 "Battle-scarred")
The spacious Brand Centre at Maruti Suzuki's headquarters in south Delhi showcases the company's entire range of cars and also some of its concept cars for the future. It is the country's largest car maker and the idea is to impress visitors with its wide range of vans, hatchbacks, sedans, utility vehicles et cetera. On January 28, the space was used for an impromptu press conference. Nobody knew why it was called. Most thought the company would announce a share buyback - the speculation had been doing the rounds for a few days. Flanked by 84-year-old Osamu Suzuki (totally inscrutable, he runs Suzuki as its absolute monarch), Maruti Chairman RC Bhargava, 79, took everyone by surprise when he disclosed the purpose of the conference: the board had decided that the new factory in Gujarat would not be owned by the company, as was planned originally, but by a fully-owned subsidiary of Suzuki Motor Corporation (it owns 56.21 per cent of Maruti). Anticipating questions that this could be unfair to the Maruti shareholders, Bhargava argued that this would help the company conserve cash on which it would earn interest. The new subsidiary would sell cars to Maruti at cost price, so there was no question of the company being drained of profits.
But Bhargava, a former bureaucrat and Maruti CEO, had perhaps misread the situation - the next day, the Maruti stock fell over 8 per cent on the market. Analysts panned the move, saying it would transform Maruti into a trading company and would compress its profit margins. Six mutual funds demanded action from the Securities & Exchange Board of India and threatened to move the Company Law Board to protect their interests. At least one independent director said the deal was unacceptable. A finance ministry officer let it be known that state-owned Life Insurance Corporation, the largest institutional shareholder, was unhappy with the arrangement. Stung by the criticism, the Maruti board on March 15 decided that the proposal would not be implemented unless three-fourths of the minority shareholders cleared it. The irate shareholders piped down. The crisis blew over. Bhargava is travelling to Hamamatsu in Japan, where Suzuki is headquartered, to confabulate with Osamu. The two are, after all, veterans of several fights in India.
To begin with, Maruti (it was earlier called Maruti Udyog) was majority owned by the government - Suzuki owned just 26 per cent of it. The seeds of Suzuki's gradually increasing stake in the company had been sown by its founder chairman and CEO, V Krishnamurthy. In the joint venture agreement, the Japanese company was given the option of raising its shareholding from 26 per cent to 40 per cent by the end of five years. What helped Suzuki exercise the option in 1987 was a combination of this agreement, the realisation that it had got a good foothold in the Indian market and the first wave of liberalisation that started after Rajiv Gandhi became prime minister in 1985. But clearly that wasn't enough for it.
In hindsight, it is clear why Suzuki wanted more and more of the company. Today, Suzuki depends heavily on the Indian operations for its place in the world. "Unlike other Japanese car makers like Honda and Toyota which operate in over 23 countries, Suzuki is restricted primarily to India, Hungary and Thailand. It has failed to expand in other markets," says a Maruti veteran. Suzuki, despite being present in the United States for 30 years, was forced to exit last year after sales plummeted. It's a small player in Japan. According to production figures for January 2014 released by the Japanese Automobile Manufacturers Association, it is fifth in the pecking order after Toyota, Nissan, Mazda and Honda, and has a share of less than 10 per cent. While Maruti sold 1.05 million cars in 2012-13, Suzuki sold about half the number in Japan and a fourth in ASEAN countries. Financially too, Maruti is its cash cow. Maruti's royalty payout of Rs 2,453 crore to Suzuki in 2012-13 is higher than the Japanese company's standalone profit in 2012-13. Its profit margin in Japan is just 2.6 per cent of sales, less than Maruti's 5.6 per cent - even after paying royalty. Suzuki makes serious money on the sale of components to Maruti.
In 1992, the PV Narasimha Rao government initiated economic liberalisation. Leveraging the popular mood, Suzuki was able to push its stake in Maruti to 50 per cent from 40 per cent, which made it an equal partner in the venture along with the government, without making any new commitment. As a result, Maruti was no longer a public-sector company bound by government rules and regulations. At the same time, it was agreed that the government and Suzuki would take turns in appointing the chairman and managing director. That helped ensure that Bhargava, Osamu's trusted man who was to retire in 1992, would continue for five more years, this time as a Suzuki nominee. (Bhargava, a former bureaucrat, had joined Maruti in 1981 as director of marketing. Always suave and composed, he has played troubleshooter all his life for one problem or the other.)
