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Old 29th July 2010, 21:13   #46
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Originally Posted by amitk26 View Post
Some one here wrote that Maruti should to it's own R&D , It would be prudent to remember when Suzuki share was 50% and as per government appointed Mr. Bhaskarudu ( former MD of B.H.E.L) as MD one of the step he tried was to make indeginious gear box. Suzuki cryed foul and said Bhaskarendu is incompetent and went to Delhi H.C. Government and Suzuki reached out of court settlement and Mr.Bhaskarendu was removed by year end as per agreement.
It is noteworthy that Mr.Bhaskarendu had vast experinece of running a bigger and more profitable company with far more complex technology then Suzuki and calling him incompetent in public was not the best way but still the United Front government of that time was weak and did not stick to it's guns.

So it is very clear that Suzuki's intention is to milk by means of royalty and it will never allow Maruti to create any replacement technology.
+1 to that. This is a clear case of Suzuki acting against the interests of the country. Now atleast regulators or the government can probe that.

A link for that:

Rediff On The Net Business News: Bhaskarudu: The man Suzuki loves to hate

"If the gear box is indigenised, Maruti could start producing all its cars without any technical assistance from the Japanese company," an MUL employee told Rediff On The NeT.


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Originally Posted by amitk26 View Post
till date the defination of small car and excise duty structure is tailor made to suit Maruti.
That's a no brainer. When the rule was first implemented they had the most small cars on road and in pipeline.


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Originally Posted by supremeBaleno View Post
This is the most funny thing I hear on various threads. Almost all manufacturers today have in the market cars that meet this stipulation and anyone is free to use that benefit. This is by no means a Maruti monopoly.
Why talk about only today? Why can't you go back and see the market when the rule was made? And why was the length of small cars changed and for whose benefit?

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Originally Posted by supremeBaleno View Post
I think only good has come out of this decision - we now have a range of small cars that are FE and good for the environment. And I dont think any manufacturer thinks they are being forced. They want the benefits, they go for it, else they are free to not abide. I think of this as on the lines of the Kei car norms in Japan.
The question is not about good or bad. Was the rule enforced to benefit some manufacturer. ANd why was it changed later. In the case of hyundai, they were forced. Carzest has quoted an example in this redard. IT takes years to start and complete a product. And before the competitors could react, suzuki was reaping the benefits.


@sandeepmdas:
I like the way you put it. Very informative but in a professional way. But this is from wiki:

The Life Insurance Corporation of India (LIC) ([COLOR=#0645ad]Hindi[/COLOR]: भारतीय जीवन बीमा निगम) is the largest state-owned [COLOR=#0645ad]life insurance[/COLOR] company in [COLOR=#0645ad]India[/COLOR], and also the country's largest investor. It is fully owned by the [COLOR=#0645ad]Government of India[/COLOR]

Fully owned by government does mean fully owned by tax payers money.

Last edited by airbender : 29th July 2010 at 21:17.
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Old 29th July 2010, 21:21   #47
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The issue here is, how much exactly is the monetary value of the technology that is being transferred. The calculation of royalty has to be transparent, or else shareholders suffer. Thus the company benefits two times, one on account of having the stake in it, and another subterfuge of funds under the name of royalty.

Or is it an attempt to value down the stocks and later suzuki can buy it back at much lower value and eventully owning the whole Maruti Suzuki?

Whatever it is, this is a loss of value to current shareholders and the customers of maruti, say a swift owner could get more value with a parcel tray/ a better stock tyre.
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Old 29th July 2010, 21:36   #48
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I still dont understand why we need to discuss so much about the shareholding pattern of the Maruti. Dont think that is going to affect the quality of the cars anyway.

Moreover, why are we not discussing the shareholding patterns of companies like fiat, Ford and Chevrolet who are repatriating 100% of their profits to companies outside india.

Ultimately, its sure most of R&D for Maruti comes from suzuki as it is only Suzuki's product that is being sold my Maruti, so Suzuki deserves a better part of the pie.
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Old 29th July 2010, 22:22   #49
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Moreover, why are we not discussing the shareholding patterns of companies like fiat, Ford and Chevrolet who are repatriating 100% of their profits to companies outside india.
Govt never had any share in these companies. And I believe they are 100% owned by the parent. Correct me If I am wrong.
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Old 30th July 2010, 13:56   #50
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As of today, Govt does not have any share in MSIL either (or maybe a miniscule share at most). And as far as LIC goes, I am sure as a FI, it knows how to safeguard its interest and could exit if it deems the investment to be not returning expected gains.
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Old 30th July 2010, 14:19   #51
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I still dont understand why we need to discuss so much about the shareholding pattern of the Maruti. Dont think that is going to affect the quality of the cars anyway.
On T-BHP we discuss various things such as cars , quality , customer satisfaction an car companies themselves.

