In the last 18 months, Osamu Suzuki, the chairman of Suzuki Motor Corporation that owns India’s largest car maker Maruti Suzuki India Ltd, has been a regular visitor to India. He makes it a point to attend almost all of company’s board meetings (around 6 every year), and is a routine visitor to the firm’s Annual General shareholder’s Meeting generally held in September.
It would appear normal for the owner of a company to make this many visits to its most important subsidiary but in Suzuki’s case it has not always been like that. Till 2009, he was more bothered about Suzuki’s growth in bigger markets like Japan and US and while he understood the importance of Maruti, it did not occupy a significant portion of his mindspace.
The change in attitude is attributed largely to Suzuki’s weakening command in global markets like Europe and US and the coming of age of India and with it Maruti as a new frontier for automobiles. As a result, Maruti not only became the Japanese firm’s most fledgling arm–superseding its own standing in Japan– but in the last 3-4 years, it has also became a veritable cash cow.
The sluggishness in the Indian automobile market in the last 2 years has taken some sheen off that story. That has made Suzuki anxious. Labour strikes at the company’s Manesar factories in 2011 followed by an violent repetition in 2012 has forced him to take matters into his own hands.
The decision to steal the Gujarat project, where Maruti was working on building a factory of the same size as Gurgaon and Manesar put together, and put it under its own fold in a 100% owned Suzuki subsidiary however, was uncalled for. The company was at pains on Tuesday to explain the financial benefits of it.
The subsidiary–Suzuki Motor Gujarat Pvt Ltd–would come into force by April 2014 and come 2018 manufacture cars only for Maruti. The latter would not need to spend on building the factory whose cost would be Rs 3000 crore initially but at the same time it would not have any say on how the factory is being run.
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