The passages given below are followed by a set of questions. Choose the most…

The passages given below are followed by a set of questions. Choose the most appropriate answer to each question

Proton and Daewoo bid for Lotus and after a fierce battle, Proton bought Lotus, lock, stock, and sports cars for a total of $51 million. Why? Stop before you dismiss this as an irrelevant question and turn to the next story. The answer could have a link with India’s much-won muddle at its largest car-maker, Maruti Udyog Limited (MUL). To understand why you need to know about Proton and what Lotus means to it. Proton is Malaysia’s number one car manufacturer, and it has announced an all-new product range that will be on the road by the turn of the millennium. Proton was set up by the government of Malaysia, in

cooperation with Japan's Mitsubishi. The first Proton, fitted with the most modern Japanese technology, rolled off the production line in 1985, a year after MUL rolled out its first car. At present, its production capacity is over 180,000 vehicles, whereas MUL is nearly 300,000.

By 2000, Proton plans to increase production to over 400,000 cars a year. In just two years after the first Proton rolled out, the company started exports. Proton now exports to 32 countries, has sold over 80,000 cars in the UK and is easily one of the most successful importers there. Impressive? Yes. But can Proton sustain the growth? And whatever happened to Mitsubishi, the Japanese partner? The most important difference between Proton and MUL is while the government of Malaysia wanted to build a national car and was ready to support it for as long as it was needed, MUL was the creation of a lobby of politicians. But first, let us concentrate on what the government of Malaysia did to ensure Proton's future. To start with, the Japanese never had more than a 30 percent stake in the company. Instead, the Malaysia government,

which held the majority stake through a company called Hicon Holdings, was always ready to pay the Japanese any royalties they wanted. Mitubishi began losing interest and now holds only a marginal stake. But last year, Proton got a new owner. The 50- year old Tan Sri Yahaya Ahamad is the son of a forestry official who trained at Loughborough University as an automotive engineer, then returned to Malaysia to sell cars. He went from one success to another, and when the Malaysian government decided to sell the state-owned Hicon Holdings, Vahaya was its man. He is now one of the biggest players in the rapidly growing Malaysian economy. A true technocrat, he saw no growth for the Proton unless investments were made in research and development. The timing was perfect. Lotus, the legendary sports car maker and research firm that designs everything from Olympic medal-winning cycles to Corvette engines, was up for sale.

It would take Yahaya and Proton lots to buy Lotus- in fact, fully double of what the previous owner ” Romano Silver Fox” Artioli paid General Motors for the ailing firm just two years ago. Too much was at stake for Artioli and with bailiffs knocking at the door, he was willing to part with 80 percent of Lotus. The seeming simplicity of the deal may have had something to do with the size of the offer. For a company grappling with terminal cash-flow problems, an offer for 80 percent amounting to roughly double the company’s value three years earlier, was irresistible. Yahaya guaranteed Artioli a seat on the board of the new lotus, committed himself to double the production of the Elise sports car, and expanding the contract engineering business.

The last was actually Yahaya’s trump card. And now that Mitsubishi link was weakening every day, Proton needed all the services Lotus could offer. And Yahaya would try to maximize every penny of the $80 million that he had spent acquiring that controlling stake. A glimpse of things to come was seen at the Frankfurt International Auto show’97, where Proton launched the stylish 1800cc coupe, combining high performance, responsive handling, and lavish standard specifications. The concept is to explore the market developed by the South Korean giants by playing their own value-for-money game. So Proton, a former government owned company is emerging as a credible player on the competitive global car market. There are lessons in this for MUL. The problem with MUL was that the desire to make a national car came from the ruling Congress party. It wanted to pay homage to Sanjay Gandhi whose dream was an affordable automobile for the masses and one that was built in India. And those who worked feverishly to achieve that can be proud because MUL does make an affordable quality automobile in large volumes in India. But once the company was created, the need to protect it became so paramount that competition was not on the agenda in the start-up period. To Suzuki, the partner, this was something new. Financially speaking, no partner can be better than a government and whatever difficulties Suzuki had to face were erased easily by government sops. So what started for Suzuki as a minor overseas operation, soon became its largest car plant outside Hamamatsu. And India became a good money earner for Suzuki outside Japan, with 74.6 percent of its global profits coming in from the Rs.800 crore profit made by MUL in 1996-97.

The Maruti 800 became the benchmark car in India and a shooting yen prevented MUL from swapping the model from Alto nee Zen, the same car made an entry in India as a classier hatchback and a replacement market car. And the 800 cc continued to reign supreme. Credit must go to MUL and Suzuki for indigenising the car and making it one of the cheapest in the world - it retails well under US $10000 mark. But Suzuki fast became complacent and with the stake of the company raised to 50 percent from a mere 26 percent in 1992, it became even more so. Nowhere in al\this did the government think of setting up an R&D wing big enough to develop a newer design or at least revamps, without going to Hamamatsu. To be fair, Suzuki never voiced the need for an in-house MUL R&D.

Which of the following sentences is incorrect, according to the passage?