THE honeymoon is over. With 50:50 partners Suzuki Motor Corporation and the Government of India going to court over who should replace R.C. Bhargava as managing director of the Rs 8,000-crore Maruti Udyog Ltd (MUL), suddenly the future of India's largest automaker seems uncertain.
After expressing public discontentment with the government's appointment of R.S.S.L.N. Bhaskarudu as the new managing director of Maruti, Suzuki moved the Delhi High Court, challenging the appointment. On August 27, when Bhaskarudu was appointed by a board resolution, Suzuki president Osama Suzuki had stated: "It is extremely regrettable that the Indian government notified us of an appointment of a person who Suzukibelieves is not suitable for the post."
In Suzuki's view, crucial business decisions regarding the company's future were being taken unilaterally. Earlier this year, industry minister Murasoli Maran had dampened Suzuki's attempts to increase its stake in the 50:50 joint venture. Maran declared in Parliament that the government had no intention of becoming a minority partner in the successful joint venture.
In its petition, Suzuki sought a stay on Bhaskarudu's appointment and on the Maruti annual general meeting (AGM), slated for September 22. Suzuki's appeal, pleaded by top lawyer K.K. Venugopal: if at all the AGM is held, it should be restrained from ratifying the appointment and the effect of any resolution passed at the AGM should be suspended till the matter was adjudicated at the International Council for Arbitration. Says Venugopal: "How can Suzuki be in a company where it did not have a voice for the appointment of managing director?" Retorts attorney-general Ashok Desai: "If he works as a joint managing director it is all right for them. But the moment he is appointed as managing director, the ego hassles come to the fore."
Ministry sources are surprised by Suzuki's allegations, as, they claim, Osama Suzuki had been informed about Bhaskarudu being the chosen one during his last trip to India. Moreover, the 1992 agreement between the two partners clearly specifies that each owner would take turns in appointing its nominee as managing director at the end of every five years. This time, it was the turn of the Indian government. According to the agreement, say bureaucrats, the concurrence of Suzuki was required only if the nominee was from outside the company.
"Suzuki wants to stop the government from its self-destructive approach," says Venugopal. "Look what happened to India's national airlines. When it was under J.R.D. Tata, every foreigner wanted a seat on the carriers, but what now? Maruti would go the same way if the government is allowed to put Mr Bhaskarudu as managing director." But the government of India is unlikely to accede to any of Suzuki's demands. A defiant Maran was quoted as saying that if Suzuki was unhappy, it could exit from the company: there were many foreign companies who would love to be the government's partners in MUL.
Sadly, both—the government and Suzuki—have got the timing wrong: the new-look Maruti 800 has just been launched, while several other small cars are on the way, simply waiting to grab the huge market Maruti created.
