Report – Maruti Suzuki to put the Gujarat plant up for a vote

Karthik

Karthik H,

A bit of a car freak and a bike nut, and a fan of trucks and technology too. Expect sharp stories that focus on those four fronts. As always, stay tuned to IndianAutosBlog.com for quick and unassuming updates from across the world.

Maruti Suzuki would put into vote its decision to transfer its upcoming manufacturing facility in Gujarat to parent company Suzuki, even though it is not required by law to do so. This was a main point of contention from Maruti’s minority shareholders.

Maruti Ciaz Concept front
Maruti Suzuki will put to vote, even though it is legally not required to, its decision to transfer its Gujarat plant over to Suzuki.

A report on The Economic Times says that the parent company has also agreed to relook some of the clauses of the agreement, including the one that says Maruti will buy the cars manufactured by Suzuki at a premium.

Maruti Suzuki in January had announced that it would transfer its upcoming plant in Gujarat to its parent company Suzuki Motor Corporation on the pretext that it would help save some funds and that it would help Suzuki reduce its own liquidity.

Suzuki Celerio AMT front three quarters at Geneva Motor Show
If voted against, Maruti will take over the upcoming plant at book value.

The Life Insurance Corporation (LIC), that owns around 7 percent stake in Maruti Suzuki, had raised concern and asked for an explanation, apart from writing to the Securities and Exchanges Board of India (SEBI) regarding possible actions.

In case, after the vote, the company decides to terminate the contract manufacturing contract, the Board of Directors at Maruti Suzuki have decided that the plant would be transferred back to Maruti Suzuki at book value, ensuring that the stakes remain the same.

[Source – The Economic Times]

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