Amid the shareholder uproar over high salary paid to the CEO of Eicher Motors, Maruti Suzuki Chairman RC Bhargava urged the auto component community to spend more on improving the quality of parts than on the lifestyle of the senior management.
Bhargava who was speaking at the 61st Annual Session of the Automotive Component Manufacturers Association (ACMA) said that companies need to spruce up their internal resources and invest them in development of technologies for future growth.
“I would strongly suggest to component manufacturers that they need to look at the entire management culture and 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,” Bhargava added.
Siddhartha Lal, the managing director and CEO of Eicher Motors, which controls niche bike brand Royal Enfield, faced shareholder’s ire when the resolution for his reappointment as the MD was voted down along with his remuneration package. In less than a week Lal got reappointed as MD but not before the board of the company amended his pay package.
“Remember, money which remains in the company, will and can be used for strengthening the company. Money which is taken out leads to a comfortable and luxurious life but it does nothing for the growth of the company,” Bhargava added.
Addressing Maruti Suzuki shareholders at the company’s annual general meeting on August 24, Bhargava said that company managements need to "curtail the kind of expenditures on themselves personally" with the COVID-19 pandemic highlighting the need to build internal resources with a frugal style of functioning.
Bhargava, in his capacity as non-executive chairman, non-independent director of Maruti Suzuki, does not draw any salary, perquisites and performance-linked bonus but only gets sitting fees and commission.
“Based on my experience in the last 40 years, the investments in developing engineering capacity and R&D in the component industry have been inadequate in most companies. It is true that such investments will be comparatively large and may not yield adequate dividends in the short term. For that reason, it becomes important that these investments are made from internal resources and these need to be maximised,” Bhargava added.
Shareholders of Hero MotoCorp also voted against the resolution which allows Chairman and Managing Director Pawan Munjal to secure a 10 percent jump in remuneration. However, the resolution was passed.Similarly, institutional investors rejected the proposal to allow Bajaj Auto Chairman Emeritus Rahul Bajaj to draw benefits including pay of Rs 6 crore a year, furnished accommodation, medical expenses reimbursement and a car with driver.