A new call may need to be taken by Suzuki Motor Corporation (SMC), which now might have to put in double the equity amount it had earlier planned to put into its proposed 100 per cent subsidiary for the Gujarat Maruti factory.
Maruti is facing opposition from shareholders because of its plans to give the Gujarat plan on contract manufacturing to Suzuki, and hence it is making some changes. Chairman R C Bhargava, however, remains unfazed. “The structure remains unchanged. The only difference is, under the earlier plan, Suzuki was to invest Rs 3,000 crore as equity in the new plant. But now, it might have to invest close to Rs 6,000 crore, depending on growth, timing and the amount accruing from depreciation, and when the plant reaches production of 1.5 million cars,” he says.
Bhargava says this will bring in more money for Maruti’s share holders, by earning more profit. "Yes, it will increase the quantum of profit for Maruti Suzuki." Bhargava makes the position of Maruti clear: "Our main stand - that Suzuki will set up a 100 per cent subsidiary - remains unchanged, as does the commitment to contract manufacturing by them.” The new plant will ensure that vehicles going down to the South and for exports are fed properly