Citizens' Issues
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.

It's Veni, Vidi, Vici at Nathu La
No amount of preparation can get one ready to travel to the historic pass. For an uninitiated like me, it was a trip that opened my eyes wider.
 
Visiting Nathu La is no less than a pilgrimage, but not of the religious kind. At 14,420 feet above sea level, one is struck by the sheer history that surrounds this strategic mountain pass which connects the northeast Indian state of Sikkim to the Chumbi Valley in China's Tibet Autonomous Region.
 
An off-shoot of the famous Silk Road which networked trade routes since 500 BC, the "listening ears pass" or Nathu La is about nature, history, beauty and sheer ingenuity all rolled into one.
 
No amount of preparation can get one ready to travel to the historic pass. For an uninitiated like me, it was a trip that opened my eyes wider. The overcast skies only added to the chill when we set off from Gangtok, the capital of Sikkim, in an SUV at 8.30 a.m. The next four hours that followed made for one of the most unforgettable trips I have ever undertaken.
 
Just 54 km from Gangtok, Nathu La was a nodal point for commerce and exchange of knowledge between India, China and rest of the world. If history isn't what draws attention, the sights are enough to captivate your imagination.
 
As the stomach churning drive began, the Himalayan mountain range soon presented its sheer imposing complex edifice. Soon, the roads meandered to sights that make one cling on tightly to the seat.
 
At some hairpin bends, the valley below looks like a good dozen kilometres down; however, at another turn, it's a pristine waterfall that wakes a traveller's visual sense.
 
Sealed by India after the 1962 Sino-Indian War, Nathu La was re-opened in 2006 following numerous bilateral trade agreements.
 
Nathu La is one of the two open trading border posts between China and India, the other being Shipkila in Himachal Pradesh.
 
With the opening of Nathu La as the second route for Kailash Mansarovar Yatra pilgrims in June, the neighbours have gone a step ahead in strengthening confidence-building measures.
 
Our driver, Sonam, tells us that the new route has given him more business this year.
 
A visit to Nathu La is strictly monitored by the Indian Army and it's open on five days of the week, barring Mondays and Tuesdays.
 
Just as the gorges, valleys and streams begin to overwhelm one's senses, Sonam makes a much-awaited pit stop at a quaint monastery.
 
With a few shops selling woolens and a few curios, the break from the back-breaking road was a welcome relief.
 
Waving good-bye to the old couple there, the journey that resumed was one of sheer awe. As the imposing Himalayas presented their grace, one couldn't but feel humbled. However, the bad road made one return to the real world.
 
At certain places that we stopped to stretch our legs, what captured one's attention other than the beauty was the sheer silence that engulfed . After a few more jaw-dropping turns, we reached the Tsomgo Lake (also called Changu Lake).
 
The azure blue water seems to freeze time in its tracks. Capturing the skies and the mountains in its reflection, the water body, which covers an area of 60 acres, seemed like a vision from a scenic dream. The locals venerate the lake for its "power" to fulfil wishes.
 
Another sight that held my full attention was the yaks that were lined up to give tourists a ride. Looking straight out of a page from J.R.R. Tolkien, these beasts looked menacing but were utterly gentle. After clicking a selfie, standing at a safe distance from the animal, we began our final stretch to Nathu La.
 
Through the overcast skies, a glimpse of the Himalayan snowline was literally breathtaking. It was then that the advice of thin air struck and our driver chuckled to warn that air gets lighter as we approach the pass.
 
When we finally reached Nathu La, at a bone-chilling minus three degrees Celsius, a leather jacket hardly did any justice. A camp house at the top however provided much-needed relief.
 
Champa and her friend who runs the lone tea stall attached to the camp looked like a vision from the heavens with steam emerging from the pot of tea and momos she was preparing.
 
I made it to the foot of the 90 steps that takes tourists to the border fence, with clattering teeth and numb in cold. Nothing could be more apt than the famous Latin quote, "Veni, Vidi, Vici" as one reaches the Indian border post.
 
For the first time I saw Chinese soldiers in flesh and blood. Boorish and non-responsive to our "namaste" and "hello", we felt more warmth when the Chinese tourists from the other side waved at us.
 
When I returned to my hotel at Gangtok at 4 p.m., besides sheer exhaustion, I was reminded that the same seven-and-a-half-hour journey I undertook may have taken a few days for traders using the Silk Route.
 
(Preetha Nair can be reached at [email protected] The writer was in Gangtok to participate in the fourth International Tourism Mart hosted by the Ministry Of Tourism)
 
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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