Swaraj Mazda is now Swaraj Trucks and Buses Ltd

Manufacturing company Swaraj Mazda would now be called Swaraj Trucks and Buses Ltd. The name change is just a part of an overhaul...

Manufacturing company Swaraj Mazda would now be called Swaraj Trucks and Buses Ltd. The name change is just a part of an overhaul in the company which may result in widespread changes in the company’s stake holding pattern. Swaraj and Mazda drifted away in 2004 as the latter wanted to concentrate on passenger cars and the change in nomenclature has been on the cards for a long time.

They wanted to focus on passenger car. But they gave us an option to continue using their name. Now we have applied to the company board for change in the Name clause,” said Yash Mahajan managing director Swaraj Mazda Ltd.

In the light of the events in the past few days, one could expect a big overhaul in the company. For a start, Mahindra and Mahindra which owns around 14 per cent of stake (via PTL) in the company aren’t too impressed with Swaraj Mazda’s partnership with Japanese Isuzu Motors for manufacturing luxury buses. As the new name indicates, introduction of trucks and other heavy vehicles is also on the cards.

This is in direct competition with Mahindra’s own joint venture with International Trucks and Engine Corporation. Swaraj has set up two new plants near Ropar (one each for manufacture of Isuzu vehicles and fabrication of bus bodies) over an area of 120 acres with a combined investment of Rs 300 crore. It is expected that around Rs 120 crore of this amount will be raised through a Rights issue.

M&M have opposed this but Mahajan is categorical that the issue would be released “within next four to five months.”

This means, that the forthcoming AGM at the end of this end may see plenty of action. But the company remains steadfast, “I can’t comment on behalf of M&M, but we have to see our own growth. We cannot afford to neglect the heavy vehicles sector where the growth has been phenomenal,” said Mahajan.

In terms of volumes, commercial vehicle industry in India registered sales of 5.18 lakh units last year. This represents an increase of around 160 per cent in the last five years. The sales in 2002-03 were 2.03 lakh.

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This is especially important for Sumitomo Corporation, the Japan based equity firm which currently is the largest stakeholder in the company with a 41 per cent share.

The rights issue could increase their share further and bring them closer to clear majority of 51 per cent, another fact which is being resisted by M&M. Actis, which owns 18 per cent of the stake isn’t too happy with this issue either.

At the forthcoming general meeting, Mahajan will have to convince the remaining 27 per cent shareholders (public and financial institutions) that partnership with Isuzu holds promise of greater financial returns and growth for the company.