travel without paying for a ticket and to steal library books. But then he encountered Moral Re-Armament (now Initiatives of Change) and this challenged him 'to walk the talk, to rise above blame towards responsibility'.
On graduation, he decided to be an unpaid volunteer with MRA, helping to run industrial leadership training programmes at Asia Plateau, MRA's conference centre near Pune. There he would urge businessmen not to be corrupt, he recalls. That's all very well, they would reply, but you've never run a business. You don't know what it's like.
The challenge rankled with Vazirani, but he knew it had some truth. So when after nine years with MRA he needed to earn an income, he decided to go into business himself. In 1979 he and a friend, Satish Sutaria, registered the company name of Transasia, 'as a reminder of Asia Plateau', Vazirani says. He was 29 and had just 250 rupees (about GBP4) to his name from his final honorarium from MRA.
Their idea was to create an importing and marketing company. They had no capital to start a factory, and not even enough to rent an office. But thanks to their experience with MRA, says Mala, 'they wanted to do something of central relevance, definitely in industry, health care or social services. They wanted to make a difference where it really could count.'
Sutaria's mother sold some jewellery to help them get started, and a dental manufacturing businessman, Surendra Patel, and his wife, Dhara, let them use their dining room in the Mumbai suburb of Andheri as an office. From there they wrote 100 letters to companies all over the world, offering their marketing services, with hardly any response.
Then Dhara's brother sold an apartment and offered to loan the money to Vazirani. Sutaria felt uneasy about whether they could ever repay the loan. But Vazirani leapt at the opportunity and, taking the biggest gamble of his life, bought a six-month round-the-world air ticket. He wanted to find out what the world was making that India most needed. This was too much for Sutaria, who decided to quit the partnership.
Vazirani visited medical manufacturing companies in Florence and Rome - it was unprecedented for an Indian marketer to turn up on the doorstep. In Tokyo he met a dynamic young export manager, Shimoyama, also handling medical machines, who had visited India after his graduation. They immediately established a rapport and Shimoyama felt he could trust Vazirani to give good customer service. These encounters gave Vazirani his big break and he returned to Mumbai a fully signed up distributor of Italian and Japanese medical diagnostic machines.
He knew little about the machine parts or their application but he set to, clearing the imported machines through customs, installing them and training the customers.
But it was a big leap from importing to manufacturing. The potential market was vast, not only in India but also in China and Africa. The imported machines were expensive and prone to failure. The service engineers that Vazirani employed gave him the confidence that they could assemble them locally themselves.
A critical moment came in 1991 when Vazirani was badly let down by one of the Italian firms. He had the orders from customers, but the machines never arrived. Exasperated, he flew to Rome and visited the company every day for 15 days before concluding that they were never going to deliver. 'That experience in Rome really crystallized things for me - that if we were to come up to customers' expectations, and if I was to control my own destiny, we had to start manufacturing ourselves. It was a question of our credibility.'
Back in Andheri his staff of 25 were so enthusiastic that they put together their first prototype within two months. 'We said to each other, 'Wow, we can do it. Why didn't we do it all along?' That first model had 70 per cent of imported parts. From then on they developed a new model each year and now the foreign content is less than 25 per cent. 'We were able to give tough competition to the bigger American, German and Japanese companies,' Vazirani says.
The company faced tougher competition when, between 1995 and 1997, the government cut import tariffs from 40 per cent to five per cent, under World Trade Organization rules. 'We had to see globalization as an opportunity rather than a threat,' Vazirani says. He calculated that, while the company manufactured 5,000 machines a year for the domestic market, they could produce 20,000 for the world market-provided they could make a machine with a really big capacity.
In 1996, he revisited Japan at a time when the yen was rising, making the large Japanese machines prohibitively expensive abroad. Over three days he negotiated an agreement with a Japanese company that would give him the technology to manufacture the machines in India, in return for a royalty for each one that Transasia sold. 'It was a win-win situation,' Vazirani says. 'Here was a Japanese company willing to give us the technology with not much down payment purely on the basis of trust.' This first venture into the top end of the market was a dream fulfilled for Vazirani. When a supercilious German distributor visited Transasia, 'You should have seen his face,' Vazirani says. 'His mouth was open. He couldn't believe his eyes. We started supplying to him and it was a very good contract.'
Along with the exports came the fight against corruption. Vazirani risked losing a DM20 million sales contract to Germany because a customs officer wanted a bribe to release vital imported components. Rather than paying up, Vazirani left the components in the warehouse for three months. He went to the top customs officials, arguing that if Transasia didn't get this order the country would lose. 'We appealed to their sense of national pride.' The components were released just in time for Transasia to win the contract.
Recently, a politician suggested to Vazirani that it would be 'an opportunity' if they each pocketed part of the World Bank aid the politician had received to improve health care. 'Yes, and is it an opportunity if we land up in hospital needing urgent care ourselves?' replied Vazirani. At this, the politician changed his tune, realizing that Vazirani was not to be bought. He even promised to increase state aid to hospitals.
Last September, Vazirani was a keynote speaker at the launch in Mumbai of Transparency International's new Business Principles for Combating Bribery. 'Corruption is a big road block to progress,' he says. 'Because of it everything goes wrong. The intimidation leads to wrong decision-making. Transasia can be an example. But many more companies need to be.'
In his stance, Vazirani is wholeheartedly supported by his effervescent wife, Mala. They were introduced by their parents and 'we took off' - an ideal match - 'much to everyone's surprise, including ourselves,' Mala says. They now have three children. It was her idea to supply 35 machines at a special low price to small clinics for the benefit of slum dwellers.
Today Transasia employs 450 people in three locations, one near the airport, and two 150 kilometres up the coast in the state of Gujarat.
'It has been a wonderful learning, and at times tough, experience,' comments Vazirani. 'But I know it is part of God's plan. So I never get worried about the problems. God gives the power and I am sure he gives the solutions too. Whenever I come to a junction, I find someone taking my hand and making sure I take the right turn.'
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