PETALING JAYA : Datuk Seri Syed Zainal Abidin Syed Mohamed Tahir has tendered his resignation as Proton Holdings Bhd's group managing director last Thursday, casting a long cloud over the future of the group which is under siege from local and foreign competition.
Senior financial executives close to the situation said that his resignation, which could presage the departure of several other senior managers at Proton, was largely a result over management differences with the car maker's new owners DRB-Hicom Bhd.
"Syed Zainal has done a good job leading Proton since taking over from Tengku Mahaleel (former chief executive of Proton). During his tenure, the design and quality of Proton's cars has improved, with the new Proton Saga and Persona enjoying high take up rate among buyers," said the executive.
Syed Zainal could not be reached for immediate comment, but close associates of the "automan" said that he has been approached by several senior politicians and government officials to reconsider his decision.
However, Proton's head of public communication Izad Raya commented that nothing has changed in the group's leadership structure and Syed Zainal continue to lead the automaker's operation.
"Not that I’m aware of, as far as I’m concerned everything is moving, just as usual," said Azad when contacted by The Edge Financial Daily to confirm the matter.
A source closed to the company said that DRB-Hicom's group managing director Datuk Seri Khamil Jamil has met up with Syed Zainal to convince him to stay on as Proton's managing director.
It was believed that DRB-Hicom wanted Syed Zainal to stay and lead Proton, because of his expertise and ability to drive the group. However, according to the source, Syed Zainal will not stay at Proton.
"Syed Zainal is not in good terms with Khamil Jamil, because DRB-Hicom wanted to assert their control into Proton's board of directors and influence its decisions, since they have acquired the majority of shares in the group,
"This is met with strong opposition from some other directors as well as several key senior management of Proton, led by Syed Zainal," said the source.
Now, a source said that Proton's advisor and former Prime Minister Tun Dr Mahathir Mohamed is calling on Syed Zainal for a meeting, to try to convince him to stay on as Proton's managing director.
On March 20, DRB-Hicom has received 50.01% direct shareholding of Proton largely from the transfer of Khazanah Nasional Bhd's block of shares in the group.
Thus, DRB-Hicom has become the single largest shareholder of Proton with over 50% voting rights. It has also extended the offer to acquire the remaining shares of Proton that it has not received at the same price of RM5.50 per share it paid to Khazanah.
The view among industry observers is that DRB-Hicom is largely an automotive assembler, having secured assembly contracts with some automotive giants such as Mercedes-Benz, Honda and Volkswagen.
Having said that, automotive industry observers noted that the conglomerate does not have the expert people to run a true-blue automotive manufacturing business.
Under Syed Zainal's leadership, Proton has launched several models which have received rave reviews from buyers and critics alike, and has become some of the country's best selling models for several years.
For instance, the new Saga, which was launched in 2008 has so far become the second best selling model in Malaysia's passenger car market, just behind the Myvi by Perusahaan Otomobil Kedua Sdn Bhd (Perodua).
Even prior to his posting as Proton's managing director, Syed Zainal was the man behind the development of Perodua Myvi, due to his capacity as the managing director of Perodua Manufacturing Sdn Bhd.
The Myvi, a remake of Toyota's Passo and Daihatsu's Sirion, is the best selling model of Malaysia's automotive market since 2006.
Khamil Jamil has recently being appointed as Proton's chairman, replacing Datuk Mohd Nazmi Mohd Salleh, who resigned from the top post on March 16, 2012.
Since 2007, Proton's financial results has been improving, especially in terms of revenue. In 2011, the group raked in RM8.97 billion in sales revenue, compared to RM4.69 billion in 2007, and RM155.61 million of net profit compared with a net loss of RM589.53 million five years ago.
However, that is a far cry from what Proton used to chalk in the early 2000s. In the financial year ended March 31, 2002, Proton recorded RM1.12 billion in net profit, and this is followed by another equally impressive RM1.11 billion in 2003.
The increasingly competitive landscape of Malaysia's automotive industry, and Proton's lack of scale in terms of export market, are some of the factors which drives it down hill.
The government has slowly liberating the automotive industry, in line with the Asean Free Trade Agreement (FTA) and the larger China-Asean FTA, which have reduced the entry barriers of completely built up (CBU) units of passenger vehicles into Malaysia and increase price affordability of the units.
Although the government has provided preferential duties and tax rates for locally assembled cars, the increasing affluence amongst Malaysians have enabled imported cars to carve out niche market share in the industry, although priced higher than Proton's cars.
Since the launching of Perodua Myvi in 2005, the company has overtaken Proton's top position in the automotive market, which it has held since 1985, the year the original Saga was born.
The Myvi is highly popular especially among young, urban buyers because of its sleek design, optimal performance on the road, as well as a price tag and maintenance cost which does not burn a hole in its owner's pocket.
Proton's dwindling fortune has also being associated with its ownership of British luxury automaker, Lotus plc. Proton first acquired 63.75% of Lotus in 1995, and later increased it to 100% ownership in 2003.
Lotus requirement of huge capital outlay for the development of its models has eats into Proton's coffer since the acquisition. Presently, Proton has provided RM2.33 billion of capital investments for Lotus' five-year turn around plan.
The huge capital requirement to revive Lotus has drained so much resources needed for the development of Proton's design and technology, which are seen as trailing other Asia Pacific car makers such as South Korea's Hyundai-Kia, and the Japanese brands.