In 1993, Bhargava had brought in Jagdish Khattar, also an ex-bureaucrat (as a child he had dreamt of a career in films) and rank outsider, in 1993 as "officer on special duty". Khattar had seen great success as the chairman of the Tea Board. So he was soon made the director of marketing. Insiders say Bhargava groomed him as his successor so that when he retired and the government had to nominate the managing director, it didn't get someone Suzuki wasn't comfortable with.
In 1995, K Karunakaran became the Industry minister and TR Prasad, an aggressive bureaucrat, became the industry secretary. Prasad attacked Bhargava for getting Suzuki additional shares in 1992 at a throwaway price. Many in the government sided with Prasad. They alleged that the deal was one-sided as Suzuki did not pay any premium to become an equal partner. Nor did the government get any money as the company issued new shares to Suzuki. Prasad foisted himself as the chairman of Maruti - the post had remained vacant, though it was up to the government to fill it. Some say the slot remained vacant because Bhargava was able to keep the government from appointing anyone by using his clout with the Prime Minister's Office.
By 1997 Suzuki's worst fears started to come true. The United Front government came to power and tough-as-nails Murasoli Maran (father of Kalanithi and Dayanidhi Maran) became the new industry minister. And Prasad was clearly out to assert the government's rights. So, Khattar's candidature was rejected and RSSLN Bhaskarudu was made the managing director. He was close to the union leaders and as director (materials) handled all vendors and component pricing. He was earthy and a hardcore operations man. Bhaskarudu, now based around Delhi, refused to comment for this report, saying "he has totally forgotten Maruti".
Suzuki found it difficult to work with Bhaskarudu. Privately, Suzuki's people said that he was not competent enough to face competition which was imminent. Some insist that Bhaskarudu's only crime was that he pushed Suzuki to give Maruti the crucial gearbox technology, something it was reluctant to do. If the gearbox was indigenised, Bhaskarudu argued, the cars would have more local (and inexpensive) content and that would take care of any competition. So, he prodded the government to take up this issue with Suzuki, and it became a serious bone of contention. Yet those in the know say the issue was blown out of proportion because at least 60 per cent of the components required for the gearbox were already being produced in India. So the technology transfer would not have caused such a dramatic transformation as Bhaskarudu was making it out to be.
So far as the vision to face competition was concerned, Bhargava, the Bhaskarudu camp said, during his tenure did not show any interest in pushing Suzuki to come out with new models to face competition. Also, Bhaskarudu was opposed to Suzuki's proposal to expand production capacity through fresh equity capital. As the government had embarked on disinvestment, there was no way it could have infused fresh capital. This would have increased Suzuki's share further in Maruti. Instead, Bhaskarudu supported the government's stand that the project must be financed through debt. Confrontation was bound to escalate.
Suzuki opposed Bhaskarudu's appointment in the annual general meeting of Maruti shareholders, forcing Chairman Prabir Sen Gupta (he was the secretary for heavy industries, the new nodal ministry) to cast his vote to break the tie. Bhakarudu survived. Suzuki moved the Delhi High Court against Bhaskarudu's appointment. However, the government had a strong case. Suzuki's appeal got turned down and it went for international arbitration. Maran, never the one to shy away from a fight, said that Suzuki could opt out of Maruti as the government could always tie up with American car makers, or even Korean. (It was only after Maran's tirade that Chennai, his base, began to emerge as an automobile hub. His detractors insist that Maran's visceral opposition to Suzuki was sponsored by rival car makers.) To complicate matters further, Osamu said that he would not give gearbox technology to Maruti until the dispute was settled, which further riled the government. The government then hinted that it had in the past nationalised companies - it wouldn't hesitate to do so again. It was assumed that Japan would not jeopardise its relations with India over one company.
However, things took another turn when the Atal Bihari Vajpayee-led National Democratic Alliance came to power in 1998. Amongst the first things Vajpayee did was to conduct a nuclear test. Several countries, including Japan, imposed sanctions against India. But India was keen to rebuild bridges with its trade partners. Thus, Sikander Bakht, Vajpayee's industry minister, endorsed talks and a motley group (then Confederation of Indian Industry President Rajesh Shah and director-general Tarun Das from the government's side and low-profile businessman Satyasheel from Suzuki) byassed the bureaucracy and stuck a compromise. Suzuki withdrew the arbitration and the government agreed that the choice of managing director would have to be endorsed by Suzuki. Also, the government acknowledged that Suzuki would have a bigger say in deciding new models and technology. Soon, Bhaskarudu was out and Khattar became the managing director. Maruti got listed on the stock markets. And Suzuki became the majority shareholder. Subsequently, the government exited the company.
