By S Jayasankaran
KUALA LUMPUR - Malaysian carmaker Proton Holdings has denied market talk that it is planning a sale of its British sports car unit Lotus, insisting that its loss-making wholly owned unit can still provide value to the carmaker.
Proton, a brainchild of former premier Mahathir Mohamad, was until recently 43 per cent owned by state agency Khazanah Nasional. However, Khazanah put it up for sale and it was taken over in January by DRB-Hicom, an auto, arms and property conglomerate owned by tycoon Syed Mokhtar Al-Bukhary.
Lotus is currently in the second year of a five-year turnaround plan that could see the firm incur more losses in the coming years. According to previous reports, Proton's higher spending on the iconic Lotus brand had seen the national carmaker's second-quarter net profit last year slump by 76 per cent to RM15.55 million (S$6.3 million) from RM65.92 million in the same period the previous year.
Moreover, there had been talk about the suspension of Lotus chief executive Dany Bahar. British motoring magazine Autocar had reported that Lotus refused to comment on rumours that the suspension is related to expenses incurred by Mr Bahar.
Proton, however, confirmed that "following an operational review", Mr Bahar has been temporarily suspended from his role to facilitate an investigation into a complaint about his conduct made by DRB-Hicom.
There had also been other media reports that the contracts of several top officials in the carmaker had lapsed and major management changes could take place next month.
A recent media report claimed that managing director Syed Zainal Abidin would announce his departure tomorrow after the board accepted his resignation letter and that there was speculation chief financial officer Azhar Othman has also quit.
For all that, however, it appears that Proton intends to hold on to Lotus. Proton's chairman Mohd Khamil Jamil insisted in a statement on Monday night that Proton and DRB-Hicom had plans to take Lotus "forward in the immediate to medium term".
"Lotus can provide value to Proton. Lotus is an iconic brand with a global presence and positioning, coupled with unsurpassed engineering expertise and a talented workforce," the statement read.
"Both Proton and DRB-Hicom will continue to review the existing business plans and financial position of Lotus in taking Lotus forward in the immediate to medium term," the carmaker's chairman said, adding that the parent firm had sent a team of consultants to Lotus in March to conduct an operations and legal audit.
He said the need for this review is especially pertinent in the light of the existing financial obligation of Lotus in the form of a RM1.33 billion syndicated loan taken at the end of 2010, for which Proton has given a corporate guarantee.
He also added that his recent visit to Lotus' Norfolk headquarters had resulted in the British government considering a RM50 million Regional Growth Fund pledge to support Lotus' vehicle development plans there.
Following an operational review, Lotus chief executive Dany Bahar has been temporarily suspended from his role to facilitate an investigation into a complaint about his conduct made by DRB-Hicom.
This article was first published in The Business Times.