Citizens' Issues
India ranks low in WHO's global road safety rankings
The data on road crashes in the country is highly fragmented, barring states of Punjab and Tamil Nadu which have a good Road Accident Data Management System.
 
Yet, India stands out miserably in the latest World Health Organisation's (WHO) "Global Road Safety Report-2015" with an estimated 2,07,551 deaths on roads.
 
In 2014, India reported 137,572 deaths, since accidental deaths are clubbed with suicides, totalling to 141,526 deaths, said SafeLife Foundation, an NGO that analysed the India-specific findings of the WHO report.
 
Over 1.20 million people perish on the world's roads annually, making it a leading cause of deaths, especially in low and middle-income countries and entailing a loss of almost three percent of Gross Domestic Product (GDP) to their economies.
 
While the number of road traffic fatalities have remained nearly constant, given a four percent increase in global population and 16 percent increase in motorisation, road safety efforts in the past three years have saved human lives.
 
But in India, there has been a continuous rise in road accident deaths since 2007 -- with a brief annual decline in 2012. The 2014 data stood at 141,526, marking a three percent increase over 2013.
 
Road deaths in low and middle-income countries are more than double of those in developed countries.
 
The noteworthy aspect is that 90 percent of the road deaths occurred in the underdeveloped or developing countries, housing 84 percent of the global population but having only 54 percent of the world's vehicles.
 
In the same context, of the 68 countries which saw a rise in road traffic deaths since 2010, 84 percent are in the low and middle-income group countries.
 
Similarly, 79 countries reporting a decline in road traffic deaths include 56 percent which are in the low and middle-income group countries -- making it clear that the risk of dying in road accident remains highest in the underdeveloped/developing nations.
 
Almost half of all the road accident deaths are among the vulnerable users -- two-wheeler, cycles or pedestrians, with WHO recommending more attention to be paid to the needs of the pedestrians and cyclists.
 
India has no laws protecting these (pedestrians/cyclists) who account for more than one-third of all road accident deaths in the country.
 
The WHO estimates that half a million lives could be saved each year in developing countries by creating an efficient emergency system to tackle road accident casualties.
 
While India boasts of a multiple access numbers for emergencies, only a few are reliable, compared to 116 countries that have a universal access number to activate emergency services response.
 
Moreover, after a road crash in developing countries like India, the local community leaders, police or drivers, if trained in basic injury care and coordination of transporting the victims to a hospital can fulfil the role of saviours in the absence absence of professional experts or medicos.
 
The SaveLife Foundation's Chief Executive Officer Piyush Tewari also endorsed WHO recommendation that health-care staff must be trained in emergency care and there is no legislation ensuring efficient emergency care and protection to bystanders rendering help to the victims.
 
Added to this is the lack of robust data on road traffic fatalities in most countries, though many submit vital registration date to the WHO on all causes of deaths, including many which now use hospital data as the basis for their figures.
 
The WHO feels that coordination of road safety efforts across multiple sectors and stakeholders is critical for success and currently 167 countries, compared to 162 in 2010, have an agency that leads the initiative.
 
India has no lead agency to effectively execute road safety strategies despite most states having their own Road Safety Policies.
 
Regarding legislation and road user behaviour, 17 countries have laws relating to one or more of five key behavioural risk factors, representing 409 million or 5.7 percent of the world population.
 
These are -- speed limits, use of motorcycle helmets, using seat belts, reducing drunken driving and child restraint use in which India meets the WHO criteria only pertaining to seat belts usage.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Now, defence personnel can collect i-ticket across India
Defence personnel can now collect their railway i-tickets booked on the Defence Travel System from any computerised passenger reservation system counter across India.
 
Earlier, it could only be collected from the counters of the journey originating station.
 
The Indian Railways have also issued a format of receipt to be given by the defence personnel while collecting the ticket which specifies inter alia details such as PNR Number and "Transaction ID" on the Defence Travel System (DTS).
 
With a view to phase out the Defence Warrant System, railways commenced operations of DTS on its e-ticketing portal of Indian Railway Catering and Tourism Corporation (IRCTC) in 2009.
 
It has also mitigated certain other problems encountered in booking i-tickets for the defence personnel through facilities like auto cancellation of fully waitlisted e-tickets, allowing booking of tickets on DTS during the first 30 minutes of opening of reservation which is disallowed for all other ticketing agents.
 
The i-ticket can be collected from any such counter by the defence personnel upon showing one of the ten prescribed proofs of identity allowed for undertaking the journey. 
 
In case some other person collects the tickets on behalf of the defence personnel, then the person has to produce any of the ten prescribed proofs of identity in original along with photocopy of the ticket-holding defence personnel.

 

Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Maruti's royalty payouts to Suzuki are “extortive”, says report
Over the past 15 years, Maruti's royalty to Suzuki grew 6.6 times when the average sale realisation per car increased by just 1.6 times. Royalty is not Suzuki’s indelible right – it must explain its coercive charges on Maruti’s cash flows, says IiAS
 
The royalty payouts by Maruti Suzuki India Ltd (Maruti) to its parent Japanese Suzuki Motor Corp (Suzuki) are 'extortive' says Institutional Investor Advisory Services India Ltd (IiAS). "Royalty is not Suzuki’s indelible right and it must explain its coercive charges on Maruti’s cash flows. In addition, Maruti shareholders must ask the fundamental question as to what is the right amount of royalty that must be charged?" the proxy advisory firm said.
 