In 2004, once it was firmly in the saddle, Suzuki announced that it would set up three new automobile ventures, including a new car-making partnership with Maruti. The other two projects included a diesel engine plant and a two-wheeler company. The announcement saw the Maruti share price fall over 10 per cent amid fears that the plan was to shift profits to a new company. Then heavy industries minister Santosh Mohan Dev attacked Suzuki for taking a unilateral decision without consulting its partner (the government still owned 18 per cent of Maruti at that time) and blamed it for the company's shareholders losing wealth of over Rs 1,000 crore. He made his displeasure public in a letter to Suzuki. Insiders say the initial proposal was that Suzuki would take 70 per cent stake in the new venture and Maruti 30 per cent. This new company would set up a factory at Manesar, not far from its first unit at Gurgaon. The cars made here would be sold to Maruti. The apprehension was that this would transfer profits from Maruti to a company owned 70 per cent by Suzuki.
To scuttle Suzuki's plan, the government argued that the Japanese company had violated Press Note 18 under which it was mandatory to first get a "no-objection certificate" from the local partner before implementing such a proposal. And the partner here was the government. In the board meeting that followed, Suzuki agreed to water down the proposal: the stakes were reversed (70 per cent with Maruti and 30 per cent with Suzuki) to make it palatable for the government. But Suzuki was able to push through its engine plant proposal without losing control: it was allowed to retain a 70 per cent stake. It was a partial victory. Yet it became obvious very soon that the new structure would create many tax headaches. Maruti hired a battery of chartered accountants and lawyers to see if the company would face transfer pricing issues. The consensus was that it would open up a Pandora's Box of trouble. The company decided the better alternative would be to merge the two plants into Maruti.
In the case of the Gujarat plant, history seems to be repeating itself. Bhargava says that the two are different as under this plan Maruti does not have to invest any money and hence does not have to worry about the return on capital. By offering a new proposal to the minority shareholders, Suzuki and Maruti have bought peace - at least for a while. The question is whether they will get three-fourths of the minority shareholders to agree to the proposal. Last week, a top team from the company made a presentation to Life Insurance Corporation. The six mutual funds whose endorsement would be important are expected to meet in a few days to chart their plan of action. This is certainly not the last one has heard of the matter.
A doyen of the public sector, Krishnamurthy was known for his closeness to the Gandhi family. He was the founder chairman of Maruti.
(He came to the company from Bharat Heavy Electricals Ltd, or Bhel.) In the joint venture agreement between the government and Suzuki, the Japanese car maker was given the option to raise its shareholding from 26 per cent to 40 per cent by the end of five years.
Suzuki exercised the option in 1987 - four years after Maruti went into production.
An IAS officer of the Uttar Pradesh cadre, he chose a life in the public sector. Like Krishnamurthy, he too came to Maruti from Bhel and was the third employee of the car maker. Over the years, he became a confidant of Osamu Suzuki and doused many a fire for him in India. One version says that in 1991, the government was willing to let Suzuki own 51 per cent of Maruti but Bhargava didn't pursue it. He is said to have kept the government from exercising its right to appoint a chairman for several years. This riled many a bureaucrat; sure enough, it snowballed into a huge issue. He returned to Maruti as chairman some years ago.
The government chose him, and not Jagdish Khattar, as Bhargava's successor to run the company. He was known to be close to the labour unions and some vendors, some of whom may have supported him in the fight against Suzuki. He made Suzuki's refusal to share the gearbox technology into a huge issue. He had the support of top bureaucrats, like industry secretary T R Prasad who accused Bhargava for getting Maruti equity cheap for Suzuki. (Many say he held a grudge against Bhargava for not letting him become the Maruti chairman.) Bhaskarudu faded away from the limelight after leaving Maruti.
Also an IAS from Uttar Pradesh, he first missed out against Bhaskarudu. Murasoli Maran, then industry minister, held a meeting at his home where Bhaskarudu's name was finalised. "You were identified by the government to lead the company. We trained you. Now the government has changed its view. We will support you," Osamu Suzuki wrote to Khattar at that time. After a compromise was reached between the two warring partners, Bhaskarudu left and Khattar became the managing director of the company. He now runs the Carnation chain of service stations.
