LIC is one of the largest Indian shareholders in Maruti Suzuki India Ltd (MSIL) with a 6.93 per cent stake and its view on the issue will be crucial to the direction of the battle between the two sides.
The mutual funds have said the decision by Suzuki is detrimental to minority shareholders, as MSIL will increasingly become a trading company and will have to share its margins with its new subsidiary. They are also contemplating a second letter to the MSIL management rejecting arguments put forth by CFO Ajay Sheth last Saturday.
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The seven mutual funds are Axis, DSP BlackRock, HDFC MF, Prudential ICICI, Reliance MF, SBI MF and UTI. The mutual funds had on February written to MSIL Chairman R C Bhargava.
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“Yes, we have approached both Sebi and LIC to give our views on the deal, as we are sure it will have an adverse impact on minority shareholders. We have to follow a process, so we might again write to the company to reiterate our view and reject their justification," said a source working with an MF.
The funds can seek recourse under “oppression against minority shareholders” clause with Sebi and the Company Law Board.
Bhargava said LIC had asked MSIL to make a presentation to understand details of the deal and had not opposed it. He pointed out that as a key shareholder, LIC could ask for an explanation and the company would provide it.