Rahul Bajaj has shown the way for Indian business family patriarchs.

For a man who is believed to have said “Only fools retire,” Rahul Bajaj’s stepping down as Bajaj Finance chairman can seem a little strange. Will the man who turned his fledgling family business into Humara Bajaj, still sprightly at 82 and bright as ever, be content with a seat at the family dining table?

The company’s release was carefully worded: “Rahul Bajaj, the company’s non-executive chairman, who has been in the helm since its inception in 1987 and the group has decided to demolish the office for over five decades as part of succession planning.”

No stranger to simmering rivalry between siblings that in the past led to a bitter parting with his own brother, last year he negotiated a family settlement with his cousins, Shekhar, Madhur and Niraj, which set out the terms of group company joint ownership along with a formal process to deal with any future conflicts.

He has also ensured, however, that his sons are free from any such tensions. The senior Bajaj has thus set out a perfect template for Indian business families on how they can increase value from one generation to the next.

It is the fourth generation of the Bajaj family, led by Rajiv and Sanjiv, that defies the unwritten rules of Indian business families, which has grown the empire the most and created huge shareholder wealth in the bargain.

Today, three companies in the Bajaj group, Bajaj Finance, Bajaj Finserv, and Bajaj Auto rank among the country’s 35 most valuable companies.

It was in 1968 that Rahul Bajaj took over from his father Kamalnayan Bajaj the small family business of scooters, cement and electrical appliances, which in turn had inherited it from his father Jamnalal Bajaj whose contribution to India’s struggle for freedom far exceeds that of Indian business.

Through the 1970s and 1980s, Rahul Bajaj turned the firm into a household name that stretched the company to the limits permitted by the era’s asphyxiating license-permit raj.

The feisty, charismatic business leader was among those who raised their voices against the sudden attack of international capital and technology and called for no more than a level playing field when liberalization came in.

But the canny businessman soon figured out the game’s new rules and played it better than most. By the late 1990s, Bajaj Auto again became king of the Indian roads.

But here is where Rahul Bajaj departed for effective patriarchs from the time-honored script. When it was time to move back he realized. The man who developed the business into a two-wheeler giant transformed seamlessly into a mentor and guide with both his sons having apprenticed long enough on the shop floor, leaving operational power to them.

It was a wise decision and ultimately enriching. Rajiv, the two’s elder and appointed heir to the two-wheeler business, steered it out of a mini-slump following the motorcycle onslaught in which arch-rival Hero Honda took the lead.

Even after Bajaj had regained lost ground, the company took the momentous, albeit highly controversial, decision to quit the scooter market in 2009. Subsequent events prove that it made up the value of what the firm lost in market share. But it is the newer financial services sector that has proved to be a bonanza for the company.

Rahul Bajaj is anything but reckless in his company, blunt, and frank in public. Even when other Indian businessmen flamed through forays into diverse industries following ill-thought-out, Bajaj stuck to knitting the company’s healthy balance sheet, enabling it to continuously pursue relevant opportunities. Financial services were an integral part of that strategy to diversify.

While entry into this business was largely the idea of Rahul Bajaj (in 2001 the company signed up to start a general insurance business with Allianz SE) he left it to Sanjiv to develop it the way he thought best.

His ability to make a success of the financial sector transforming Bajaj Finance into one of the country’s largest retail asset financing NBFCs is a remarkable feat to Sanjiv ‘s credit after 10 years of learning the ropes of the two-wheeler market.

Just as the transition from the Bajaj Chetak to the Pulsar bike marks a generational change in the group’s two-wheeler sector, an equally effective diversification marks the emergence of a powerful financial services company whose market cap dwarfs that of the original entity, Bajaj Auto.

In both of these, by empowering his sons at the right time and giving them distinct business lines to run, Rahul Bajaj provided the ballast, and more significantly the original impetus.

The reference to succession planning holds not only the key to this decision but also the singular achievement of the man which goes beyond the numbers alone.

In reality, the single greatest achievement of Rahul Bajaj could have been the smooth transition of his power to his sons and then, in effect, the bifurcation of business interests between the two.