Known to run Suzuki with strict control, he saw the appointment of Bhaskarudu over Khattar as a breach of faith. Instead of capitulating to the government's threats (that it would replace Suzuki with another car maker from the United States or even South Korea, that it wouldn't hesitate to nationalise Maruti), he toughened the stance. He refused to come to India. After the Indian courts rejected his plea challenging Bhaskarudu's appointment, he took the matter to the International Court of Arbitration. His son-in-law tried to push Suzuki to alter its image of a small-car company and experimented with larger cars and also looked at newer markets like the US. But with his death, the strategy was dumped.
But Bhargava, a former bureaucrat and Maruti CEO, had perhaps misread the situation - the next day, the Maruti stock fell over 8 per cent on the market. Analysts panned the move, saying it would transform Maruti into a trading company and would compress its profit margins. Six mutual funds demanded action from the Securities & Exchange Board of India and threatened to move the Company Law Board to protect their interests. At least one independent director said the deal was unacceptable. A finance ministry officer let it be known that state-owned Life Insurance Corporation, the largest institutional shareholder, was unhappy with the arrangement. Stung by the criticism, the Maruti board on March 15 decided that the proposal would not be implemented unless three-fourths of the minority shareholders cleared it. The irate shareholders piped down. The crisis blew over. Bhargava is travelling to Hamamatsu in Japan, where Suzuki is headquartered, to confabulate with Osamu. The two are, after all, veterans of several fights in India.
To begin with, Maruti (it was earlier called Maruti Udyog) was majority owned by the government - Suzuki owned just 26 per cent of it. The seeds of Suzuki's gradually increasing stake in the company had been sown by its founder chairman and CEO, V Krishnamurthy. In the joint venture agreement, the Japanese company was given the option of raising its shareholding from 26 per cent to 40 per cent by the end of five years. What helped Suzuki exercise the option in 1987 was a combination of this agreement, the realisation that it had got a good foothold in the Indian market and the first wave of liberalisation that started after Rajiv Gandhi became prime minister in 1985. But clearly that wasn't enough for it.
In hindsight, it is clear why Suzuki wanted more and more of the company. Today, Suzuki depends heavily on the Indian operations for its place in the world. "Unlike other Japanese car makers like Honda and Toyota which operate in over 23 countries, Suzuki is restricted primarily to India, Hungary and Thailand. It has failed to expand in other markets," says a Maruti veteran. Suzuki, despite being present in the United States for 30 years, was forced to exit last year after sales plummeted. It's a small player in Japan. According to production figures for January 2014 released by the Japanese Automobile Manufacturers Association, it is fifth in the pecking order after Toyota, Nissan, Mazda and Honda, and has a share of less than 10 per cent. While Maruti sold 1.05 million cars in 2012-13, Suzuki sold about half the number in Japan and a fourth in ASEAN countries. Financially too, Maruti is its cash cow. Maruti's royalty payout of Rs 2,453 crore to Suzuki in 2012-13 is higher than the Japanese company's standalone profit in 2012-13. Its profit margin in Japan is just 2.6 per cent of sales, less than Maruti's 5.6 per cent - even after paying royalty. Suzuki makes serious money on the sale of components to Maruti.
In 1992, the PV Narasimha Rao government initiated economic liberalisation. Leveraging the popular mood, Suzuki was able to push its stake in Maruti to 50 per cent from 40 per cent, which made it an equal partner in the venture along with the government, without making any new commitment. As a result, Maruti was no longer a public-sector company bound by government rules and regulations. At the same time, it was agreed that the government and Suzuki would take turns in appointing the chairman and managing director. That helped ensure that Bhargava, Osamu's trusted man who was to retire in 1992, would continue for five more years, this time as a Suzuki nominee. (Bhargava, a former bureaucrat, had joined Maruti in 1981 as director of marketing. Always suave and composed, he has played troubleshooter all his life for one problem or the other.)
In 1993, Bhargava had brought in Jagdish Khattar, also an ex-bureaucrat (as a child he had dreamt of a career in films) and rank outsider, in 1993 as "officer on special duty". Khattar had seen great success as the chairman of the Tea Board. So he was soon made the director of marketing. Insiders say Bhargava groomed him as his successor so that when he retired and the government had to nominate the managing director, it didn't get someone Suzuki wasn't comfortable with.
