Ahmedabad: Top officials of the country's largest carmaker Maruti Suzuki India met new Gujarat Chief Minister Anandiben Patel and reiterated the Suzuki group's commitment to invest in a new plant in the state. Maruti Suzuki India Chairman R C Bhargava and Managing Director & CEO Kenichi Ayukawa met Patel, a company official said.
The officials briefed the chief minister about developments regarding the plant to be set up near Mehsana. In March, under pressure from institutional investors, Maruti Suzuki decided to seek the approval of minority shareholders after tweaking some of the earlier proposals for the controversial Gujarat plant, which parent Suzuki Motor Corp (SMC) had decided to take over.
Maruti had stated that investments in the Gujarat plant would be funded by SMC via a wholly owned subsidiary through depreciation and equity brought in by the parent without a 'mark-up' on cost of production, as was proposed before. Also, in case of termination of the contract manufacturing agreement between them, the facilities of the Gujarat subsidiary would be transferred to Maruti at book value and not at fair value as was envisaged before.
The company had also stated that the impact of any direct or indirect taxes on account of the contract manufacturing agreement would be assessed before finalising the accord. In January, SMC announced it would invest USD 488 million to build the Gujarat plant, which Maruti had earlier proposed to set up. SMC proposed to invest in the plant through a wholly owned unit Suzuki Motor Gujarat (SMGPL).
The plant, which would be the first fully owned factory of SMC in India, is being planned with an initial capacity of 1,00,000 units a year, all of which will be supplied to Maruti. Opposing the move, Maruti's institutional investors approached Sebi, seeking its intervention to safeguard the interests of minority shareholders. Private sector mutual funds and insurance companies, which own almost 7 per cent of the company, led the opposition.
