Maruti bags shareholder approval for Gujarat plant

Maruti Suzuki India has announced that a majority of its minority shareholders have voted in favour of the contract manufacturing agreement (with Suzuki Motor Corp) for the contract manufacturing agreement for production and sale of vehicles from the new Gujarat plant (which will commence production in early 2017). Also approved is the lease deed for leasing land for purposes of implementing the contract manufacturing agreement.

Voting by minority shareholders began on November 16 and ended on December 15. The result of the voting, according to the scrutineer, is that 89.75% have ruled in favour of the resolution and 10.25% against.

RC Bhargava, chairman of Maruti Suzuki India, said: “This is beneficial for Maruti because we do not have to now invest in the Gujarat plant. Maruti can use the money instead for strengthening its R&D and on extending the marketing and distribution network.”

The Gujarat plant is set to get commissioned in early 2017 and will see a total investment of around Rs 18,500 crore with Suzuki bringing in equity of around Rs 8,000-Rs 10,000 crore. With Maruti Suzuki, which currently commands a near 53% share of the passenger car market, running out of production capacity, the upcoming Gujarat plant will give it new momentum.

Given the ongoing diesel dilemma in the Delhi and NCR region, Maruti Suzuki India, with its stable of petrol-engined cars, is well placed to capitalise on future demand.