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Old 27th July 2010, 19:50   #16
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Originally Posted by Technocrat View Post
hmm wouldnt Hero Honda's case be similar?
Yes, ofcourse. Infact it is even worse, because Honda is also a direct competitor. Bajaj, TVS etc have world class R&D in place and very good products coming out of it.
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Old 27th July 2010, 20:00   #17
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Originally Posted by sandeepmdas View Post
MSIL is nothing but a beggar and we all know this; beggars can't be choosers.
i agree with what you tried to convey but using the word beggar was going little too far.

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IMHO this is only a stock-market issue.
Not really. Government of india still owns a lot of stake in maruti which is taxpayers money.

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In some other parts of the world this kind of corporate malpractices are keenly watched by regulators.
After reading Skywalker and carZest posts wanted to reply a long one but you saved me a lot of typing. +100 to you. If that had happened in any developed country, these directors would have been in jail. Non-suzuki directors are just rubber stamps.
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Old 27th July 2010, 20:16   #18
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i agree with what you tried to convey but using the word beggar was going little too far.
Well, that was purely "IMO". I guess I should have said "assemblers can't be choosers"...but hey! many companies assemble cars of other marques in many countries without losing dignity 1%.

brother, (no pun intended here) you can shoot the messenger but...
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Old 27th July 2010, 20:20   #19
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Well, that was purely "IMO". I guess I should have said "assemblers can't be choosers"...but hey! many companies assemble cars of other marques in many countries without losing dignity 1%.

brother, (no pun intended here) you can shoot the messenger but...
Point taken. Let's concentrate on the message not the messenger.
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Old 27th July 2010, 20:21   #20
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Originally Posted by amitk26 View Post
1. Maruti can not remain cost effective and competitive as royalty overheads are there.
2. Maruti despite just being 54%holding of Suzuki can not go to another company for technology licensing because the Royalty earner is dictating the terms.
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PS : Maruti was never a sole effort of Suzuki so it is good that company was not given on a platter to Suzuki. If Suzuki really has finencial muscle it should come up with an open offer to buy the remaining stake from other share holders. but as of today revenues of Maruti are more then Suzuki so reverse looks more logical that MSIL raises money and buy out parent in other markets, but for that a visionary local leadership is required not slave drivers planted from overseas.
well, ambitious, and thats good. But here's the catch:
a. We are assuming that some manufacturer will supply R&D (engines, designs etc) to Maruti cheaper than Suzuki. Big assumption - unless you look at some Chinese manufacturer. American/German cars wont be a fit for Maruti and other top Japanese manufacturers have solo plans for India. There's hardly a chance of a manufacturer as capable as Suzuki supplying cheaper stuff.

b. Yes, Maruti can go on the offensive and try to buy out Suzuki (assuming board approves). But then they are going for broke. They will hurt the equations, most probably fail and in effect land paying more in royalties or going to option #a with more money spent as royalties.


Much easier for Maruti to improve R&D effort here, and try to make themselves self sustainable. But with Suzuki controlling Maruti (they would be stupid to sell their controlling stocks anyway), who will bell the cat?

Last edited by SkyWalker : 27th July 2010 at 20:22.
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Old 27th July 2010, 20:24   #21
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Not really. Government of india still owns a lot of stake in maruti which is taxpayers money.
GOI exited Maruti a long time ago. Maruti is 54% owned by Suzuki and Institutions own about 38%. Public and others own the rest.
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Old 27th July 2010, 20:28   #22
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Originally Posted by SkyWalker View Post
well, ambitious, and thats good. But here's the catch:
a. We are assuming that some manufacturer will supply R&D (engines, designs etc) to Maruti cheaper than Suzuki. Big assumption - unless you look at some Chinese manufacturer. American/German cars wont be a fit for Maruti and other top Japanese manufacturers have solo plans for India. There's hardly a chance of a manufacturer as capable as Suzuki supplying cheaper stuff.

b. Yes, Maruti can go on the offensive and try to buy out Suzuki (assuming board approves). But then they are going for broke. They will hurt the equations, most probably fail and in effect land paying more in royalties or going to option #a with more money spent as royalties.


Much easier for Maruti to improve R&D effort here, and try to make themselves self sustainable. But with Suzuki controlling Maruti (they would be stupid to sell their controlling stocks anyway), who will bell the cat?
Regulators/Non-suzuki directors. Suzuki only owns 54% of maruti. The rest 46% is owed by FII's. They must put pressure on the company to improve R&D. But they do not bcoz they are bribed. Thats where regulators come into picture.

