Maruti Suzuki’s shareholders have spoke, and approved the company’s request to enter into a contract manufacturing agreement for the production and sale of vehicles with Suzuki Motor Gujarat Private Ltd. Shareholders have also approved a lease deed for leasing land for purposes of implementing the contract manufacturing agreement.

The voting by shareholders began on November 16 and ended on December 15. The result of the ballot was made public in a notice to stock exchange just now. The proposal was passed by an 89.75 per cent majority.

Maruti currently has two facilities — in Gurgaon and in Manesar, which together manufacture 15.5 lakh cars. The third proposed plant in Gujarat will be capable of making 15 lakh cars annually. This will be set up by Japanese parent Suzuki. The plant will then sell the cars at cost price to Maruti (the Indian subsidiary) and the cars will be sold as part of the Maruti product portfolio.

In an emailed statement, Amit Tandon, Managing Director of proxy advisory firm IiAS, which had opposed the proposal, said, “While we continue to maintain our stand, we believe this transaction has been pivotal in defining shareholder engagement in India, and hopefully a bellwether of the times to come. 

“Maruti’s management has empowered shareholders watching over them. Maruti will need to come good on the promises it has made to shareholders, especially with respect to the use of its excess liquidity.”

 

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