Maruti gets minority shareholder approval for Gujarat plant
Minority shareholders of Maruti Suzuki India (MSI) on Thursday approved a move by the company to let its Japanese parent Suzuki invest and own the upcoming plant in Gujarat.business Updated: Dec 18, 2015 01:02 IST
Minority shareholders of Maruti Suzuki India (MSI) on Thursday approved a move by the company to let its Japanese parent Suzuki invest and own the upcoming plant in Gujarat.
The shareholders approved the move with 89.75% through a postal ballot that took place from November 16 to December 15.
“Out of the total votes cast by the minority shareholders, 89.75% voted in favour while 10.25% voted against the resolution,” Maruti Suzuki India Chairman RC Bhargava told reporters here. A total of 65,833,152 votes were cast during the month long voting.
“The resolution has been passed and passed quite comfortably,” Bhargava said.
Initially, the Gujarat plant was proposed to be owned by Maruti Suzuki but the plan was changed later with its Japanese parent Suzuki Motor Corporation announcing in January last year that it would invest $488 million to build the plant.
Last year, under pressure from institutional investors, Maruti Suzuki had decided to seek minority shareholders’ approval after tweaking some of the earlier proposals for the controversial Gujarat plant, which it had initially planned to set up on its own. Private sector mutual funds and insurance companies,which own almost 7% of the company, led the opposition. However, the voting was delayed due to changes in regulations and MSI deciding to comply with requirements under the amended Companies Act.
Proxy advisory firm IiAS asked minority shareholders to vote against the move. It said in its report that if the transaction is approved, Maruti will lose all control over its own destiny, and Maruti’s shareholders will always remain subservient to the interest of Suzuki’s shareholders.
MSI hit back by asserting that it will have full control over upcoming plant in Gujarat.
The Gujarat plant is envisaged to have an installed capacity of 750,000 units annually. MSI’s two units at Gurgaon and Manesar have a total production capacity of 1,500,000 units annually.