Suzuki’s solo investment for the Gujarat plant hasn’t gone well with its stake holders and the Japanese firm is facing huge opposition from its minority stake holders of the Indian subsidiary. Suzuki holds a major share of 56 percent in its Indian subsidiary while the minority share holders are Axis MF, DSP Blackrock, HDFC MF, ICICI Prudential, Reliance MF, SBI MF, UTI and LIC. These firms have raised serious concerns over the Japanese automaker’s strategy as the new development is not in the interest of its Indian subsidiary as well as its stake holders.
Maruti Suzuki has officially announced last month that its Japanese partner, Suzuki Motor Corporation would be the sole investor for the manufacturing facility which is going to be built with an investment of $485 million in Gujarat. The new manufacturing facility will be run by the wholly-owned company, Suzuki Gujarat Private Ltd. which will be the subsidiary of the Japanese brand. This new facility which will be built by Suzuki is aimed to manufacture cars and other vehicles on contract bases for its Indian subsidiary as well as to cater to the needs of global markets.
The new production unit is expected to start its operations in the financial year of 2016-17. According to the plan, Maruti Suzuki has to acquire the land for production related work which will be owned by Suzuki and MSIL has already acquired about 640 acres of land in Becharaji and 550 acres in Vithalapur for further expansion of manufacturing facilities. The minority stake holders are raising severe concerns in this issue as the direct investment might cause harm to them and might allow Suzuki to divert funds to their home market.