Business News
Personally not in favour of stock split, says Maruti Suzuki chairman Bhargava
‘Priority to maintain operational efficiency, fulfil investors’ confidence; no need to change focus to stock split’
In the backdrop of Maruti Suzuki share touching the milestone of ₹ 10,000 and questions on whether the company would consider a ‘stock split’ to make it more affordable” for small retail investors, chairman R C Bhargava on Thursday said he personally was not in favour of such a move as there was no lack of buyers at the current price.
Pointing out that the stock split proposal was talked about frequently, Mr. Bhargava, however, told reporters, “I’m not convinced if there is any reason to go to stock split… I’m not clear if the stock split would make things better for anyone. It may become more affordable, but then there is no lack of buyers at this price.”
Mr. Bhargava said what was more important for him was that the increase in share price has put greater responsibility on the company to maintain its operational efficiency at the highest level, as well as to fulfil the investors’ confidence and expectations. “It is our duty not to let the investor down, and I would not want to change the focus to stock split.” Maruti Suzuki Managing Director Kenichi Ayukawa said these are matters that the company’s board of directors would have to take a call.
Royalty payment cap
Asked about certain reports that there were proposals before the government to bring in severe curbs on royalty payment as well as to introduce certain measures that would make companies increase research and development spending in India, Mr. Bhargava said he was not aware of any such recommendations.
He, however, added, “This (NDA) government’s policy has been to attract more foreign investment. Such measures (royalty payment ceiling) will restrict foreign investment and … take the country back to pre-’91 (pre-liberalisation) era, … and against market forces… I don’t think this government wants to go back to pre-’91 policies. More government control will play with market forces and lead to lesser chances of success.”
When told that such recommendations were to promote Indian companies and the ‘Make In India’ (MII) initiative, Mr. Bhargava said “I don’t see any connection between MII and who owns foreign equity. Foreign-owned equity can be there … as long as they are making in India. We (Maruti Suzuki) have invested over Rs 2,000 crore in setting up R&D facilities in India… to lower costs and compete more efficiently. Market forces drove such decisions and not any (royalty) caps.”