Please check the first post on this thread it is about financial outgo of MSIL and it's balance sheet. The input costs and profitability impacts shareholders so that is being discussed in detail

Perhaps all other comments related to quality/customer service or existing customers being happy belong more to some other thread dedicated to eulogy from owners.
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Old 30th July 2010, 16:28   #52
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Originally Posted by airbender
And why was the length of small cars changed and for whose benefit? Was the rule enforced to benefit some manufacturer. ANd why was it changed later. In the case of hyundai, they were forced. Carzest has quoted an example in this redard.
The following thread discusses about the excise-cuts for small cars and from what I read, it mentions this being a consolidated demand from the auto-lobby and not something asked by MSIL.
http://www.team-bhp.com/forum/indian...ufacturer.html (Excise Duty Cuts for small cars: Advantage Customer Or Manufacturer?!)

And again what was Hyundai forced to do ? Carzest mentions a change from 4m to 3.8ms, but AFAIK the criteria was 4m when proposed and still remains 4m.

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Originally Posted by amitk26
Perhaps all other comments related to quality/customer service or existing customers being happy belong more to some other thread dedicated to eulogy from owners.
Yes. Just like all the theories about corporate fraud and comparison with Satyam-fraud could be moved since the OP does not even hint at any fraud. All the OP says is about MSIL's profit being squeezed inspite of sales being up, due to the slew of new launches that pushed the royalty up (due to the launches being with the K-series engines ?)
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Old 30th July 2010, 18:07   #53
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Originally Posted by supremeBaleno View Post
Yes. Just like all the theories about corporate fraud and comparison with Satyam-fraud could be moved since the OP does not even hint at any fraud. All the OP says is about MSIL's profit being squeezed inspite of sales being up, due to the slew of new launches that pushed the royalty up (due to the launches being with the K-series engines ?)
Just a small correction providing an example of not discussing service while discussing corporate malpractice is not exactly comparison.

Secondly Suzuki blocks R&D attempt of a company which it owned to the tune of 50% is well established and documented by none other then a person who was once MD of the MSIL so corporate malpractice is not just a theory.

Last edited by amitk26 : 30th July 2010 at 18:10.
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Old 30th July 2010, 19:32   #54
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Quote:
Originally Posted by amitk26
Secondly Suzuki blocks R&D attempt of a company which it owned to the tune of 50% is well established and documented by none other then a person who was once MD of the MSIL so corporate malpractice is not just a theory.
Even assuming this to be true, how does this become relevant here since this is neither the subject of this thread nor is implied/mentioned in the OP ? And even if Suzuki did block local R&D for the gearbox, I am not sure if it automatically qualifies as malpractice. What if Suzuki had reasons to believe that the local equivalent might not be as good as the one it is replacing ?
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Old 30th July 2010, 20:11   #55
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Originally Posted by supremeBaleno View Post
Even assuming this to be true, how does this become relevant here since this is neither the subject of this thread nor is implied/mentioned in the OP ? And even if Suzuki did block local R&D for the gearbox, I am not sure if it automatically qualifies as malpractice. What if Suzuki had reasons to believe that the local equivalent might not be as good as the one it is replacing ?
Blocking the R&D may not be malpractice but blocking R&D and other possible source of technology and then fixing the high royalty for itself then competition is possibly a malpractice. These is an inherent conflict of interest here.

While some people may believe Suzuki technology is cutting edge there is no proof to this belief either.
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Old 1st August 2010, 02:00   #56
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Quote:
Originally Posted by amitk26
Blocking the R&D may not be malpractice but blocking R&D and other possible source of technology and then fixing the high royalty for itself then competition is possibly a malpractice. These is an inherent conflict of interest here.
Hmm. I did not know that royalty is fixed based on what the competition charges. And is this "supposed" conflict of interest from years ago the cause of the high RTF mentioned by the OP ? All we know is that royalty outgo was high enough to dent margins. But do we know what this royalty was charged for ? No. But already we have conspiracy theories and plots.

