Maruti Gujarat Plant Resolution Estimated to Go Through
It is believed that the company management has been able to successfully convince shareholders that the deal will not have any negative impact on Maruti’s financials. It also assured the minority shareholders that their interests will be taken care of.
Maruti is one of the country’s largest car makers. Company faced investor indignation after the company announced it would set up a plant in Gujarat on behalf of its Japanese parent Suzuki.
maruti Suzuki India is probably to get minority shareholders’ approval for its highly disputed Gujarat manufacturing unit proposal, CNBC TV-18 reported. The most mutual funds are believed to have voted in favour of the deal or stayed neutral. It should be considered that a few have objected to the proposal.
Following a chaos, the company sweetened the deal saying Suzuki would make an investment. The company has been doing road shows over the past couple of months to build awareness on the finer details of the proposal and the benefits that will mount up in the longer run for both majority as well as minority shareholders.
The resolution, put forward by Maruti, seeks permission from minority shareholders to permit Suzuki to set up its own car plant in Gujarat. Domestic MFs have opposed it as they felt it will hurt Maruti’s interests and prospects of minority shareholders.
LIC and Domestic mutual funds together hold 14.43% in Maruti Suzuki. The position of Life Insurance Corporation is not clear but the combined opposition of all mutual funds will make it difficult for Suzuki and Maruti to make safe consent.
Maruti Suzuki Chairman RC Bhargava said “During our meetings with them, almost all the shareholders were pretty much satisfied that the proposal would substantially benefit them going forward and they all seem to be quite convinced that this proposal will be in their interest,”.
By FY2020, the plant is expected to help Maruti achieve a sales target of 2 million units.