Maruti Suzuki says the first line of project in Gujarat will get commissioned in early 2017. Total investment into the Gujarat plant will be to the tune of Rs 18,500 crore
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In a big boost to Maruti Suzuki , the company’s minority shareholders have approved the Gujarat plant resolution, with 89.75 percent minority shareholders voting in favour of the resolution. Just 10.25 percent minority shareholders voted against the plant proposal.
However, only 54.7 percent of public shareholders participated in Maruti postal ballot, that is out of 13.2 crore public shareholders only 7.23 crore participated.
Going ahead, Maruti Suzuki says the first line of project in Gujarat will get commissioned in early 2017. Total investment into the Gujarat plant will be to the tune of Rs 18,500 crore. Amount of equity that Suzuki can bring in will be around Rs 8,000-10,000 crore.
Maruti also says six separate lines of 2.5 lakh capacity will be installed in the Gujarat plant. A clearly exuberant RC Bhargava, who is the chairman of Maruti Suzuki, says, the company was running out of manufacturing capacity, and the Gujarat plant to that extent will be very important. He also says the Gujarat plant model is a unique transaction.
Maruti, one of the country’s largest car makers, had faced investor ire after the company announced it would set up a plant in Gujarat on behalf of its Japanese parent Suzuki. Following an uproar, the company sweetened the deal saying Suzuki would make an investment.
The company has been doing road shows over the past couple of months to create awareness on the finer details of the proposal and the benefits that will accrue in the longer run for both majority as well as minority shareholders.
Maruti also says the royalty rate of the company’s upcoming compact SUV will be less than 4 percent, with the rate being capped at 5 percent for all products. It will now also invest surplus cash, up to Rs 30000 crore, in R&D, to double the number of dealerships.
More to follow…
Maruti Suzuki stock price
On December 17, 2015, Maruti Suzuki India closed at Rs 4666.00, up Rs 47.05, or 1.02 percent. The 52-week high of the share was Rs 4789.00 and the 52-week low was Rs 3250.00.
The company’s trailing 12-month (TTM) EPS was at Rs 149.13 per share as per the quarter ended September 2015. The stock’s price-to-earnings (P/E) ratio was 31.29. The latest book value of the company is Rs 784.70 per share. At current value, the price-to-book value of the company is 5.95.