Maruti Suzuki chairman R.C. Bhargava on Thursday asked the automobile components industry to focus on maximising internal resources for investments in research and development and to spend less on other purposes such as lifestyles of senior management personnel.
Mr. Bhargava’s statement comes amid renewed debates over high salaries drawn by senior management after shareholders of Eicher Motors, the maker of Royal Enfield motorcycles, voted against the re-appointment of Siddhartha Lal as managing director due to concerns around remuneration.
Speaking at the 61st annual session of the component manufacturers’ association ACMA, Mr. Bhargava said, “The component industry must understand that if it is to become capable of meeting global challenges, then it has also to realise that it cannot be worked by the industry management merely for the benefit of a very limited number of people…”
Stating that investments in developing engineering and R&D capabilities had been inadequate in the components industry, Mr. Bhargava said given that such investments would be comparatively large and might not yield adequate dividends in the short term, it is important that they are done from internal resources.
“Internal resources need to be maximised... the secret of success of building strong companies for developing technology or growth is to generate more and more internal resources. There is just no other way of doing this. And I will strongly suggest to component manufacturers that they need to look at the entire management culture and the management style and see how more funds remain within the company and less funds are used for other purposes, including lifestyles of senior management personnel,” he added.
He further stressed that money that remains in the company can be used for strengthening the company, while money which is taken out leads to a comfortable and luxurious life, but does nothing for the growth of the company.
He also asked component manufacturers to focus on constantly improving quality not only for tier-1 vendors, but also tier 2 and tier 3 vendors, who, in many cases, are the weak points of the industry.
Further, he said that if Indian component manufacturers were to become globally competitive, they must take a relook at their human resource policies. “It is not possible to achieve global standards if we continue to work with people who are not properly skilled, people who are contract workers, people who have no commitment to the company…,” he said.
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