15-04-2008: Slew of resignations at Proton?

KUALA LUMPUR: There could be a slew of resignations from the top management echelons of national automaker Proton Holdings Bhd, industry sources said.

As at press time, the number, albeit unsubstantiated, stands at about nine and include such big wigs as director of manufacturing Datuk Kamarulzaman Darus (above right) and head of engineering Abdul Wahab Mohamed Khalid (above left).

When contacted, Proton yesterday confirmed that both Kamarulzaman and Abdul Wahab were leaving and it had also appointed Vimala Menon as director of finance and corporate affairs division. Menon was previously executive director of finance and corporate services of auto distributor Edaran Otomobil Nasional Bhd.

“Appointments and resignations of senior level personnel are a common occurrence in any organisation. After more than two decades with Proton, both Kamarulzaman and Tuan Haji Abdul Wahab Khalid have decided to pursue new opportunities and challenges outside the group.

“Proton has also appointed Vimala Menon, previously from EON, as director of the finance and corporate affairs division.

“Proton is confident that Vimala Menon, who brings with her more than 20 years of experience in the automotive industry, will strengthen Proton moving forward,” Proton managing director Datuk Syed Zainal Abidin Mohamed Tahir said in a statement yesterday, in response to queries from The Edge Financial Daily.

Syed Zainal made no mention of any others who may be leaving the company. The crucial question now is how quickly will Proton be able to fill the void left by the departures of the key personnel before it leaves a major dent on its operations.

It is no secret that Proton had faced difficulties in replacing its former chief executive officer Tengku Tan Sri Mahaleel Tengku Ariff, who went on leave in June 2005, but only officially left in September the same year.

The appointment of Syed Zainal happened only at end-November 2005, and according to industry players several other candidates had declined to take over the helm of the ailing automaker.

“It was perceived pretty much as getting on board a sinking ship back then… This time around, the head of engineering position, especially, will be hard to fill in,” an industry player said.

It is also noteworthy that there have been three resignations from the board, albeit all non-executive positions, since last November.

Early this month, Mohamad Zainal Shaari resigned from the board while Datuk Ahmad Hashim left in February this year. Datuk Mohd Izzaddin Idris resigned in November.

So far only one appointment has been made, that of Datuk Zalekha Hassan who was the deputy secretary-general of the Ministry of Finance. She was appointed in February this year to replace Datuk Ahmad Hashim.

There could possibly be more appointments from Proton’s parent Khazanah Nasional which has been trying to salvage the company after it started bleeding in the first quarter of its 2005 financial year.

Khazanah controls slightly less than 43% of Proton’s equity. The resignations came at a time when Proton sales has been dwindling and the company hard pressed to make ends meet.

About five years ago in 2002, Proton’s sales numbers stood at about the 215,000 mark, but has since dwindled by about 45% to less than 120,000 in 2007. Proton’s cash hoard (which is essential for it to churn out new models) has also been substantially reduced.

As at December last year, Proton had in its kitty about RM985 million. In contrast, at end-2004, Proton had about RM3.2 billion in cash and bank balances.

For the nine months ended Dec 31, 2007, Proton suffered a net loss of RM32.9 million on the back of RM3.9 billion in sales. This, however, is an improvement from its showing in FY06, where the company incurred losses of some RM590.4 million, from RM3.6 billion in revenue.

Since mid-November last year, Proton has shed slightly more than 20% or about RM600 million in market capitalisation. Proton fell six sen to close at RM3.88 yesterday.