New Delhi: Maruti Suzuki India expects to obtain minority shareholders approval on its plans to let parent Suzuki Motor Corporation own and invest in its upcoming plant in Gujarat in the next six months. The company, which had delayed seeking the approval for the same, is awaiting the amendments to the Companies Act 2013 that has already been cleared by the Lok Sabha to go through the Rajya Sabha during the upcoming Budget session of Parliament next month.
"We are awaiting the changes in the Companies Act. Once that is done, we will get the voting done...I am sure that'll be done in the next six months," Maruti Suzuki India Chief Financial Officer Ajay Seth told analysts.
In the meantime, the company has gone ahead with the construction of the plant on its own and expects it to be commissioned by 2017. In December, the company had stated that it was not going ahead with the proposed voting due to the amendments in the Act. As per the current regulatory framework under the Companies Act 2013, a proposal like Maruti's need approval from 75 per cent of the minority shareholders for a special resolution in this regard.
However, following the latest changes approved by the Cabinet, such proposals can be approved through an ordinary resolution requiring a simple majority of over 50 per cent. Once the changes come into effect, after Parliament's nod, it would become easier for companies to get shareholder approvals for related party transactions. Maruti's proposed plant transfer to Suzuki falls under this category of transactions.
Under pressure from institutional investors, Maruti had decided last year to seek minority shareholders' nod after tweaking some of the earlier proposals with regard to transfer of the Gujarat plant to Suzuki.
Last January, Suzuki Motor Corporation (SMC) announced it would invest $488 million to build Gujarat plant, which Maruti had earlier proposed to set up. The plant, which would be SMC's first fully owned factory in India, is being planned with an initial capacity of 250,000 units a year, all of which will be supplied to Maruti.
Opposing the move, Maruti's institutional investors approached capital markets regulator Securities and Exchange Board of India (Sebi), seeking its intervention to safeguard the interests of minority shareholders. Private sector mutual funds and insurance companies, which own almost 7 per cent of the company, led the opposition.
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