The government's deal with Suzuki does not appear to be a fair compromise between the two sides, especially on the core issue of the appointment of RSSLN Bhaskarudu as managing director. As announced at Monday's press conference, Bhaskarudu will have to call it a day two-and-a-half years ahead of schedule in December 1999, yielding place to Suzuki nominee Jagdish Khattar.This suggests that the government has sacrificed Bhaskarudu at the altar of a shoddy business compromise. Not that Suzuki didn't have a point: a joint venture cannot work if one partner cannot agree to the other's choice of nominee to head the operations.
In claiming that the government should have sought its concurrence on Bhaskarudu's appointment, Suzuki was merely stating the obvious. But having taken the position that it had to have its own nominee as managing director, the government had no right to sacrifice Bhaskarudu's interests when it decided to change its mind.
A fairer compromise would have been to effect the deal afterBhaskarudu's term ended in 2002. Proponents of the deal can say that the government has not accepted the Suzuki plea for removing Bhaskarudu immediately; actually it would have been better for him if the government had done just that. By retaining Bhaskarudu as managing director till next year and accepting Jagdish Khattar as joint managing director, the government has sent clear signals that Bhaskarudu is a lame duck. The government clearly needs to make amends to Bhaskarudu in some way to compensate him for this humiliation.
The other worrying aspect of the compromise is the clear signal being sent that Suzuki is in control. There is already talk that the government should exit from the car business, and Suzuki should be given an option to raise its stake in the company. This can only add injury to insult.
A few years back, the government allowed Suzuki to raise its stake from 24 per cent to 50 per cent for a pittance. If the ground is being prepared for allowing Suzuki to raise its stake further, theidea should be killed right here. Maruti belongs to the nation, having been fed and nurtured by Indian taxpayers with huge tax sops and benefits.
The government, if it wants to exit the car business, must not only seek to recoup the investment with interest, but also to protect the country's interest in Maruti. The best option would be to let a strong Indian company bid for the government's stake. Scattering the stake to hundreds of Indian shareholders would be the same as selling it to Suzuki. Maruti needs an Indian promoter to nurture its Indian roots.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