IiAS says it examined Maruti’s royalty payouts in the context of revenues, margins, and research and development (R&D) spends, and concluded that Maruti’s royalty payouts are extortive. “Suzuki needs to explain the basis of charging Maruti very high rates of royalty. Royalty payments aggregated 5.7% of net sales and 36% of profits before royalty in 2014-15. Over the past 15 years, royalty paid to Suzuki, has grown 6.6x to Rs21,415 per car sold, while average sales realization per car has increased only 1.6x. While Suzuki’s consolidated R&D spend per vehicle (including motorcycles) averaged 4% of sales, its royalty payments from Maruti are 6% of net sales,” it said.
 
Most multi-nationals charge their Indian companies royalty. This royalty is typically charged for either the brand and / or product technology. The basis for this charge is that the global brands have been developed outside India, as is the product research and technology. There is some merit to this argument, says IiAS, but the question is how much should be claimed?
 
Maruti has been paying royalty to Suzuki for its car manufacturing technology since inception. Over the past five years (2010-11 to 2014-15), Maruti’s aggregate payout towards royalty was Rs11,870 crore while its five-year profit before tax (PBT) aggregated Rs16,770 crore. In 2014-15 alone, royalty expenses aggregated 36% of profit before tax and royalty.

IiAS says, Maruti cars are for the most Suzuki’s products that emanate from the research and development undertaken in Japan. Yet, Maruti has been a stronger brand in India than Suzuki. To the extent that Maruti uses Suzuki’s technology, it must pay royalty. But how much is enough?

IiAS says, Maruti cars are for the most Suzuki’s products that emanate from the research and development undertaken in Japan. Yet, Maruti has been a stronger brand in India than Suzuki. To the extent that Maruti uses Suzuki’s technology, it must pay royalty. But how much is enough?

Maruti’s EBITDA margins (after royalty payouts) at over 12% are almost twice that of Suzuki’s sub-7% margins for the automobile segment. Maruti’s margins emanate from its own local efforts of cost control, value engineering, and indigenisation. Over the past 15 years, royalty payouts from Maruti have grown from 2% to almost 6% of net sales. However, IiAS says, Suzuki’s investments in R&D have not stepped up accordingly. In 2014-15, Suzuki’s expenditure in R&D aggregated only about 4% of net sales, it added.

Maruti’s own efforts hold the key
 
Over the past three years, Maruti has invested an average of over Rs3,000 per car (produced) in R&D efforts, including capital expenditure aggregating Rs1,014 crore and another Rs814 crore in revenue expenditure. 
 
Maruti’s R&D efforts have supported the launch of the new models and variants, new feature developments and fuel efficiency improvement efforts in the recent past. 
The Rohtak R&D facility (Suzuki Group’s first R&D centre outside Japan) is expected to be fully functional by the end of the current fiscal. Among other facilities, the Rohtak R&D facility is expected to aid in testing and validating products to meet new regulations regarding safety and environment. 
 
IiAS says, "If the incremental investment in R&D facilities is largely being made in India through Maruti, should shareholders expect a reduction in royalty payouts per car going forward?"
 
"Maruti shareholders must ask the fundamental question. What is the right amount of royalty that must be charged? Royalty is not Suzuki’s indelible right – it must explain its coercive charges on Maruti’s cash flows," the proxy advisory firm added.
 

 

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COMMENTS

Leslie Menezes

1 year ago

Such milking and mis governance can only be curbed by shareholder activism. Though Suzuki has 57% holding the DIIs and banks not raising the issue is a question mark on their role/complicity?

Dr Jain

1 year ago

Here one can see a huge corporate governance problem. Though global, the company is still acting feudalistic. Why aren't the Board members including the Chairman raising these issues? If the figures are right, then there is hardly any justification for a royalty amounting to > Rs 21000/- per car! On top there are payments for imported components from other Suzuki subsidiaries, dividends, bonuses and salaries.

A S Bhat

1 year ago

Royalty payouts require prior approval of RBI. in such sanctions royalty is generally restricted to 10% of net sales, after deduction of bought out components where no detailed designing is done by the Principal (Suzuki in this case). Whether such formula is stipulated in the RBI permission? If not why not and then what formula is stipulated?

Siva

1 year ago

MNCs have been milking their Indian ventures dry with these Royalty arrangements. Govt must discourage such measures thru enhanced taxation of such Royalty payments.

Siva

1 year ago

MNCs have been milking their Indian ventures dry with these Royalty arrangements. Govt must discourage such measures thru enhanced taxation of such Royalty payments.

Raj K Swamy

1 year ago

Why should anyone other than a Suzuki supporter take offense at this art. Plenty of shareholders do not read or completely analyse Companies reports for various reasons from lack of time to ignorance. This art provides an angle which is worth looking at regardless of what the motive is. Anyone who thinks this article's analysis is wrong or not in the retail shareholder interest should comeout with logical reasons instead throwing mud based on unsubstantiated motives.

REPLY

Sucheta Dalal

In Reply to Raj K Swamy 1 year ago

True and to look at the source of the information and the job that they do

Sucheta Dalal

1 year ago

Wow....this is news in all the papers. It has been put out by proxy advisory firms which look at good governance standards.

But our dear readers have such wonderful opinions -- one things Maruti is being targetted. Another calls US a YELLOW journal.

IS it any wonder that only paid media works well in India? why then do investors all expect us to take up issues when they lose money in fixed deposits etc?

If readers consider advance warning as "targetting" or yellow journalism then why should media bother to investigate anything at all??

TIHARwale

1 year ago

Why Suzuki is being targeted is not common to see IT companies charge AMC at 8% for the software implemented. Is it not a fact drugs get patent protection.

vnrao

1 year ago

when shareholders are not worried why do you worried about it it your magzine is like a yellow journal

Parimal Shah

1 year ago

This too is an instrument misused by companies to pay income tax.

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