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September 25, 1997


Keep dispute apolitical, says Suzuki

Even as the government on Wednesday termed the allegations made by Suzuki Motor Corporation, its equal partner in Maruti Udyog Limited, false and baseless, the Japanese company urged that the dispute should not take political connotations.

The government had, in a statement issued on Wednesday night, denied SMC's allegations that it had usurped the posts of chairman and managing director in the 50:50 joint venture and stated that the appointments ''were done according to the letter and spirit of the agreement.''

However, Suzuki retaliated later on Wednesday night with a statement that the industry ministry had ignored an international business practice ''and not acted along with the letter and spirit of the agreement.''

The government stated that at the annual general meeting, the SMC representative had submitted a letter to MUL chairman Prabir Sengupta before the resolution regarding R C Bhargava's appointment as chairman could be taken up. The letter said Suzuki would like to supersede the resolution and instead propose Y Saito for the chairman's post.

''However, when the resolution was to be taken up for discussions, the SMC representative stated that they withdrew the resolution itself,'' the statement said.

The question of the chairman's appointment was neither discussed nor put to vote as SMC withdrew this particular resolution. ''Whatever was done, was done according to the letter and spirit of the agreement,'' it added.

However, both partners expressed the view that they were committed to the growth and retention of Maruti's predominant market position and hoped that the avoidable acrimony and controversies of the immediate past would be put behind and both partners would work together and march forward in a harmonious manner to enable Maruti to face the emerging competition in the automobile market.

While the government continued to back R S S L N Bhaskarudu's appointment as MUL managing director, its Japanese partner also reiterated that Maruti should be led by a person who ''strongly exercised fairness and ethics.''

The government statement said, ''It needs to be borne in mind that Bhaskarudu has been a joint managing director since 1993 and was officiating MD when Bhargava was on leave or on tour.''

''It is presumptuous to draw any conclusion on the competence of any person on the basis of the fact that detailed answers to a host of questions were promised to be sent. It needs to be pointed out that the allegations against Bhaskarudu are false and baseless, to say the least,'' it added.

Meanwhile, Suzuki, in its four-page statement, said, ''This dispute is between two business partners, and is not of a political nature but of a commercial nature.''

The Japanese ambassador to India, S Tanino, was on Wednesday quoted as saying that this incident should not spill over to mutual ties between the two countries. Suzuki also expressed similar views stating that it hoped Maruti would be managed by a board of professional and independent directors, and ''political factors should not be allowed to jeopardise the operation of the company and lead to unnecessary delays in decision-making.''

It also reiterated that Suzuki remained fully committed to India and to Maruti's further progress and growth.

Suzuki further stated that the disputes and differences between the two partners would be determined by the International Court of Arbitration, and expressed hope that the award of arbitration in London could be rendered as soon as possible.

The company also alleged that the industry ministry had ignored an international business practice of not discussing the issues concerning the joint venture with its partner, and had not acted in the letter and spirit of the agreement.

''This had resulted in a situation where this issue could only be resolved by clarifying the interpretation of the joint venture agreement through legal proceedings by means of arbitration while keeping the doors open to discussions with the ministry,'' the statement added.

''It is unfortunate and much to Suzuki's discomfort that this globally acknowledged Indian company is being forced to pass through such a turbulent time.''

It stated that since 1995, there have been various attempts to foster partisan individualistic agendas overriding the concerns of Maruti's future.

Suzuki, the statement said, has always considered Maruti as an Indian company with global aspirations. It has a deep-rooted faith in Indian managerial talent. ''It is in this background that Suzuki feels deeply hurt and aggrieved by the treatment meted out to it as a long-standing trusted partner.''

It also pointed out that under the amended agreement signed in June 1992, it was agreed that for the development of Maruti as a world class automobile manufacturer, Maruti should become a non-governmental company with 50:50 equity sharing by the Government of India and Suzuki. In order to materialise the purpose of the agreement, it was also stated that restrictions and regulations applied to government companies should not be applied to Maruti, and that Maruti would be a company managed by a board.

Moreover, for professional decisions, Suzuki's experience and expertise would be respected. ''In the emerging competition in the market, this argument became a key for Maruti's further success.''

The company reiterated that it believed that Maruti should be headed by a professional and independent MD, equidistant from both the industry ministry and Suzuki, and devoted solely to the interests of Maruti to enable it to become a player in the global automotive market.

Regarding Bhaskarudu's appointment as MUL managing director, it stated that at the August 27 Maruti board meeting, the industry ministry informed Suzuki of the name of its nominee (Bhaskarudu) just 30 minutes before the meeting.

Suzuki opposed this nomination and withheld consent for holding the annual general meeting, requesting the ministry for more consultations.

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Bhaskarudu: The man Suzuki loves to hate
Bhaskarudu can stay till ICA verdict, rules Delhi HC
Suzuki can leave Maruti, says industry minister
Showdown with Suzuki!
A successful marriage goes to court
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Suzuki takes govt to court over Bhaskarudu's appointment
Bhaskarudu takes over as MD of Maruti
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