Maruti Denies Suppressing A-Star Problems in India

Maruti Suzuki has recalled thousands of A-Star models from Europe due to fuel tank problem. The fuel tank may leak if filled up to the brim. The total cost of the same is about Rs. 30 crores of which 40 percent will be borne by the auto component manufacturer. The recall includes Maruti A-Star models manufactured during November 2008 and August 2009. However, the recall development was not declared openly by MSIL in India. As an explanation, the company states that India does not have any recall policy for faulty vehicles.

“There was no attempt to hush up the matter. There was a delay in going public as India does not have a recall policy in contrast to countries in Europe which have a framework in place for reporting such matters ,” Maruti Suzuki chairman R C Bhargava said. The company officials had however informed the European regulatory authorities in November last year about the possible problems.

Regarding informing to Sebi, Bhargava said that it is supposed to inform Sebi only if there is a “significant amount” involved. "In this case, the upper limit of costs for Maruti is around Rs 12 crore which is not large when we read it in relation to the company’s annual profit before tax amount of Rs 3,000 crores. The amount is less than 0.4% of our PBT and would not make any difference to our price-to-earnings ratio,” he clarified. He also stated that the faulty leak in fuel tank has been reported only in few models but there is no complaint in any other Maruti models in India.

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