Shareholders express concerns for new Suzuki plant in Gujarat
Minority shareholders who include DSP Blackrock, HDFC MF, Prudential ICICI, Axis Mutual and UTI have all expressed their concern where the new Suzuki plant in Gujarat is concerned. These doubts have been alleviated by Maruti Suzuki India Limited who affirm that there will be complete clarity and transparency in the deal so as not to damage the trust of shareholders.
This new Suzuki plant is meant to be a separate 100% subsidiary for Gujarat and while there is some opposition to its setup, there is also certain amount of apprehension that the move is not fair or in the interest of Maruti Suzuki’s Indian arm which possesses a 56% stake in the company.
The minority shareholders express doubts where royalty payments by MSIL to their Japanese counterparts are concerned while they are also concerned about all manufacturing shifting to the 100% subsidiary, reveals ET.
Besides these concerns, MSIL has affirmed that 70% of production is done by vendors while only final assembly is done at the plants. The company aspires to concentrate more on research, development, design and marketing. The company has also stated that there is no cause for concern by investors where profits are concerned, as it is not possible for profits to be diverted when the 100% subsidiary will be selling cars to Maruti Suzuki at cost prices itself.