Maruti Suzuki Receives Approval For Gujarat Plant Agreement

Modified On Dec 28, 2015 12:13 PM By Nabeel

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Maruti Suzuki India’s 90 percent (approx) minority shareholders have voted in favour of the Gujarat Plant Agreement.

Maruti conducted a voting to let Suzuki invest and own the upcoming plant in Gujarat. This voting was done by Maruti’s minority shareholders from November 16 to December 15. Results for the same were announced yesterday and the minority shareholders, who are in a majority, have voted in favour of the agreement. This will let Suzuki start production and sales from the Gujarat plant which will most likely start from 2017. Also, this approves the lease for land to let Suzuki Motor Corp. implement the manufacturing agreement.

Originally, the Gujarat plant was to be owned by Maruti Suzuki but soon Suzuki Motor Corporation’s announced that they would be investing $488 million for a new facility. So, under pressure from institutional investors, Maruti decided to seek approval from its minority shareholders'. The results of the elections showed that approximately 90 percent of the shareholders were in favour and approximately 10 were 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 total investment in the Gujarat plant accounts for approximately Rs 18,500 crore with Suzuki’s contribution being around Rs 8,000-Rs 10,000 crore. As of now, Maruti has two functional plants in India at Gurgaon and Manesar which have a combined annual production capacity of 15.5 lac units. The new facility alone will have an annual production capacity of around 15 lac units. The plant is to be set up by Suzuki and then, it will sell these cars at cost price to Maruti Suzuki which will be introduced in the market as Maruti Suzuki’s products.

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