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Journalism of Courage
Maruti Udyog’s journey may have just begun. While the company achieved a remarkable turnaround last year by improving quality and cutting costs, its new owner, O. Suzuki of Japan, told The Indian Express, Maruti would have to make massive efforts to cut costs and improve quality if it hoped to be taken seriously in the global market—‘a lot of work has to be done in India for making export more competitive.’ The Express caught Suzuki at his Magyar-Suzuki plant in Budapest for a faxed interview—the plant, by the way, was also begun, like Maruti, as a government-Suzuki joint venture and Suzuki now has a majority stake in it. Excerpts from an interview with Sunil Jain:
At the outset, congratulations for your acquiring control of India’s auto leader Maruti Udyog.
Thank you. But I do not see this as acquiring control of Maruti. I perceive this as an increase in responsibility of SMC to the Indian customers.
You once told me that Maruti still had a long way to go before it reached Japanese standards of quality. How will you now ensure this in Maruti?
Quality upgradation is a constant endevour for every automobile manufacturer in the competitive global market. Maruti will have to make several efforts to reduce costs and increase quality and maintain their current status of number one in customer satisfaction. Suzuki has been committed, all along, in all these areas to MUL. The commitment will continue.
Now that you are in control, how long will it take before Maruti will be exporting more cars than just the Zen or Alto? Will Maruti now become one of Suzuki’s production bases for all over the world?
In the world market place, price-to-quality ratio is the key factor for finding global market. If Maruti can increase its quality while cutting cost then it can certainly emerge as a hub. But a lot of work has to be done in India for making exports more competitive. The government also has to facilitate the culture of exports.
Suzuki is part of the General Motors alliance the world over. Now that Maruti will be a fully-owned Suzuki company, will there be collaboration between Maruti and GM in India?
I believe that there should be friendly contest amongst each other in various constituencies. Similarly, the alliance partner will also contest for market share in certain markets. Beyond that we have not formalised any plans.
Will the name of Maruti be changed to incorporate the fact that it is now a Suzuki company?
The strength of Maruti is that it is an Indian company and its local flavour has made it such a popular one in India. Maruti has created a huge brand equity for itself. Its brand equity is an asset for us, so we wouldn’t like to hurt it.
How will the takeover effect the balance-sheet of Suzuki?
Suzuki’s shareholding will increase to nearly 54 per cent, thereby making Maruti its subsidiary. The accounts of Maruti will be then consolidated in Suzuki’s accounts.
Considering that GM paid just $251 million for taking over three plants of Daewoo, is the price you’ve paid to the government too high?
There is a difference between GM-Daewoo deal and Suzuki-Maruti deal. The biggest difference is GM was an outsider in Daewoo and Suzuki is a partner in Maruti. Maruti is the largest automobile company of India. Daewoo, on the other hand, was bankrupt. Hence the two deals are not comparable. Plus, there is a difference when a partner decides to exit from a successful company, and when a partner is taken in a bankrupt company.
