BackMaruti to start investor roadshow on Gujarat plant this month
Management to meet institutional investors from the US, UK, Asia and India
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New Delhi: The country’s largest car maker Maruti Suzuki India Ltd will kick off a roadshow this month to explain to global and domestic investors its move to let parent Suzuki Motor Corp. own a proposed plant in Gujarat. According to people familiar with the matters, the company’s management led by chairman R.C. Bhargava, along with managing director and chief executive officer (CEO) Kenichi Ayukawa and chief financial officer Ajay Seth will meet institutional investors from the US, UK, Asia and India.
“It is a two-month long programme starting from the middle of June to middle of August. The meetings with the institutional investors will take place during this period," a person familiar with the matter said. A Maruti Suzuki India spokesperson did not comment. “Once the roadshow is over, the process for voting by shareholders will start," one of the persons said. In March, 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 parent Suzuki Motor Corp had decided to take over. In January, Suzuki Motor Corp announced it would invest $488 million to build the Gujarat plant, which Maruti had earlier proposed to set up. Opposing the move, Maruti’s institutional investors approached the 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% of the company, led the opposition. On Wednesday, Maruti officials, including Bhargava and Ayukawa, met Gujarat chief minister Anandiben Patel to discuss issues arising out of the changed plant ownership structure. Revising the earlier proposals, Maruti stated that investments in the Gujarat plant would be funded by Suzuki Motor Corp via a wholly owned subsidiary through depreciation and equity brought in by the parent without a ‘mark-up’ on cost of production, as was proposed before.
Also, in case the contract manufacturing agreement between them is terminated, the facilities of the Gujarat subsidiary would be transferred to Maruti at book value and not at fair value, as was envisaged earlier. The company also stated that the impact of any direct or indirect taxes on account of the contract manufacturing agreement would be assessed before finalising the accord. Suzuki Motor Corp had proposed to invest in the plant through a wholly owned unit, Suzuki Motor Gujarat. The plant, which would be SMC’s first fully owned factory in India, is being planned with an initial capacity of 100,000 units a year, all of which will be supplied to Maruti.
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