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Understanding the meaning of conflict

A brief Overview of Maruti Udyog ltd.

In 1981, GOI entered into four wheeler business

through joint venture with Suzuki motors corporation
a Japanese company
Maruti Udyog Limited (MUL) was established in
February 1981
competitors- the Hindustan Ambassador and Premier
Padmini were both around 25 years out of date at
that point
Maruti Suzuki offers a complete range of cars from
entry level Maruti 800 and Alto, to hatchback Ritz, AStar, Swift, Wagon-R , Estillo and sedans DZire, SX4,
in the 'C' segment Maruti Eeco and Sports Utility
vehicle Grand Vitara.

Plan for modernization and expansion

Appointment of Bhaskarudu as the managing
Disinvestment of MUL
Stake of SMC and GOI in Maruti udyog ltd
Funding decisions

Maruti ltdGovernment of
Suzuki ltd


Process conflict

In August 1997, the Government of India appointed

R.S.S.L.N. Bhaskarudu (Bhaskarudu) as the managing
director (MD) of India's passenger car market leader
Maruti Udyog Ltd. (MUL). The appointment was
strongly opposed by Suzuki Motors Corporation
(SMC) of Japan.

The GOI argued that as per the 1992 amendment in the

GoI-SMC joint venture agreement, both the partners
were entitled to nominate the MD for five years in
turns, and there was no need for any consultation on it

SMC then lodged an arbitration petition against

Bhaskarudu's appointment in the International Court of
Arbitration. In June 1998, the new ruling Bharatiya
Janata Party (BJP) government intervened into the
issue and arranged for an out-of-court settlement
between the parties

Signs of dispute surfaced in late 1993, when SMC

proposed a Rs 2,200 crore expansion and
modernization plan. The plan envisaged increasing the
production by 1,00,000 vehicles to effectively meet the
growing competition in the sector.

Though initially SMC was reluctant to go for a

public issue, Bhargava managed to persuade it
in 1995 for the same. However, things changed
with K.Karunakaran (Karunakaran) becoming
the Union minister for Industries in 1995.

In late 1999, following the recommendations of

Disinvestment Commission, the GoI
announced its decision to divest its stake in

However, subject to a clause in the MUL joint venture

agreement, the GoI could not sell its stake without the
written consent of SMC. This was expected to
complicate the disvestment process of MUL.

the GoI announced its willingness to renounce

its portion of the rights in favour of SMC
during the rights issue. The negotiations
between the GoI and SMC to fix the
renunciation premium and the control premium
were scheduled to begin in January 2002.

The above mentioned conflict will never occur again if

both the companies Maruti India and Suzuki Japan
make a policy that contains democratic theory of ethics

This conflict could be resolved by making a policy in

such a way where an executive post should be filled by
conducting a lucky draw which should be crystal clear
and transparent so every one should accept this way of
job posting.

Another way of handling such a conflict is to

form a neutral committee which is
responsible for judging the problems faced
by the organization and making ways to
resolve those problems.