Maruti Suzuki is confident that all opposition to its Gujarat plant proposal has been put to rest and minority shareholders are now convinced of the merits of the revised plan, managing director Kenichi Ayukawa said on Friday. The country’s largest carmaker now aims to seek a formal nod from shareholders in October through a postal ballot ? as per the Companies Act, it needs a three-fourth majority for its proposal to go through.
?Because of the way we communicated our sincerity to the investors, we did not get any negative response. We are expecting better results, but it’s not finalised yet. We expect to seek a shareholder nod in 1-2 months,? Ayukawa said.
Added chairman RC Bhargava, ?The Gujarat structure we have envisaged is beneficial to Maruti shareholders and there are no real issues on this now. The only major issue raised by institutional investors now is why higher dividends are paid to
Suzuki Motor Corporation and on royalty.?
First announced in January this year, Maruti’s proposal was to to let its Japanese parent, Suzuki Motor Corp (SMC), invest in the mega manufacturing plant at Gujarat, and then sell the cars to Maruti for further retail. This met with stiff opposition ? about 16 major investors had written to the company and its board members saying that this limited Maruti’s growth prospects and affected its profitability because it will end up paying a higher amount to SMC’s fully-owned Gujarat subsidiary for finished cars than what it would cost to make them itself.
Maruti’s board then revised the Gujarat manufacturing agreement, changing a key element that said that cars sold to Maruti by SMC’s fully-owned Gujarat subsidiary will not have any mark-up on pricing, and Suzuki’s intial equity investment into Gujarat will be doubled to about Rs 6,000 crore.
