Building up a company or a brand from the scratch seems to be his forte. With sheer determination and hard work Rakesh Malhotra, CEO, Luminous, has conquered almost everything he had wished for in life. Now preparing to play a new role in Luminous, a company he built through 20 years of hard work, this entrepreneur is proceeding on a new journey
Willingness to take risks and the thrill of doing things my own way keeps me going. Life is a short span of time but wishes are many—all needs to be fulfilled. I’ve always been focused, yet I wish I could have been more focused to achieve more. There is more to do in future, hence no stopping, no looking back.
My school days
I belong to a middle class family and my upbringing was in a very disciplined and principled environment. We were a family of four—my father, an IAS officer, my mother, a homemaker and a younger sister. Till class IX, I went to Kendriya Vidyalya in Delhi but in 1976 when my father was posted in Afghanistan and my family had to move to Kabul, I stayed back and finished my class X from a school in Ludhiana. In my school days although I was a notorious and mischievous kid, I was reasonably good in studies with interest in maths and physics, and all my teachers admired and loved me.
Later, I too moved to Kabul and joined an Indian school. Those were the days when Kabul was a peaceful city. Although the Russian “invasion” had forced the free-spirited society of this beautiful country to turn into a military society, it didn’t have much impact on the day to day lives of the people like us except following some disciplinaryrules and regulations.
Although my family shifted back to India in 1981, I left Kabul in 1979 to appear in entrance exams in India. I finally enrolled myself in a graduation programme in electronics and telecom engineering at Jadhavpur University, Kolkata.
Varsity years prepared me to face life
The years spent at Jadhavpur University were indeed the best in my life and prepared me for the life ahead. I did well in studies and loved sports like cricket, football and hammer throw. The groundwork for my life ahead had started during those years. The first lesson I had learned was that with independence comes responsibility. I had started valuing money—the monetary support that came from home was never sufficient and I had to give tuitions to school students in my locality to meet my expenses.
Those years were not only struggling but interesting and exciting as well. My friendly nature helped me make good friends and I picked up the sweet Bengali language and the local culture quite fast.
When you are in Bengal, you cannot stay away from politics too long. I also got actively involved in it and formed my own political alignment. Two important political bodies were active in the university—SFI, which was CPM’s students’ wing and DSF. I actively supported the latter. We raised students’ issues with the university authorities. Once we forcibly took over an empty building and turned it into a hostel and got our share of hammering from the authorities.
I had fairly good leadership traits but becoming an entrepreneur was never on At Jadhavpur University, I had gathered multidimensional my mind. As an electronics engineering experience, which not only helped me become more student I was a regular reader of Electronics For You and one of my professors Dr Biswas was a regular contributor to the focused towards my future organised and disciplined but also made me stronger and magazine. I often tried the circuits published in the magazine—some worked, some didn’t. I had even thought of giving a competition to Electronics For You by publishing my own magazine. A panel of seven to eight professors from Jadhavpur University and Indian Institute of Science was set up, who had agreed to write for my magazine but eventually the project didn’t take off.
In short, in those few years I had gathered multidimensional experience, which not only helped me become more organised and disciplined but also made me stronger and focused towards my future.
Short stints in jobs
My first job with Allen Bradley lasted for just four days. Thereafter, I came to Delhi and joined Nelco and later Siemens. I was earning quite well as in those days my starting salary was Rs 14,000 a month. But since I am a restless soul I never stayed in a job for too long. I changed jobs quite often but never for money. In fact, I took up a job that paid me 10 times lesser than what I used to earn and I stayed with the company the longest.
I quit Siemens after working for a one-and-ahalf years to start my own business. Though the decision didn’t go well with my father who was already disappointed with me for not appearing in the civil services exam and later leaving a “well-respected job”.
I tasted failure early in my life
Nevertheless, I entered into my first venture in 1985 by setting up a sales and service business for DB Power Electronics, which is now owned by Power Chloride. My responsibilities were to sell the company’s products and offer service support. In a few years I managed to build up a revenue of Rs 2.5 crore for the company. On every sale I used to earn 10 per cent commission and by 1987 I had a capital base of about Rs 40 lakh.
The idea of making offline UPS came to me when I purchased my first computer, a DOS version for Rs 1.5 lakh. At that time, the only offline UPS available in the market was Sterling, a 1 KVA UPS, which in those days used to cost Rs 50,000. Being an electronics engineer I did not find the amount justifiable. This forced me to think about developing a cheaper power backup system for computers.
I challenged myself to manufacture an UPS for Rs 15,000. I was supported by a few people working with C-DOT, which was among a few companies doing research and development work. We put together a good team and after some efforts managed to develop the product, which we branded as Active 500 and named our company as Oak Power System. We began sales and promotion of the product and the response was quite good as people were happy to invest Rs 15,000 in a product which had earlier cost them as high as Rs 50,000.
Orders started pouring in, particularly from oil companies and sugar mills. Around 600 orders were placed in a span of just six months. The total cost of our product was around Rs 7,000 to 8,000. We made good profits by selling Active 500 UPS. But after a few months the ordeal began. We were flooded with complaints about the product. My partner and I spent the next seven to eight months travelling on trains as service engineers. With bags full of spare parts, we visited various parts of the country trying to fix those boxes. We did our level best to make them work but one day we finally had to give up. And in doing so, I had to lose my partner in the bargain. We couldn’t keep up with the level of services required as the product was not fully matured.
