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September 18, 1997


Suzuki challenges Bhaskarudu's appointment as Maruti MD

The Delhi high court will hear on Friday the petition of the Suzuki Motor Corporation challenging the nomination of R S S L N Bhaskarudu as managing director of the country's top car manufacturer, Maruti Udyog Limited.

The original miscellaneous petition, which was filed through counsel S S Shroff, will come up for hearing before Justice C M Nayar on Friday.

Suzuki, besides seeking the quashing of the decision taken at the Maruti board meeting held in New Delhi on August 27, has also sought a stay on the holding of the annual general body meeting on September 22.

Bhaskarudu, a central government nominee, was on August 27, named by the board as managing director to replace R C Bhargava, who was a Suzuki nominee.

The Japanese Suzuki Motor Corporation, a 50 per cent share holder in the Maruti Udyog Ltd, sought a stay on the holding of the AGM or alternatively restraining the AGM from adopting the board resolution of August 27 on the nomination of Bhaskarudu.

As another alternative, the Japanese firm urged the court to appoint some senior court official or registrar or a senior advocate as chairman for the AGM to be held on September 22.

As the last alternative, the arbitration petition suggested the suspension of any resolution passed at the AGM pending adjudication of the dispute in the International Council of Arbitration.

The Indian side of the joint-venture had filed the caveat in the high court preempting the Suzuki move against the nomination of Bhaskarudu.

The caveat seeks that the AGM of September 22 should not be stalled, ensuring that the Japanese car manufacturer did not get an ex parte order from the high court.

With Suzuki having moved the court, the ambitious expansion plans of India's leading automobile manufacturer might get delayed, if not derailed.

The company had recently launched an upgraded version of its most popular 800 cc model and was planning to introduce upgraded versions of its Zen and Esteem models.

Besides, it also intended to introduce diesel models of its high-selling Zen and Gypsy models by 1998-end.

Meanwhile, the company has commissioned an in-house study to examine the viability of manufacturing gear boxes for all its models at its plant at Gurgaon.

The gear box is the only major component which the company continues to import from Japan. If the proposal is cleared, the Maruti 800 cc model will achieve 100 per cent indigenisation. The project envisages an investment in excess of Rs 200 crore.

However, the immediate priority with the company was the Rs 15 billion expansion which would take its capacity to 500,000 cars. The expansion is to be funded mostly from internal accruals.

The company has also decided to prune its vendor base to about 250 from the current level of 375. However, no time frame has been set for this.

The company is also planning to pick up equity stakes in some of its vendors. It already has about 14 joint ventures in which its equity holding ranges from 10 per cent to 30 per cent.

Bhaskarudu was nominated as managing director at a board meeting on August 27 to replace Bhargava. His nomination was to be ratified at the annual general meeting to be held here on September 22.

A rift had emerged ever since the government had announced Bhaskarudu as their nominee to replace Bhargava. Suzuki, which did not approve of Bhaskarudu's appointment, had been reportedly promoting Jagdish Khattar.

Just after Bhaskarudu's nomination, Suzuki had issued a statement from Japan which stated that they would oppose his appointment as ''he was not fit for the post.''

The government also retaliated, though not in the same vein, with Industry Minister Murasoli Maran stating that they would not loosen their stand and would keep promoting Bhaskarudu.

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