The Hindu Business Line : Suzuki's new plan hits Maruti stock prices

THE country's largest carmaker Maruti Udyog Ltd's (MUL) stock prices slipped on Monday, triggered ostensibly by parent company Suzuki Motor Corporation's announcement to set up a new car assembly unit in India through a separate joint venture.

The company's stock price went down 3.55 per cent even as the Sensex was up by 27.41 points.

An analyst at a local brokerage attributed the fall to fears that further investments in the country, including the launch of new models, may be channelled through the new Suzuki-Maruti joint venture company, to be tentatively called `Suzuki Maruti India.'

"The overall direction seems negative.

The question that arises is why Suzuki would look to channel investments through a separate company when it already has a listed investment vehicle," he said.

According to Mr S. Ramnath, auto analyst at Enam Securities, there was confusion in the market over Suzuki's statement.

"It makes no sense to set up a new company altogether. However, it is too early to say how this would impact the stock.

"Investors are taking a wait-and-watch policy for now to see if any clarifications are provided in the coming days," he said.

Mr Ashish Jagnani, auto analyst at HDFC Securities, meanwhile, termed the announcement outright "negative" as Maruti does seem to figure very prominently in the company's outlook for the Indian market.

While the shareholding of the new company, Suzuki Maruti India, is not yet known, analysts are of the view that Maruti may have a minority shareholding in the company.