Monday, Apr 27, 2015

Maruti Suzuki to hold global roadshow on Gujarat plant

A team led by chairman RC Bhargava and CEO Kenichi Ayukawa along with other officials would meet domestic and global investors soon. A team led by chairman RC Bhargava and CEO Kenichi Ayukawa along with other officials would meet domestic and global investors soon.
By: ENS Economic Bureau | New Delhi | Updated: June 6, 2014 9:09 am

Maruti Suzuki India Ltd,  will kick off a roadshow this month to reach out to domestic and global investors and explain the company’s decision to allow its Japanese parent Suzuki Motor Corporation to start a manufacturing plant in Gujarat on its own.

“We plan to meet domestic as well as international investors to explain the details about the proposed new plant in Gujarat. The details of our meeting will be released in a day’s time,” said a senior Maruti Suzuki official.

The company’s management team will be led by chairman RC Bhargava, along with managing director and CEO Kenichi Ayukawa and chief financial officer Ajay Seth will meet institutional investors from the US, UK, the Asian region and India.

In January, Suzuki Motor Corporation announced it would invest $488 million to build the Gujarat plant, which Maruti had earlier proposed to set up.

Maruti’s institutional investors opposed the move and approached 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.
The company, in March, decided to seek the approval of minority shareholders after tweaking some of the earlier proposals for the Gujarat plant, which parent Suzuki Motor Corporation had decided to take over.

Revising the earlier proposals, Maruti stated that investments in the Gujarat plant would be funded by Suzuki 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. SMC 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 1,00,000 units a year, all of which will be supplied to Maruti.

First Published on: June 6, 20141:27 am
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