Thursday, June 29, 2006

Let's be Clear of some Real Grouses WE THE PEOPLE understand PROTON's CURRENT CHAIRMAN has to answer for (outside of the still continuing stuck-window saga)

  • The sale of MV Agusta seemed to conclude in a matter of days, or at most weeks, and without extensive stakeholder engagement, where even the Italian partners and management of MV Agusta expressed surprise at the conclusion of the sale! Strange when the purchase process took months of very public deliberation and stakeholder engagement.

    Sure, the propaganda around the sale of MV Agusta hints at the purchase being an isolated Dr M - Tunku M decision. However, the truth is that international newswires, including the BBC, reported an engagement and due dilligance process ~1 year prior to the finalisation of the purchase of MV Agusta. With the 3-month initial due-diligence stretching to months longer, all publicly reported, the purchase deal was done with the agreement of the Proton board and Khazanah, backed by a lengthy due diligence, audits from Big 4 firms as well as support from MV Agusta's creditors such as Citibank.

    In contrast, where was the due-diligence around the sale of MV Agusta? Hence, the manner of the sale, to an unknown entity and for a measly fraction of the purchase price (even with the debt transfer) with no discernable due diligance, is a major source of angst!

  • Many who study Proton's quarterly performace figures expressed suspicions that despite the sale of the debt of MV Agusta, Proton still chose to perform a debt provision at the quarter of the MV Agusta sale, attributing this to losses due to the MV Agusta sale. The debt provision seemed exhorbitant, making people wonder whether Proton was actually trying to hide real operational losses it had incurred following dismissal of Tunku Mahaleel and the departure of a core of his team, including the highly reputable CFO.

  • When a CEO is dismissed / allowed to lapse in his contract / encouraged to leave, one expects the replacement to do better. Else, why dismiss the earlier CEO?

    However, Proton's performance has not improved since the departure of Tunku Mahaleel, but has taken a turn for the worse, with the biggest low when Azlan unveiled the "luxury" Waja.... ??!!!??!?!!!.

    Some of the decline has been arrested since the arrival of Syed Zainal, but ironically, all the successes of Syed Zainal can also be attributed to the plans laid out during Tunku Mahaleel's time.

    E.g. the Campro Engine replacement for the Waja, the SRM or Satria Neo's (late) delivery, even the vendor quality assurance program were all plans Tunku Mahaleel laid out. In fact, resistance to the vendor quality assurance program by 'influential' vendors is supposed to have been one reason for Tunku Mahaleel being ousted from the CEO position.

    So, why did the Proton board need to remove Tunku Mahaleel, if Chairman Azlan's more direct leadership since could do no better, and in some ways, have done far worse!

  • Finally, Proton's current problems are symptomatic of a directionless leadership. There is much given to slogans and press releases of success, but if one takes away the plans of Tunku Mahaleel that they have implemented, they are struggling for direction. Otherwise, why would Proton be regressing by negotiating with Mitsubishi on building cars together (probably a Mitsubishi knock-off), when Proton has already demonstrated the capacity to build from scratch?

    The current Proton leadership has a penchant for proclaiming the NAP defines the strategy they are following, but as the NAP is non-specific, non-detailed and bereft of real-life big rules and big picture ideals of where Malaysia wants to position its automotive industry in the regional, let alone global market, Proton is basically directionless. The NAP is so poor as a guide to Proton that if anyone is willing to pay me for a few weekends, I, a non-expert, could probably come up with something better!

Maybe I'll do it anyway.... but for now, can someone convey the above to Azlan Hashim so he (and others) will at least just stop yammering on about how they have 'answered' Dr M's questions on Proton? Some real answers would be nice too...

3 comments:

hasbullah said...

Assalamua'alaikum n good morning,

Good analysis!

Hasbullah

Re: I think your father knows my father in law - orang acheh juga.

Satria Asia said...

"In contrast, where was the due-diligence around the sale of MV Agusta? Hence, the manner of the sale, to an unknown entity and for a measly fraction of the purchase price (even with the debt transfer) with no discernable due diligance, is a major source of angst!"

-- Could it be because 'time was of the essence'?

To extract from The Star's report:

"In the event Agusta goes bankrupt, Proton would have been subjected to a further contingent liability for an amount of up to Euro202 mil (RM923.1mil; at the rate of Euro1 =RM4.57)"

I think also the losses reported by Proton must have started occurring during the time of the previous management -- I mean, it's difficult to understand 'overnight' losses from such a huge corporation...the 'rot' must have started from way back when...

Anyway, selling off a company for 1 euro or 1 ringgit isn't entirely unheard of...Air Asia was sold at RM1.00 if my memory serves me right. And just like the MV Agusta sale, the buyer also bought the liabilities.

I also can't understand the hullaballoo on the non-renewal of Mahaleel's contract...I mean, if your employer doesn't want to renew your contract, it's their perogative isn't it? Who are you to question their decision? Sometimes it seems Mahaleel is crying over a lost toy.

Satria Asia said...

How about this from The Edge Daily:

Proton's board not fully briefed of Agusta deal
By Tamimi Omar

Proton Holdings Bhd board was not given full details of the acquisition of the debt-laden MV Agusta Motors SpA (MVAM) when the deal was executed in 2004, its chairman Datuk Mohd Azlan Hashim alleged.

He said information on the relationship of its unit Proton Capital Sdn Bhd and minority shareholders of the Italian motorcycle company, was not made clear to the board.

At a press briefing at the Proton headquarters in Shah Alam on March 28, he said that the board was not aware that the MVAM minority shareholders had veto powers and hindered most of Proton’s efforts to turn around the company...

What is Azlan saying or insinuating here?

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