CONFLICT NEGOTIATION PRESENTATION

ORGANISATION: MARUTI-SUZUKI

AGENDA

ISSUE REASONS FOR OPPOSE BY SMC REASONS FOR GoI STAND SEQUENCE OF EVENTS NEGOTIATIONS

ISSUE
o

In August 1997, the Government of India (GoI) appointed Bhaskarudu as the managing director (MD) of Maruti Udyog Ltd. (MUL).
The appointment was strongly opposed by Suzuki Motors Corporation (SMC) of Japan, the GoI's 50% partner in MUL joint venture.

REASONS FOR OPPOSE BY SMC

Osamu Suzuki, President of SMC, claimed that the appointment was illegal on the ground that five of the directors who comprised the majority of MUL's board strength of nine, had objected to the appointment. Suzuki even alleged that Bhaskarudu was incompetent and unsuitable for the MD post.

REASONS FOR GOI STAND

The GoI argued that as per the 1992 amendment in the GoISMC 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. Industry minister Murasoli Maran alleged that SMC was opposing the appointment of Bhaskarudu as it wanted Jagdish Khattar, Executive Director (ED), MUL (reportedly a SMC loyalist) to become the MD.

SEQUENCE OF EVENTS

A furious exchange of letters took place between SMC and the Industry ministry. SMC asked for Bhaskurudu's resignation claiming that the minutes of meeting(MoM) when Bhaskurudu was appointed, did not fully record its objections.

GoI refused to remove Bhaskurudu and reportedly even started looking for a prospective partner in the event of SMC's exit.
In the AGM held on September 22, 1997, SMC and the GoI representatives even resorted to verbal violence. SMC nominees on the board attempted to prove Bhaskarudu's unsuitability of the post by questioning him regarding MUL's functioning.

CONTD

When Bhaskarudu's appointment was put to vote, there was a tie. Prabir Sengupta (Sengupta), Chairman of the MUL board, used his casting vote to ratify the appointment. Following this, SMC nominees passed a no confidence motion against Sengupta and proposed the name of Yoshio Saito (Saito) for the chairmanship. The GoI strongly backed Sengupta stating that he should be allowed to complete his scheduled term of five years until 2000. SMC then lodged an arbitration petition against Bhaskarudu's appointment in the International Court of Arbitration.

NEGOTIATION

In June 1998, the new ruling Bharatiya Janata Party (BJP) government intervened into the issue and arranged for an outof-court settlement between the parties. As per the settlement deal, Bhaskarudu was to step down in December 1999, two years ahead of schedule and Khattar was to replace him in January 2000. Further, Saito was to replace Sengupta as the chairman.