In 1995, K Karunakaran became the Industry minister and TR Prasad, an aggressive bureaucrat, became the industry secretary. Prasad attacked Bhargava for getting Suzuki additional shares in 1992 at a throwaway price. Many in the government sided with Prasad. They alleged that the deal was one-sided as Suzuki did not pay any premium to become an equal partner. Nor did the government get any money as the company issued new shares to Suzuki. Prasad foisted himself as the chairman of Maruti - the post had remained vacant, though it was up to the government to fill it. Some say the slot remained vacant because Bhargava was able to keep the government from appointing anyone by using his clout with the Prime Minister's Office.
By 1997 Suzuki's worst fears started to come true. The United Front government came to power and tough-as-nails Murasoli Maran (father of Kalanithi and Dayanidhi Maran) became the new industry minister. And Prasad was clearly out to assert the government's rights. So, Khattar's candidature was rejected and RSSLN Bhaskarudu was made the managing director. He was close to the union leaders and as director (materials) handled all vendors and component pricing. He was earthy and a hardcore operations man. Bhaskarudu, now based around Delhi, refused to comment for this report, saying "he has totally forgotten Maruti".
Suzuki found it difficult to work with Bhaskarudu. Privately, Suzuki's people said that he was not competent enough to face competition which was imminent. Some insist that Bhaskarudu's only crime was that he pushed Suzuki to give Maruti the crucial gearbox technology, something it was reluctant to do. If the gearbox was indigenised, Bhaskarudu argued, the cars would have more local (and inexpensive) content and that would take care of any competition. So, he prodded the government to take up this issue with Suzuki, and it became a serious bone of contention. Yet those in the know say the issue was blown out of proportion because at least 60 per cent of the components required for the gearbox were already being produced in India. So the technology transfer would not have caused such a dramatic transformation as Bhaskarudu was making it out to be.
So far as the vision to face competition was concerned, Bhargava, the Bhaskarudu camp said, during his tenure did not show any interest in pushing Suzuki to come out with new models to face competition. Also, Bhaskarudu was opposed to Suzuki's proposal to expand production capacity through fresh equity capital. As the government had embarked on disinvestment, there was no way it could have infused fresh capital. This would have increased Suzuki's share further in Maruti. Instead, Bhaskarudu supported the government's stand that the project must be financed through debt. Confrontation was bound to escalate.
Suzuki opposed Bhaskarudu's appointment in the annual general meeting of Maruti shareholders, forcing Chairman Prabir Sen Gupta (he was the secretary for heavy industries, the new nodal ministry) to cast his vote to break the tie. Bhakarudu survived. Suzuki moved the Delhi High Court against Bhaskarudu's appointment. However, the government had a strong case. Suzuki's appeal got turned down and it went for international arbitration. Maran, never the one to shy away from a fight, said that Suzuki could opt out of Maruti as the government could always tie up with American car makers, or even Korean. (It was only after Maran's tirade that Chennai, his base, began to emerge as an automobile hub. His detractors insist that Maran's visceral opposition to Suzuki was sponsored by rival car makers.) To complicate matters further, Osamu said that he would not give gearbox technology to Maruti until the dispute was settled, which further riled the government. The government then hinted that it had in the past nationalised companies - it wouldn't hesitate to do so again. It was assumed that Japan would not jeopardise its relations with India over one company.
However, things took another turn when the Atal Bihari Vajpayee-led National Democratic Alliance came to power in 1998. Amongst the first things Vajpayee did was to conduct a nuclear test. Several countries, including Japan, imposed sanctions against India. But India was keen to rebuild bridges with its trade partners. Thus, Sikander Bakht, Vajpayee's industry minister, endorsed talks and a motley group (then Confederation of Indian Industry President Rajesh Shah and director-general Tarun Das from the government's side and low-profile businessman Satyasheel from Suzuki) byassed the bureaucracy and stuck a compromise. Suzuki withdrew the arbitration and the government agreed that the choice of managing director would have to be endorsed by Suzuki. Also, the government acknowledged that Suzuki would have a bigger say in deciding new models and technology. Soon, Bhaskarudu was out and Khattar became the managing director. Maruti got listed on the stock markets. And Suzuki became the majority shareholder. Subsequently, the government exited the company.