Quote:
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While some people may believe Suzuki technology is cutting edge there is no proof to this belief either.
Huh! What is the relevance of this statement here? Who said anything about cutting-edge tech - Suzuki or otherwise?
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Old 1st August 2010, 21:21   #57
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Originally Posted by supremeBaleno View Post
Hmm. I did not know that royalty is fixed based on what the competition charges. And is this "supposed" conflict of interest from years ago the cause of the high RTF mentioned by the OP ? All we know is that royalty outgo was high enough to dent margins. But do we know what this royalty was charged for ? No. But already we have conspiracy theories and plots.

Huh! What is the relevance of this statement here? Who said anything about cutting-edge tech - Suzuki or otherwise?
Well it is cardinal rule of competitive market that in a free market costs offered by various competitors is in same price bracket. Suzuki Royalty does not follow this established principle so raises a doubt.

Cost for cutting edge technology is generally higher then existing state of Art so is the relevance.

Any way you can choose to hold your views this discussion is not going anywhere.

PS :
@ramzsys: If suppose Suzuki comes up with an open offer after hammering down share prices deliberately by bleeding MSIL to buy it cheap then it would be example of Insider trading which is crime in many parts of the world including India.

http://en.wikipedia.org/wiki/Insider_trading

Last edited by amitk26 : 1st August 2010 at 21:23.
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Old 1st August 2010, 22:45   #58
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This is a well known fact that Maruti is cash cow for Suzuki. The Maruti brand is very strong and specially in the norther regions of Country. Similar issue was raised a quite a while ago when Nissan had just collapsed. Maruti wanted to manufacture its own gearbox and Suzuki was against it.

The words from somebody who visited India at that point of time " Why does Maruti need to manufacture gearbox ? Nissan made 4 million cars, but still went down, Maruti makes 4 lalk cars ". These are not exact words but overall I remember he mentioned Nissan producing 4 million cars.

But after 2003-4, things had changed considerably. By that time, much work could have been done by Suzuki. Suzuki realized this late after started giving projects like upgrade of Original Zen that ended up making the Zen look Korean. The rate at which Suzuki is trying to make Maruti more self reliant is very slow. Maruti is paying the price for this, but in the long run it will be Suzuki that will lose. If the entire Maruti team was more experienced, then minor modifications and much R&D could be done in India.

One more advantage of setting up a big R&D in India is cost effectiveness which Suzuki realized quite late.
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Old 2nd August 2010, 19:38   #59
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Originally Posted by supremeBaleno View Post
As of today, Govt does not have any share in MSIL either (or maybe a miniscule share at most).
Maruti's present status is a result of what happened eversince they step foot in india. So everything discussed regarding the shareholding pattern is relevent.

Quote:
Originally Posted by supremeBaleno View Post
The following thread discusses about the excise-cuts for small cars and from what I read, it mentions this being a consolidated demand from the auto-lobby and not something asked by MSIL.
http://www.team-bhp.com/forum/indian...ufacturer.html (Excise Duty Cuts for small cars: Advantage Customer Or Manufacturer?!)

And again what was Hyundai forced to do ? Carzest mentions a change from 4m to 3.8ms, but AFAIK the criteria was 4m when proposed and still remains 4m.
I do remember quite well that change in length from 3.8 to 4m or vice versa. I also remember reading hyundai's press statement regarding that. I do not have a link for that. May be one of the members can help us here.
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Originally Posted by supremeBaleno View Post
Even assuming this to be true, how does this become relevant here since this is neither the subject of this thread nor is implied/mentioned in the OP ? And even if Suzuki did block local R&D for the gearbox, I am not sure if it automatically qualifies as malpractice. What if Suzuki had reasons to believe that the local equivalent might not be as good as the one it is replacing ?
If Suzuki blocked local R&D it is clear case of malpractice. But only if the authorites are ready to act though. This topic is very relevent here. If they would have used components form local R&D the costs would have come down and also royalty had decreased. If Suzuki had reasons to believe that local equivalent is not good they have a professional way of coming to a conclusion not taking the MD to court. That too when the MD had a proven track record.
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Old 2nd August 2010, 23:38   #60
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its going to be this path for maruti for years to come , if i'm not wrong not one car has been engineered by maruti ,the car they did work on was a disaster for me the DEZIRE ( the part they worked on was the sticking of the boot which is exactly what they seem to have done ,just stuck it on)
MAruti is basically just a marketing service centre ( no doubt they do a brilliant job)
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