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India's largest insurer, Life Insurance Corporation of India (LIC), has sought details of Maruti Suzuki India Limited (MSIL)’s proposed Gujarat unit. Senior executives from the insurer said they required data on the exact investments in the plant and how the funds would be utilised. LIC, as a shareholding company, would give its consent for the proposal only after it gets the information sought.
"We have had several discussions with the car-maker and will take a call on the proposal only when all details and related data are provided to us," said a senior LIC official. According to LIC sources, the car-maker has agreed to provide the requisite data in the next few days.
Recently, MSIL announced the proposed new passenger car plant in the Mandal region of Gujarat would be built by a subsidiary of its parent Suzuki Motor Corporation (SMC), instead of MSIL.
The new company, Suzuki Motor Gujarat Private Limited (SMGPL), which would be registered by April this year, would exclusively contract manufacture and sell vehicles to MSIL.
LIC officials also said they were not averse to any new proposal, provided the policyholder funds were protected. According to the executive, this deal will have to be carefully studied since it is a complex arrangement.
The country's top mutual funds are opposing Suzuki Motor of Japan’s move to make Maruti Suzuki India (MSIL)’s proposed Gujarat unit its wholly owned subsidiary. In a seven-page letter, managers of top fund houses that together have invested a little over Rs 2,000 crore in the company’s stock, said this was a forced transition of MSIL into a trading company.
They had claimed the deal’s announcement had already led to a loss of Rs 5,000 crore for shareholders. It was, they said, a way of siphoning off Maruti’s cash with a carefully worded, yet confusing, communication.
Meanwhile, insurance industry experts said insurance companies like LIC are per se not against the deal. This is because their fund sizes are very large and they take calculated investment decisions. Further, the stake that they hold is lower than that held by MFs.
