18 December 2015 07:21:08 IST

Maruti: voting sails thru as many institutions abstain

Proxy advisory firm IiAS sticks to its ‘against’ the resolution stand

While the related-party transaction that Maruti Suzuki asked its shareholders to approve sailed through with a near-90 per cent majority, many institutional investors abstained from voting altogether. Against the 13-odd crore shares held by minority shareholders, only 6.58 crore votes were cast. Which means, effectively, many investors, including informed institutional investors, preferred to stay out of the voting process.

Agreed to abstain An industry source added that many institutional investors had spoken to Maruti Suzuki ahead of the vote, agreeing to abstain since they didn’t find the resolution detrimental to their economic interest in the company.

Maruti Suzuki currently has two facilities — in Gurgaon and Manesar, which together manufacture 15.5 lakh cars. The third proposed plant in Gujarat will be capable of making 15 lakh cars annually. The proposal was to let the plant be set up by Japanese parent Suzuki, instead of the Indian subsidiary Maruti Suzuki. The plant will then sell the cars at cost price to Maruti Suzuki and the cars will be sold as part of the Maruti Suzuki product portfolio.

The voting by shareholders began on November 16 and ended on December 15. The result of the ballot was made public in a notice to stock exchanges on Thursday, according to which the proposal was passed by an 89.75 per cent majority.

According to sources, several informed investors — including insurance giant LIC — preferred not to cast their votes. Some mutual funds are also rumoured to have abstained or even voted against the motion, though this could not be confirmed. LIC owns 5.37 per cent of Maruti Suzuki while Europacific Growth Fund and ICICI Prudential Life Insurance own 1.13 per cent and 1.03 per cent respectively, stock exchange data as of September 2015 show.

Proxy advisory Institutional Investor Advisory Services (IiAS), which had recommended voting against the resolution, said it maintains its stand.

Pivotal event In an emailed statement, Amit Tandon, Managing Director, said, “While we continue to maintain our stand, we believe this transaction has been pivotal in defining shareholder engagement in India, and hopefully a bellwether of the times to come.

“Maruti’s management has empowered shareholders watching over them. Maruti will need to come good on the promises it has made to shareholders, especially with respect to the use of its excess liquidity.”