In 2004, once it was firmly in the saddle, Suzuki announced that it would set up three new automobile ventures, including a new car-making partnership with Maruti. The other two projects included a diesel engine plant and a two-wheeler company. The announcement saw the Maruti share price fall over 10 per cent amid fears that the plan was to shift profits to a new company. Then heavy industries minister Santosh Mohan Dev attacked Suzuki for taking a unilateral decision without consulting its partner (the government still owned 18 per cent of Maruti at that time) and blamed it for the company's shareholders losing wealth of over Rs 1,000 crore. He made his displeasure public in a letter to Suzuki. Insiders say the initial proposal was that Suzuki would take 70 per cent stake in the new venture and Maruti 30 per cent. This new company would set up a factory at Manesar, not far from its first unit at Gurgaon. The cars made here would be sold to Maruti. The apprehension was that this would transfer profits from Maruti to a company owned 70 per cent by Suzuki.
To scuttle Suzuki's plan, the government argued that the Japanese company had violated Press Note 18 under which it was mandatory to first get a "no-objection certificate" from the local partner before implementing such a proposal. And the partner here was the government. In the board meeting that followed, Suzuki agreed to water down the proposal: the stakes were reversed (70 per cent with Maruti and 30 per cent with Suzuki) to make it palatable for the government. But Suzuki was able to push through its engine plant proposal without losing control: it was allowed to retain a 70 per cent stake. It was a partial victory. Yet it became obvious very soon that the new structure would create many tax headaches. Maruti hired a battery of chartered accountants and lawyers to see if the company would face transfer pricing issues. The consensus was that it would open up a Pandora's Box of trouble. The company decided the better alternative would be to merge the two plants into Maruti.
In the case of the Gujarat plant, history seems to be repeating itself. Bhargava says that the two are different as under this plan Maruti does not have to invest any money and hence does not have to worry about the return on capital. By offering a new proposal to the minority shareholders, Suzuki and Maruti have bought peace - at least for a while. The question is whether they will get three-fourths of the minority shareholders to agree to the proposal. Last week, a top team from the company made a presentation to Life Insurance Corporation. The six mutual funds whose endorsement would be important are expected to meet in a few days to chart their plan of action. This is certainly not the last one has heard of the matter.
A doyen of the public sector, Krishnamurthy was known for his closeness to the Gandhi family. He was the founder chairman of Maruti.
(He came to the company from Bharat Heavy Electricals Ltd, or Bhel.) In the joint venture agreement between the government and Suzuki, the Japanese car maker was given the option to raise its shareholding from 26 per cent to 40 per cent by the end of five years.
Suzuki exercised the option in 1987 - four years after Maruti went into production.
An IAS officer of the Uttar Pradesh cadre, he chose a life in the public sector. Like Krishnamurthy, he too came to Maruti from Bhel and was the third employee of the car maker. Over the years, he became a confidant of Osamu Suzuki and doused many a fire for him in India. One version says that in 1991, the government was willing to let Suzuki own 51 per cent of Maruti but Bhargava didn't pursue it. He is said to have kept the government from exercising its right to appoint a chairman for several years. This riled many a bureaucrat; sure enough, it snowballed into a huge issue. He returned to Maruti as chairman some years ago.
The government chose him, and not Jagdish Khattar, as Bhargava's successor to run the company. He was known to be close to the labour unions and some vendors, some of whom may have supported him in the fight against Suzuki. He made Suzuki's refusal to share the gearbox technology into a huge issue. He had the support of top bureaucrats, like industry secretary T R Prasad who accused Bhargava for getting Maruti equity cheap for Suzuki. (Many say he held a grudge against Bhargava for not letting him become the Maruti chairman.) Bhaskarudu faded away from the limelight after leaving Maruti.
Also an IAS from Uttar Pradesh, he first missed out against Bhaskarudu. Murasoli Maran, then industry minister, held a meeting at his home where Bhaskarudu's name was finalised. "You were identified by the government to lead the company. We trained you. Now the government has changed its view. We will support you," Osamu Suzuki wrote to Khattar at that time. After a compromise was reached between the two warring partners, Bhaskarudu left and Khattar became the managing director of the company. He now runs the Carnation chain of service stations.
Known to run Suzuki with strict control, he saw the appointment of Bhaskarudu over Khattar as a breach of faith. Instead of capitulating to the government's threats (that it would replace Suzuki with another car maker from the United States or even South Korea, that it wouldn't hesitate to nationalise Maruti), he toughened the stance. He refused to come to India. After the Indian courts rejected his plea challenging Bhaskarudu's appointment, he took the matter to the International Court of Arbitration. His son-in-law tried to push Suzuki to alter its image of a small-car company and experimented with larger cars and also looked at newer markets like the US. But with his death, the strategy was dumped.