Maruti Suzuki confident on receiving shareholders approval for investment in Gujarat plant

Monday 01 September 2014, 09:00 AM by

It has been a while since Maruti Suzuki has been considering investing a major sum in the Gujarat facility. To go ahead with the decision, Maruti Suzuki India Limited seems to be confident on receiving minority shareholders approval on the same and has given a green signal for its paraent company Suzuki Motor Corp in invest in the Gujarat facility. Moreover, Maruti Suzuki seems to be so confident that they have not worked on any backup plan of action.

R C Bhargava, Maruti Suzuki India Chairman said, “We are thinking of getting voting (done) in October... There is no plan B, I can't see why it should not happen.” The company seems to be positive on receiving approvals from minority shareholders as their recent initiatives to explain overseas and domestic investors have went on well. The investors seemed to have well understood the company’s position and ideas.

Maruti Suzuki confident on receiving shareholders approval for investment in Gujarat plant | CarTrade.com
Maruti Suzuki confident on receiving shareholders approval for investment in Gujarat plant

Speaking more on the situation Bhargava added, “By bringing in that money (Suzuki's) here we get a very low cost money instead of putting our money. So I get the benefit of low cost money and we get a benefit of having more liquidity, money that I can use without much concern about straining my balance sheet. Essentially, what has driven the decision to let Suzuki to finance the Gujarat plant is really that Suzuki now understands that their future as a global car maker is going to be increasingly dependent on India. Today we (Maruti) contribute something like 40% of the total sales volume of Suzuki and about 25% of the profit last year.”

Speaking about the Gujarat project, he stated, “In all respects, the Gujarat plant will function as a Maruti plant... we control when the production lines are established, when we need more capacity, we will determine what needs to be produced and how much is to be produced. We will control the supply chain. We will control the sale. So in what way it is different from as if I have put the plant? And that's what we have been telling the investors.”

Source: PTI

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