New Delhi: With regulatory norms in place, country’s largest carmaker Maruti Suzuki India expects the delayed minority shareholders’ voting on allowing parent Suzuki to own and invest in the Gujarat plant to happen soon.
“The minority shareholder voting on the Gujarat plant which was delayed because we first found that the government had moved some amendments in 2013 Companies Act… We thought it would be imprudent of us to vote on under an Act which is under an amendment. So, we postponed that,” Maruti Suzuki India Chairman RC Bhargava said while addressing shareholders at the company’s annual general meeting here.
As the Act was under amendment, other people who had to make changes, including Sebi and the Gujarat government, held back their actions, he said, adding that Sebi has now taken note of change in the law and amended the listing requirements.
“So one part of that is done. We expect that the Gujarat government’s action would also be completed possibly in the next one week or ten days.
After that we will come to all of you to vote in the support of the project,” Bhargava said.
MSI had initially planned to set up a new plant in Gujarat, its third, to meet growing demand. However, In January 2014, parent Suzuki Motor Corporation announced it would invest $488 million to build the Gujarat plant.
Opposing the move, Maruti’s institutional investors approached capital markets regulator Sebi, seeking its intervention to safeguard the interests of minority shareholders. Private sector mutual funds and insurance companies, which own almost 7% of the company, led the opposition.
Later, under pressure from institutional investors, Maruti decided to seek the approval of minority shareholders after tweaking some of the earlier proposals for the Gujarat plant, which SMC had decided to take over.
Highlighting the importance of the Gujarat plant in the company’s scheme of things, Bhargava said: “This year if we grow in double digits our capacity utilisation will become almost 100 per cent. We will be producing over 1.4 million vehicles during this fiscal.”
The Gurgaon and Manesar plants put together (1.5 million units annually) don’t have much more capacity left after that, he added.
“Certainly in 2016-17 we hope that we will somehow manage. In 2017-18 we will need the Gujarat plant. Work is going on the plant at full swing and we will be on schedule to commission the plant,” he said.
The Gujarat plant is envisaged to have a total installed capacity of 7.5 lakh units annually. It is expected to be operational by May 2017.
On the current market situation, Bhargava said: “Competition in India is becoming stronger and stronger. All the global majors are looking at the Indian market. They are seeing good growth, which is possible here”.