New Delhi: Maruti Suzuki India Thursday announced receipt of approval from its minority shareholders to let its Japanese parent Suzuki invest and own upcoming plant in Gujarat, where a total investment of Rs 18,500 crore has been envisaged in the long term.
“Out of the total votes cast by the minority shareholders, 89.75 percent voted in favour while 10.25 percent voted against the resolution, ” Maruti Suzuki India (MSI) Chairman R C Bhargava told reporters here.
As per the new Companies Act, 2013, the company needed over 50 percent of the minority votes cast to be in its favour.
A total of 6,58,33,152 votes were cast during the month long voting. While 5,90,84,468 votes were polled in favour of the resolution, 67,48,684 votes were against the resolution.
MSI had sought nod from minority shareholders to approve a contract manufacturing agreement for production and sale of vehicles between MSI and Suzuki and lease deed for leasing land for purposes of implementing the contract manufacturing agreement.
“The resolution has been passed and passed quite comfortably,” Bhargava said.
Significantly, out of the total minority shareholders who hold around 13 crore shares in the company, 50 percent of them abstained from the voting, including LIC which has 6 percent stake in the company.
With the approval in place, Bhargava said the company will move ahead to transfer assets at the Gujarat plant, where it has already invested Rs 350 crore, to Suzuki’s wholly-owned arm Suzuki Motor Gujarat Pvt Ltd.
Elaborating on the overall plans of the Gujarat project, he said: “The total investment there will be Rs 18,500 crore for an overall capacity of 15 lakh units. There will be six lines, each with a capacity of producing 2.5 lakh units to be set up one after another.”
He said the overall investment at the project will be a mix of Suzuki’s equity, which could range between Rs 8,000 crore to Rs 10,000 crore and also from the depreciation realised from the working lines at the plant.
The first line will be operational in the early part of 2017, Bhargava said, adding the setting up of the rest of the lines would depend on market conditions.
“We need capacity. We are running out of capacity at Haryana as we will be utilising 100 percent this year. We have to go for improvisation for the next year (to get more capacity),” 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 USD 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.
The change was, however, opposed by institutional investors forcing the company to seek minority shareholders’ approval on the matter. They had even approached market regulator Sebi seeking its intervention to safeguard the interests of minority shareholders.