Millennium Post

Gujarat’s Suzuki plant: Maruti to seek minority shareholders’ nod

Under pressure from institutional investors, Maruti Suzuki India Ltd (MSIL) on Saturday decided to seek minority shareholders’ approval after tweaking some of the earlier proposals for the controversial Gujarat plant, which its parent Suzuki Motor Corp (SMC) had decided to take over from it. Although investments at the Gujarat plant will be funded by SMC via a wholly-owned subsidiary, they will now be done through depreciation and the equity brought in by parent without ‘mark-up’ on cost of production.

Also, in case of termination of the contract manufacturing agreement between them, the facilities of the Gujarat subsidiary would be transferred to MSIL at book value and not at fair value as was envisaged before. The decision was taken at a board meeting held here, which was also attended by SMC Chairman Osamu Suzuki. Fund houses, which have been opposing the proposal, said the decisions taken by the board appeared to be in the interest of the company and the investors.

MSIL Chairman R C Bhargava said, ‘We are not required by law to seek minority shareholders’ approval but the board decided to do so as a measure of corporate governance.’ Speaking to reporters here after the meeting, he said the decision was taken in the context of the views and opinions expressed by institutional investors and 3/4th of the minority shareholders, who hold 44
per cent stake in the company, would have to approve the proposal through a special resolution.

Expressing confidence that the proposal would be approved by the minority shareholders, he said, ‘We are hopeful. It’s such a good deal that there is no reason why minority shareholders should oppose it. The apprehensions which were expressed have been absolutely made crystal clear.’

An official of MSIL said it could take a couple of months to work out the schedule to seek minority shareholders’ approval through postal ballot. MSIL also said the Gujarat arm would function on the basis that it would neither generate surpluses nor make loses.

An official of one of the fund houses, which have been opposing MSIL’s earlier proposal, said, ‘Today’s decision to seek minority shareholders’ approval is a welcome move. We will convey our official stand after studying the fine-print and discussing the same among all 16 investors.’  MSIL’s independent directors supported the company’s move.

Maruti to invest Rs 4K cr in FY15 on marketing

New Delhi:
Maruti Suzuki plans to invest around Rs 4,000 crore in the next fiscal on various activities such as the introduction of new models, marketing and R&D. The company’s board, which met on Saturday, approved the investment for the next fiscal besides coming out with new proposals for the proposed manufacturing facility in Gujarat.

‘The Board-approved capex for 2014-15 will be Rs 4,000 crore. The investments would be mainly for new models, marketing infrastructure and R&D,’ a company spokesperson said. For the ongoing fiscal, ending March 31, the company’s capex is around Rs 3,000 crore.

The company registered 1.8 per cent increase in its domestic sales in February at 99,758 units as against 97,955 units in the same month last year.
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