Financial Daily from THE HINDU group of publications
Friday, May 31, 2002
Corporate - Interview
Maruti will remain Indian: Suzuki
(From left) Mr O. Suzuki, CEO, Suzuki Motor Corporation, Mr Suresh Prabhu, Minister for Heavy Industry, and Mr Arun Shourie, Minister for Disinvestment, at a press conference in the Capital on Thursday.
NEW DELHI, May 30
WHEN Mr Osamu Suzuki, Chairman and Chief Executive Officer of Japan's Suzuki Motor Corp, first came to India in 1982, he found empty roads and no traffic jams. His sharp business acumen spotted a market that could be tapped and the massive risk associated with it was laughed at in Japan. But then, "last night I arrived at the Delhi airport and just outside the airport I was trapped in the traffic congestion," he says.
In this two-decade time period, Mr Suzuki's hand in the massive growth of the Indian automobile industry to what it is today is no mean thing. Suzuki is now getting into overdrive in the Indian market after establishing its brand name in the car and motorcycle market through different ventures.
Both joint ventures have been through turbulent times and in the case of Maruti, Suzuki is acquiring majority equity stake and management control. In the case of Suzuki's two-wheelers, the company exited from a joint venture and has got the permission to set up its own operations.
Excerpts from Mr Suzuki's e-mail-based interview:
After having taken management control of the company, what are the specific plans that Suzuki has in store for Maruti?
In fact, there will be no significant change in the company because it has already been a business unit to make Suzuki's models and it will remain an Indian company in any manner. Also, Maruti has been playing an important role as Suzuki's export base for Europe and South Asian countries. We will continuously enhance Maruti's competitiveness for not only India, but also world-wide.
Would Suzuki Motor invest in the country to set up any new facilities like research and development/design work for the international operations?
Maruti is known as a very effective and huge production unit. But not only that, Maruti has already established its R&D centre that is linked with Suzuki's R&D centre by satellite communication channel. Maruti started its development work of Maruti/Suzuki models by itself.
How would the board of Maruti be restructured?
Maruti has been developed by Indian Government, Indian management and employees with Suzuki's technical support. Accordingly, Maruti can survive only as Indian company and under Indian management. We appreciated Mr Jagdish Khattar's professional ability and asked him to continue as Managing Director.
What role would you want the Government to play in the company in the future?
The common role between the Government and Suzuki is to enhance the value of Maruti even after Government reduces its stake in Maruti.
Where would you see Maruti Udyog in five years time and beyond?
We hope that Maruti will remain as a reputable Indian company which leads the industry in terms of not only the volume of business but also the customer satisfaction and efficient operation of the company.
Suzuki Motor had applied and got an approval for making motorcycles in the country. Do you see any role for Maruti Udyog in the motorcycle market now that you will have two subsidiaries (one fully-owned for motorcycles and a majority-owned Maruti)?
We have no plan for Maruti to participate in the two-wheeler business. We will keep it independent.
How would Maruti contribute financially to Suzuki Motor's financial?
As on Suzuki's consolidated accounting, change in Maruti's contribution in the net profit is from 50 per cent to 54.2 per cent of Maruti, which is nominal.
We cannot say the percentage of Maruti's contribution to Suzuki's total profit, as it is totally a matter of future.
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