Maruti Suzuki shares drop on investor concern image

In a rather rare case of shareholder activism in India, investors in Maruti Suzuki Ltd protested the plans laid out by the Japanese parent, sending on a downward spiral the company’s shares.

Maruti Suzuki Ltd is 56% owned by Suzuki Motor Co and the company’s shares have been down ever since the Japanese announced plans to make an investment in a plant on their own – and the latest bad news coming from the investors themselves has sent the stock down a further 4.2 %.

“The decision of the MSIL board (Maruti Suzuki) is ill-conceived in its entirety and results in outsourcing of the core manufacturing activity that is fundamental and critical for MSIL,” the letter said.” This clearly is not in the best interest of MSIL and its shareholders and is in fact significantly detrimental to them.”

The letter was sent to the company by a group of 16 big fund managers and refers to January’s announcement made by Suzuki, which said it plans to use $488 million to build a new plant in India, which would then sell the cars to the Indian subsidiary – switching off the earlier investment that would have seen Maruti Suzuki build the facility.

Via Reuters