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Nakanishi bats for an Indian on Suzuki board

business Updated: Mar 22, 2013 22:33 IST
Sumant Banerji

Maruti Suzuki's outgoing chief operating officer Shinzo Nakanishi on Friday said that parent company Suzuki Motor Corporation should appoint an Indian in its global board, given the growing importance of Maruti in Suzuki's balance sheet.

"I would say there should be an Indian on the board of Suzuki globally as Maruti is so important now," said Nakanishi, who steps down on March 31. "Maruti now contributes to over 30% of Suzuki's sales. Having an Indian on the board will be the right thing."

Maruti accounts for almost 40% of Suzuki's global sales and contributes almost a fourth of its revenues. Since 2007-08, the year Nakanishi took over as the chief executive, Maruti has been selling more cars in India than Suzuki in Japan. Suzuki holds 54.2% share in Maruti.

At present, there is no Indian holds an executive position even on the Maruti board. After Jagdish Khattar stepped down in December 2007, Suzuki has not appointed any Indian for that position even as RC Bhargava continues to be its chairman on a non-executive position. Besides Bhargava, there are three more Indians on the board, but all of them are independent directors.

"It is for Suzuki to decide, but I think it will happen with time. How much (time), I dont know," he added.

The company has been battling an intense slowdown in demand for its cars this year and painted a bleak picture for the short term. Passenger vehicles sales have grown by only 4% in this fiscal year so far and are expected to grow by 3.5% for the full year that ends on March 31.

"We do not see the next fiscal year to be any different from this year," said RC Bhargava, chairman, Maruti Suzuki.

"There are many negative factors such as interest rates, inflation and fuel prices that need to be countered with good economic growth. In the last 3 months, the industry as a whole has witnessed negative growth. There is nothing so far that justifies a turnaround any time soon. If the market continues to be like this there will be even more plant shutdowns as we have to align our production with demand."

Maruti's petrol car sales have declined by 12%, 15% and 21% respectively while diesel car sales have increased by 54%, 60% and 22% during the same period.

Next fiscal, the company has projected a 16% growth in sale of its diesel cars while petrol car sales may decline further.

"The real growth is in the SUV segment and we have limited presence there," said Nakanishi, adding, "Only Ertiga is not enough. We need more vehicles."

Maruti had showcased the XA Alpha concept SUV, based on the Swift platform, at the Delhi Auto Expo last year.

The car is expected to be ready for launch before the festive season this year.