Large investors to approach Sebi on Maruti’s plant deal with Suzuki
According to the new corporate governance norms, the deal can be construed as related party transaction requiring approval from public shareholders, but these new regulations are yet to come into force and would be effective from October 1.business Updated: Mar 05, 2014 07:44 IST
The stand-off between Maruti Suzuki India Ltd (MSIL) and its mutual fund investors seems to be worsening with institutional shareholders planning to approach the Securities and Exchange Board of India (Sebi) in a day or two after the car maker failed to address their concerns regarding issues related to the car maker’s Gujarat plant.
Seven mutual fund houses including ICICI Prudential MF, Reliance MF and UTI MF are opposing Maruti’s Japanese parent Suzuki Motor Corp’s move to make a Gujarat unit its wholly-owned subsidiary as the deal would transform MSIL into a distribution company from a manufacturing one.
Suzuki last month decided to take over Maruti’s proposed plant in Gujarat and it would invest in the unit through wholly-owned unit Suzuki Motor Gujarat Pvt Ltd.
The fund houses together hold 3.93% in MSIL.
State-run Life Insurance Corp (LIC), which holds 6.93% stake in the company, has also sought clarifications on the matter.
While the market regulator is yet to hear officially from the fund houses, it is already looking into the matter on suo motu basis.
According to the new corporate governance norms, the deal can be construed as related party transaction requiring approval from public shareholders, but these new regulations are yet to come into force and would be effective from October 1.
Last month, the fund houses had written a letter to Maruti chairman RC Bhargava saying the decision is clearly “neither fair nor in the interest of shareholders”