Finally, we took back all our UPS, paid back our customers and almost got broke as a company with a pile of scrap accumulated at our factory near Dwarka. For two years we paid the rent for the factory and finally got all the junk sold to a kabariwala for a few thousand of rupees.
With the failure staring in the face, I, at an early age of 24, learned an important lesson—never sell anything in the market where the customer becomes the ‘guinea pig’.
This way you can make quick money but won’t necessarily succeed in the long run. We learned this lesson the hard way, but thereafter I never sold anything before testing it properly. Sometimes the time taken for testing kept us behind our competitors but that is fine because whatever we have produced after that disaster we have been successful with them.
Luminous was born
In 1989 Luminous was set up as a sales and service company as I wanted to keep away from manufacturing for sometime. We began re-building the capital and by 1994 we were close to a revenue of Rs 2.5 crore. Once again I decided to give one more shot to manufacturing and I took up inverters this time. During those days using inverters was a nightmare. There used to be only one brand in Delhi called Vner 7. It was an ugly looking product with very high failure rate and no service support. We had one at home too, and I remember how my wife and mother used to complain about the inverter. Being an engineer I was expected to rectify the faults taking place now and then. Seeing the inferior quality of the inverter, I decided to start manufacturing my own brand and that’s how Luminous was born. I realised that there was a huge demand for power backup systems throughout the country as Honda and Yamaha generators were sold like hot cakes. We designed inverters, tested them real hard and after one-and-a-half years of testing the product in all possible ways, launched it in the market.
Since the beginning our USP has been our strong after sales services. We were the first to start a 24-hour call centre way back in 1997. We received good feedback from our customers and people relied on our products. Our competitors had to cut down on prices as we were giving them good competition. Our products were always expensive than other products in the market, yet we sold more as we had already reached the reliability level.
These are a few of my favourite things…
- Favourite past time: Eating good food
- Favourite hobby: Reading
- Favourite music: Classical and country
- Favourite possession: Family
- Favourite health booster: Yoga
- Any regrets: Wanted to do higher studies
- If not entrepreneur: A mentor
- Things I want to change about myself: My restless nature; my anger which leads to
restlessness; to be more focused in life
- Three values you like to incorporate in your children: Be ethical; be confident; be innovative, creative and enterprising
- Message to other entrepreneurs: Go for it!
The strong foundation of Luminous
Luminous is a brand that means confidence, dependability, quality and total assurance. These qualities build the foundation of our brand, both nationally and internationally, and we have lived by these principles till date. I don’t believe that promotion can build a brand’s reputation if it is not good in itself or there is no value proposition for customers. I always believe in delivering the right product and services at the right time. I prefer investing in people and right R&D rather than infrastructure—we still work from a rented office. Our foundation has become so strong that even during recession we grew by 18 per cent and this year we are back to 40-45 per cent growth rate.
Even during the slowdown last year, we didn’t cut down on salaries and manpower. Instead, we went ahead with our growth plans and set up a new company—Luminous Teleinfra in September 2008. Our expansion plans My ambition is to make Luminous a global company and we have already started taking steps in that direction by setting up a factory in China. We believe that commitment towards local economy and local people can make us a global entity. We didn’t go for a joint venture but spent considerably in understanding the local culture and economy. We hired Chinese people—from the CEO to the gatekeeper, all are Chinese.
We already have four subsidiaries. We have recently acquired a majority stake in Tektronics, a well-known name in UPS. We have also acquired UD Energy Systems— a pioneer in wind, solar and hybrid energy—last year. We are also venturing into solar energy, but are yet to make any announcements in this regard. Overall, we are well placed in terms of financial resources, market resources and human resources and we expect exciting times ahead.
I’m a complete family man
I share a strong bond and a good emotional connection with my family. My mother passed away a few years ago but my father is a strong pillar of the family. I got married in 1991. My wife was a mathematics teacher but due to household responsibilities she quit her job and is now a homemaker. One thing I admire about my wife is her commitment towards values. I am blessed with a daughter, who is in Class XI and a son, who is in Class VII.
Despite my busy schedule, I try to spend quality time with my family catching up on the latest movie or just having fun with my children indoor. My family is always updated on the kind of work I do and they fully understand my commitment towards work. As far as my expectations from my kids are concerned, I want them to be good human beings. I do not wish to impose any career related decisions on them. They have full freedom to decide their future course.
I wish to move on
I don’t see myself just as a businessman. I wish to do more in life. I have started detaching myself from the business and have already stepped down from the post of CEO. A full-time CEO has been hired. I will act as a consultant to the company. The two key issues that concern me are the environment and education. I have already started working on them, however, I cannot disclose the details as the projects are still at nascent stages. I have a whole list of things to do after I retire. I also plan to teach one day as I believe knowledge is the biggest transformer. Probably I can be a mentor and share my experiences with those who wish to start an enterprise.
–As told to Himanshu Yadav