DRB-Hicom's entry into the national car maker was touted to be the driving force to change its fortune and speed up the development of Malaysia's automotive industry. However, without the expert to drive the group forward, what will become of Proton in the future?
Senior financial executives close to the situation said that his resignation, which could presage the departure of several other senior managers at Proton, was largely a result over management differences with the car maker's new owners DRB-Hicom Bhd.
"Syed Zainal has done a good job leading Proton since taking over from Tengku Mahaleel (former chief executive of Proton). During his tenure, the design and quality of Proton's cars has improved, with the new Proton Saga and Persona enjoying high take up rate among buyers," said the executive.
Syed Zainal could not be reached for immediate comment, but close associates of the "automan" said that he has been approached by several senior politicians and government officials to reconsider his decision.
However, Proton's head of public communication Izad Raya commented that nothing has changed in the group's leadership structure and Syed Zainal continue to lead the automaker's operation.
"Not that I’m aware of, as far as I’m concerned everything is moving, just as usual," said Azad when contacted by The Edge Financial Daily to confirm the matter.
A source closed to the company said that DRB-Hicom's group managing director Datuk Seri Khamil Jamil has met up with Syed Zainal to convince him to stay on as Proton's managing director.
It was believed that DRB-Hicom wanted Syed Zainal to stay and lead Proton, because of his expertise and ability to drive the group. However, according to the source, Syed Zainal will not stay at Proton.
"Syed Zainal is not in good terms with Khamil Jamil, because DRB-Hicom wanted to assert their control into Proton's board of directors and influence its decisions, since they have acquired the majority of shares in the group,
"This is met with strong opposition from some other directors as well as several key senior management of Proton, led by Syed Zainal," said the source.
Now, a source said that Proton's advisor and former Prime Minister Tun Dr Mahathir Mohamed is calling on Syed Zainal for a meeting, to try to convince him to stay on as Proton's managing director.
On March 20, DRB-Hicom has received 50.01% direct shareholding of Proton largely from the transfer of Khazanah Nasional Bhd's block of shares in the group.
Thus, DRB-Hicom has become the single largest shareholder of Proton with over 50% voting rights. It has also extended the offer to acquire the remaining shares of Proton that it has not received at the same price of RM5.50 per share it paid to Khazanah.
The view among industry observers is that DRB-Hicom is largely an automotive assembler, having secured assembly contracts with some automotive giants such as Mercedes-Benz, Honda and Volkswagen.
Having said that, automotive industry observers noted that the conglomerate does not have the expert people to run a true-blue automotive manufacturing business.
Under Syed Zainal's leadership, Proton has launched several models which have received rave reviews from buyers and critics alike, and has become some of the country's best selling models for several years.
For instance, the new Saga, which was launched in 2008 has so far become the second best selling model in Malaysia's passenger car market, just behind the Myvi by Perusahaan Otomobil Kedua Sdn Bhd (Perodua).
Even prior to his posting as Proton's managing director, Syed Zainal was the man behind the development of Perodua Myvi, due to his capacity as the managing director of Perodua Manufacturing Sdn Bhd.
The Myvi, a remake of Toyota's Passo and Daihatsu's Sirion, is the best selling model of Malaysia's automotive market since 2006.
Khamil Jamil has recently being appointed as Proton's chairman, replacing Datuk Mohd Nazmi Mohd Salleh, who resigned from the top post on March 16, 2012.
Since 2007, Proton's financial results has been improving, especially in terms of revenue. In 2011, the group raked in RM8.97 billion in sales revenue, compared to RM4.69 billion in 2007, and RM155.61 million of net profit compared with a net loss of RM589.53 million five years ago.
However, that is a far cry from what Proton used to chalk in the early 2000s. In the financial year ended March 31, 2002, Proton recorded RM1.12 billion in net profit, and this is followed by another equally impressive RM1.11 billion in 2003.
The increasingly competitive landscape of Malaysia's automotive industry, and Proton's lack of scale in terms of export market, are some of the factors which drives it down hill.
The government has slowly liberating the automotive industry, in line with the Asean Free Trade Agreement (FTA) and the larger China-Asean FTA, which have reduced the entry barriers of completely built up (CBU) units of passenger vehicles into Malaysia and increase price affordability of the units.
Although the government has provided preferential duties and tax rates for locally assembled cars, the increasing affluence amongst Malaysians have enabled imported cars to carve out niche market share in the industry, although priced higher than Proton's cars.
Since the launching of Perodua Myvi in 2005, the company has overtaken Proton's top position in the automotive market, which it has held since 1985, the year the original Saga was born.
The Myvi is highly popular especially among young, urban buyers because of its sleek design, optimal performance on the road, as well as a price tag and maintenance cost which does not burn a hole in its owner's pocket.
Proton's dwindling fortune has also being associated with its ownership of British luxury automaker, Lotus plc. Proton first acquired 63.75% of Lotus in 1995, and later increased it to 100% ownership in 2003.
Lotus requirement of huge capital outlay for the development of its models has eats into Proton's coffer since the acquisition. Presently, Proton has provided RM2.33 billion of capital investments for Lotus' five-year turn around plan.
The huge capital requirement to revive Lotus has drained so much resources needed for the development of Proton's design and technology, which are seen as trailing other Asia Pacific car makers such as South Korea's Hyundai-Kia, and the Japanese brands.
DRB-Hicom's entry into the national car maker was touted to be the driving force to change its fortune and speed up the development of Malaysia's automotive industry. However, without the expert to drive the group forward, what will become of Proton in the future?
