We've been hearing about the funding obstacles that Maruti Suzuki is facing in setting up its new facility in Gujarat. But now according to a report from Wall Street Journal, the auto major will go ahead with the same plan to build a new factory in Gujarat, despite opposition from large shareholders of the company.
R.C Bhargava, Chairman Maruti said, “The role of shareholders is not in the management of a company,” and If “we do something which is illegal or in some way oppressive to minority shareholders, then they can go to court,” he added.
Suzuki Corp. Japan, the major stake holder in company with 56.2 percent shares, will fully own this proposed Gujarat plant and will use that to supply passenger vehicles and auto parts to MSI.
Last month, Barclays Capital issued a research note, notifying the Gujarat plant as the manufacturers' "Significant Mis-step." As buying vehicle parts from Suzuki will increase Maruti’s costs and could potentially hurt its profits. In addition, seven fund companies that own Maruti shares, have said that if the plan is implemented, Maruti will go from being a car manufacturer to a car trader.