Maruti Suzuki India, which has come under pressure from institutional investors over the proposed takeover of its Gujarat plant by parent Suzuki Motor Corp (SMC), has tweaked its proposals related to the plant and has decided to seek the approval of minority shareholders for the same.\nThe decision was taken at a meeting of the company\u2019s board held here.
\nThe meeting was also attended by SMC Chairman Osamu Suzuki.
\nThe board also approved a capex of Rs. 4,000 crore for 2014-15 fiscal, to be used mainly for introduction of new models, marketing, infrastructure and R&D, a company spokesperson said.
\nThe company\u2019s capex for the current fiscal ending March 31, 2014, was about Rs. 3,000 crore.
\nOn the Gujarat plant, the company said although investments at the plant would be funded by SMC via a wholly-owned subsidiary, they would now be done through depreciation and the equity brought in by parent without \u2018mark-up\u2019 on cost of production.
\nAlso, in case of termination of the contract manufacturing agreement between them, the facilities of the Gujarat subsidiary would be transfered to Maruti Suzuki India Ltd (MSIL) at book value and not at fair value to be determined by independent valuation as was envisaged before.
\nFurther, MSIL Chairman R C Bhargava said, \u201cWe are not required by law to seek minority shareholders\u2019 approval but the board decided to do so as a measure of corporate governance.\u201d
\nExpressing confidence that the proposal would be approved by the minority shareholders, he said, \u201cWe are hopeful. It\u2019s such a good deal that there is no reason why minority shareholders should oppose it. \u201d
\nThe company also said that the Gujarat arm would function on the basis that it would neither generate surpluses nor make losses.
\nIn January, SMC announced that it would invest $488 million (about Rs. 3,050 crore) in the Gujarat plant, which was originally proposed to be set up by subsidiary MSIL.
\nSMC proposed to invest in the plant through a wholly-owned unit, Suzuki Motor Gujarat (SMGPL). The plant, which will be the first fully-owned factory of SMC in India, will have an initial capacity of 1,00,000 units a year, all of which will be supplied to MSIL.
\nOpposing the move, MSIL\u2019s institutional investors approached capital market regulator SEBI , seeking its intervention to safeguard minority shareholders\u2019 interests. Private sector mutual funds and insurance companies, which own almost 7 per cent of the company, led the opposition.<\/p>\n","protected":false},"excerpt":{"rendered":"