Lotus tops DRB-HICOM priorities

Group Lotus' expensive turnaround plan and "excess fat" in Proton Holdings Bhd will be DRB-HICOM Bhd's priorities when the new owner of the national carmaker moves in, sources close to the deal said.


They also said there will be no staff retrenchment, although some changes in the top management can be expected as DRB-HICOM will be striving to turn Proton into a serious regional player within three years, before becoming a global player two years later.

The group will also strengthen Proton's vendors and dealers' network, and improve staff skills and know-how by leveraging on its International College of Automotive (ICAM) in Pahang, among others.

"There will be zero lay-off as the immediate focus is on the low-hanging fruits at Proton. The group will trim any excess fat in product planning, consultancy contracts and third-party service providers, among others," they said.

One such area that needs instant review is the storage of Proton cars at a third-party site in Sijangkang, Selangor.

"The group does not think it is necessary to farm out this logistic service as Proton cars can be distributed to dealers and branches efficiently by using a good IT infrastructure. A lot of money can be saved from this," they said.

On Proton's loss-making British sports carmaker, the sources said DRB-HICOM will do a critical assessment on the Lotus turnaround plan. This is to ensure that it is really viable so that Lotus will not continue to drag its parent.

"If Lotus continues to ride on Proton, it will be cancerous, it will be like a parasite. Hence, it requires a review so that it can stand alone and be successful, perhaps like what Audi is to its parent Volkswagen AG," the sources said.

The review will also focus on Lotus' involvement in international motorsports sponsorships, especially in Formula One racing.

The sources said the group does not want a scenario where Lotus forks out the money but certain parties benefit more.

Lotus, which secured a RM1.3 billion loan from six banks in April last year, is confident of a turnaround in 2014. The carmaker plans to use the money to develop new models and upgrade its production facility.

It plans to more than double production to 7,000 cars by the end of 2014 by adding four to five new models.

Khazanah Nasional Bhd yesterday announced that it will sell its 42.7 per cent stake in national carmaker Proton to DRB-HICOM for RM5.50 a share, or RM1.29 billion.

The government's investment arm said DRB-HICOM is the appropriate buyer as its "proposed strategy and business plan provides an effective platform to enhance Proton's sustainability and meet its long-term growth needs".

In a statement, it said DRB-HICOM also submitted an offer price that was acceptable to Khazanah.