Maruti Udyog Scam, 1970s

A private limited company named 'Maruti technical services private limited' (MTSPL) is launched on November 16, 1970. The stated purpose of this company was to provide technical know-how for the design, manufacture and assembly of "a wholly indigenous motor car". In June 1971, to produce the car, a company called 'Maruti limited' was incorporated under the Companies Act and Sanjay Gandhi became its first managing director. By a formal agreement dated 26 February 1973 between Sonia Gandhi 'and Maruti Technical Services Private Ltd, she was appointed its Managing Director, along with Sanjay Gandhi, for five years at a salary of Rs 2,000 per month plus commission and perks. In the same year, MTSPL enters into an agreement with Maruti Limited to supply the company with technical know-how for the “design, manufacture and assembly in India of a wholly indigenous motor car”. Under patronage of Indira Gandhi’s Government the company receives land, tax breaks and funds. 330 acres of land are provided by the Haryana government at Gurgaon near New Delhi and nationalized banks provide substantial amounts in loans (Shirali, 1984; Business Standard, 2002; Shenoy, 2003) for the new company.

There was also an agreement concluded on Fools' Day 1975 between Maruti Technical Services P Ltd. and Maruti Heavy Vehicles P Ltd, a sister concern of Maruti Limited, for sale of technical know-how by the former for manufacturing road rollers. The company proves incapable of producing a single marketable car. The problem lies in the inexperience in automobile production of the members who compose the company’s top management. Maruti limited’s problems culminate in the company’s liquidation in 1977. At that point in time, the company’s achievements comprise of little more than some ten to twelve hand made prototypes of different design, which are “fabricated and purchased in parts” (Prakash, 1999: p.1). A commission of inquiry headed by Justice A. C. Gupta was setup in 1978, which probed the 'Maruti scandal'. Justice Gupta found it "surprising that Shrimati Sonia Gandhi who did not have any technical qualification should be appointed Managing Director of a technical company". Justice Gupta observed: "It has been found that Maruti Technical Services was not competent to render technical know-how in respect of motor cars. There is no evidence that it had the know-how in respect of road rollers."