Suzuki has finally got a nod from Maruti Suzuki shareholders to setup a wholly owned plant in Gujarat. However, the products that Suzuki manufactures at the new plant will still be marketed by Maruti Suzuki. The minority shareholders of Maruti Suzuki have voted in favour of this contract manufacturing agreement. Furthermore, Maruti will continue to pay five per cent royalty fee to Suzuki for products made in Gujarat.
Of the 65.8 million votes, 89.7 per cent were in the favour of this agreement while only 50 per cent votes were needed. The Gujarat plant will have an annual capacity of 1.5 million, but it will begin with 250,000 units a year. The plant will commence operations in early 2017. Maruti is sitting on cash reserves of Rs 15,000 crore and according to the company this be utilised in developing new products, acquiring land for dealerships and further enhancing the company’s sales and service network and infrastructure.
