IiAS’s open letter to shareholders says that if the resolution is passed, then the shareholders of Maruti would be subservient to Suzuki’s shareholders.
Suzuki had proposed to open the manufacturing facility in Gujarat with an objective of supplying vehicle parts to its Indian subsidiary.
In its open letter, IiAS has said that implications of such a deal would extend beyond the commercial arrangements and would shift the balance in favor of the parent company, Suzuki.
The letter says that if the resolution is passed, then the shareholders of Maruti would be subservient to Suzuki’s shareholders. The letter clearly asks the shareholders to decide whether Maruti will remain a car manufacturer or become a glorified distributor.
In 2014, the Maruti had announced that Suzuki will manufacture the cars in Gujarat plant and Maruti will purchase it from them and in turn, will sell the purchased cars under their product portfolio.
As per the agreement, this manufacturing deal is expected to be for 15 years and Maruti will receive an annual rent of Rs 49.9 million through Suzuki’s wholly-owned subsidiary, SMGPL.
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