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GOI exited Maruti a long time ago. Maruti is 54% owned by Suzuki and Institutions own about 38%. Public and others own the rest.
Sorry. Just checked that out. Are the institutions owning 38% sleeping?

Last edited by airbender : 27th July 2010 at 20:30.
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Old 27th July 2010, 20:33   #23
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Originally Posted by airbender View Post
Regulators/Non-suzuki directors. Suzuki only owns 54% of maruti. The rest 46% is owed by FII's. They must put pressure on the company to improve R&D. But they do not bcoz they are bribed. Thats where regulators come into picture.
What regulator are you talking about here? SEBI? They don't have any authority to 'advice' any company on business strategy. But I suppose LIC can do something if they understood the business.
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Old 27th July 2010, 20:52   #24
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Obviously, if the government hasn't exited out, it would not have been a (theoretical) free market: the 4m length and 1.2 litre excise restrictions seems to be crafted to suit Maruti. Environmental concern is entirely different issue. If government is so sensitive to environment, Bhopal would not have taken place.

Last edited by ramzsys : 27th July 2010 at 20:55.
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Old 27th July 2010, 20:56   #25
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What regulator are you talking about here? SEBI? They don't have any authority to 'advice' any company on business strategy. But I suppose LIC can do something if they understood the business.
I din't know LIC holds stake in Maruti. It's taxpayer's money involved again. Even CAG has a role to play here.
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Old 27th July 2010, 23:13   #26
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I din't know LIC holds stake in Maruti. It's taxpayer's money involved again. Even CAG has a role to play here.
What are you trying to get at here? LIC probably owns shares in Tata Motors and M&M as well. Does this mean there is taxpayer's money involved in these companies just because the govt is an LIC shareholder? By your logic, CAG should also be investigating the recent Nano fireball incidents to see if any taxpayer's money was misused.

If you think Maruti's independent directors are being 'bribed', you should file a complaint with SEBI.

Last edited by Gilead : 27th July 2010 at 23:19.
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Old 28th July 2010, 14:13   #27
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I din't know LIC holds stake in Maruti. It's taxpayer's money involved again. Even CAG has a role to play here.
Excuse me... where does taxpayer come to picture in LIC. LIC is a govt. owned entity which invests money (it receives by selling insurance policies) as part of its regular operations. They aren't putting tax money in stocks. You are mistaken/misinformed big time here.
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Old 28th July 2010, 19:27   #28
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Originally Posted by Gilead View Post
What are you trying to get at here? LIC probably owns shares in Tata Motors and M&M as well. Does this mean there is taxpayer's money involved in these companies just because the govt is an LIC shareholder? By your logic, CAG should also be investigating the recent Nano fireball incidents to see if any taxpayer's money was misused.

If you think Maruti's independent directors are being 'bribed', you should file a complaint with SEBI.
LIC is a public sector entity. So it's the government money or in other words tax payers money which was used to set it up initially. LIC continues to pay divident to Govt. Public sector Organizations come under CAG preview.
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Old 28th July 2010, 19:50   #29
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Originally Posted by airbender View Post
LIC is a public sector entity. So it's the government money or in other words tax payers money which was used to set it up initially. LIC continues to pay divident to Govt. Public sector Organizations come under CAG preview.
Kindly read the CAG charter and the LIC of India Act 1956 before commenting further.

And even then, on what authority will CAG investigate Maruti's R&D and royalty policies just because LIC happens to be one of the many shareholders?

You previously said that Maruti's non-suzuki directors were being bribed. How do you know that?
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Old 28th July 2010, 20:04   #30
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Kindly read the CAG charter and the LIC of India Act 1956 before commenting further.
Do you want to say public sector entities do not come under CAG preview?

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And even then, on what authority will CAG investigate Maruti's R&D and royalty policies just because LIC happens to be one of the many shareholders?

You previously said that Maruti's non-suzuki directors were being bribed. How do you know that?
I am not saying CAG should investigate Maruti's R&D. CAG can investigate why LIC is not forcing them to better their margins. CAG usually investigates public -private patnerships to make sure govt is getting it's proper share. Maruti is bigger than Suzuki worldwide but the R&D/product development in india is very less. That's something FII holding 46% should look into. If they are not I smell something fishy there.

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Excuse me... where does taxpayer come to picture in LIC. LIC is a govt. owned entity which invests money (it receives by selling insurance policies) as part of its regular operations. They aren't putting tax money in stocks.
Where do you thing LIC got it's initial investment from.

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You are mistaken/misinformed big time here.
Some respect please!

Last edited by airbender : 28th July 2010 at 20:06.
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