Maruti Suzuki shareholders' voting on Gujarat plan to happen soon

In the wake of regulatory norms in place, Maruti Suzuki India is hoping that the delayed minority shareholders' voting would happen soon.

The crucial voting could allow parent Suzuki to own and invest in the Gujarat plant. The minority shareholder voting was delayed because the country’s largest carmaker found that the government had moved some amendments in 2013 Companies Act.

“We thought it would be imprudent of us to vote on under an Act which is under an amendment. So, we postponed that," Maruti Suzuki India Chairman RC Bhargava said, addressing shareholders at the company's annual general meeting in New Delhi.

As the Act was under amendment, other people who had to make changes, including market regulator Securities and Exchange Board of India (SEBI) and the Gujarat government, held back their actions, he said. SEBI has now taken note of change in the law and amended the listing requirements.

He said: "We expect that the Gujarat government's action would also be completed possibly in the next one week or ten days. After that we will come to all of you to vote in the support of the project."

The company had initially planned to set up a third plant in Gujarat to meet growing demand. However, in January last year, parent Suzuki Motor Corporation announced it would invest $488 million to build the Gujarat plant.

Opposing the move, Maruti's institutional investors approached SEBI, seeking its intervention to safeguard the interests of minority shareholders. Private sector mutual funds and insurance companies, which own almost 7% of the company, led the opposition.

Later, Maruti decided to seek the approval of minority shareholders after tweaking some of the earlier proposals for the Gujarat plant, which SMC had decided to take over.

Highlighting the importance of the Gujarat plant in the company's scheme of things, Bhargava said: "This year if we grow in double digits our capacity utilisation will become almost 100%. We will be producing over 1.4 million vehicles during this fiscal."

The Gurgaon and Manesar plants put together (1.5 million units annually) don't have much more capacity left after that, he added.

"Certainly in 2016-17 we hope that we will somehow manage. In 2017-18 we will need the Gujarat plant. Work is going on the plant at full swing and we will be on schedule to commission the plant," he said.

The Gujarat plant is envisaged to have a total installed capacity of 7.5 lakh units annually. It is expected to be operational by May 2017.

(Image: Indiatimes)