The Rs.3,000 crore plant in Gujarat has been a cause of concern for the India's largest car-maker Maruti Suzuki. Marker regulator SEBI has been approached by company's institutional investors to protect the shareholders interest that have been affected due to transfer of Gujarat plant to the Japanese partner.
Some of the prominent institutional investors like ICICI Prudential Mutual Funds, Reliance Mutual Fund, Reliance Life Insurance, SBI Life Insurance have raised concerns that this deal would result in Maruti being reduced to a shell company. SEBI has not mentioned an exact date as to when the letter would be sent, but sources have mentioned that it may be released soon. Currently the Japanese partner Suzuki holds a 56% stake in the joint venture. Post handing over the project, it is anticipated that production cost may climb uphill, which could have been avoided if Maruti takes an initiative to produce the cars themselves.
Speaking more about the agenda of board meeting for the Gujarat project, R.C. Bhargava, Maruti Suzuki chairman, said, “The meeting, the date for which was fixed months ago, is being held to discuss next year’s business plans.” As per sources, representatives from 16 institutions have addressed a memorandum to the SEBI Chairman, U K Sinha. Institutional investors have also sought a clarification from Maruti Suzuki India board about the deal.
As per sources, a new law may be imposed sometime later this year which will require a public approval by the shareholders, only after which, the company may undertake similar transactions. For now, SEBI has not reverted to institutional investors. Further details on the issue may be revealed post an action initiated by SEBI in this regard.
