Maruti investors eye legal recourse May Approach CLB To Oppose Handover Of Gujarat Plant To Suzuki

New Delhi: Maruti Suzuki’s angry investors are looking at alegal challenge to the company’s plan to hand over the proposed Gujarat plant to parent Suzuki and may approach the Company Law Board (CLB) soon, a section of the institutional investors said.      The investors are not satisfied with the response of the company management to their queries. “We are studying how many of our schemes own Maruti shares and after completing this exercise, we will look at the option of approaching the CLB,” said a senior executive at one of the fund houses that have questioned the decision.      The Companies Act allows three scenarios — either those holding 10% of the issued capital (by value), or onetenth of the shareholders, or at least 100 shareholders — to challenge a decision in CLB.      Corporate lawyer Saurabh Kalia, partner at Sastra Legal, said the investors can challenge the deal under Section 397-398 of the Companies Act before the CLB on grounds of oppression and mismanagement. “This option is available if they feel that the affairs of the company are managed in a way that is prejudicial to public interest or are oppressive to members.”      The fund houses are also waiting to get a clear picture about the steps to be taken by LIC, which holds nearly 7% stake in Maruti Suzuki. Top sources in LIC have told TOI that they are studying the development and may soon take a stand on the matter. In addition, they are awaiting the outcome of the board meeting on Saturday as well as market regulator Sebi’s response.      “So far, the small investors have not protested the move. So,  we are seeing if we can take up achallenge on behalf of our investors who are retail investors,” said a fund manager.      UK Chaudhury, a senior advocate specializing in corporate law, said either the fund houses will have to cobble together 10% shareholding or will have to get the consent of at least 100 investors, who own shares through their schemes. In addition, the executive at a fund house said the issue needs to be cleared by the boards of the asset management companies as well as the trustees.      While questioning the role of independent directors, who have also raised the alarm, fund managers said that the Maruti board did not maintain the highest levels of corporate governance. A fund manager complained that the company has not responded to six of the seven questions and turned down suggestions.      The legal battle may not be a long-drawn one, Kalia said, but added that it will have an effect on the goodwill and reputation of the management. Union adds to pressure on Maruti’s plan Pankaj Doval TNN  New Delhi: Maruti’s mercurial labour union is demanding that workers at the proposed Gujarat factory be chosen from the temporary workforce in Haryana, instead of local recruits from the state. The demand, that has been conveyed to the company’s MD and CEO Kenichi Ayukawa, is expected to put further pressure on the company over the new plant.      “We have around 4,000 temporary staff and these should be the first ones to get an opportunity at the Gujarat plant,” said Kuldeep Jhangu, general secretary of the Maruti Udyog Kamgar Union (MUKU) that controls the company’s key Gurgaon plant.      Jhangu said the temporary workers at Maruti are from various states and should have the first right to any new employment opportunity. “We have workers from various places like Bihar, Orissa, Uttar Pradesh and Rajasthan. They should get a chance,” Jhangu told TOI.      He said that having experienced workers in the new plant would benefit the company. “Please remember that these workers are technically sound and mature. Their experience will be an asset for the new factory.” About locals in Gujarat, Jhangu said they should be inducted as temporary workers in the beginning. “They should be first trained and only then come up for regularization.” Suzuki coming to India for board meet  Suzuki chairman Osamu Suzuki, who is also on the Maruti board, is flying in for Saturday’s board meeting. The board meeting, scheduled to fix budgetary allocations for the next fiscal, is expected to be a stormy one with some of the independent directors likely to raise questions over the Gujarat deal. Suzuki is expected to answer some of these queries and clear the air over the change in investment plan. TNN