Swaraj Mazda board gives nod to rights issue

The Swaraj Mazda board today approved a Rs 120-crore fund, which it plans to raise through a rights issue despite opposition from two main shareholders "" Punjab Tractors (PTL) and Actis.

Sources close to the development said the stand-off between Japan's Sumitomo, the largest shareholder with a 41 per cent stake in the company, and PTL, which is now owned by Mahindra & Mahindra (M&M), would further intensify the boardroom battle. PTL holds a 14 per cent stake in Swaraz Mazda, while Actis holds 18 per cent. However, it could not be ascertained whether PTL would take legal recourse against the rights issue move.

PTL sources declined to comment, while the spokespersons for Actis and M&M were not available for comment. PTL MD Yash Mahajan was not available either. The share price of Swaraj Mazda today closed flat at Rs 321.

According to sources, Swaraj Mazda may go for a change in name as its technical tie-up with Mazda ended three years ago. Now, Mazda does not hold stake in the company. Swaraj Mazda has technical collaboration with Isuzu, which does not hold stake in the company. Swaraj Mazda has been mired in controversy ever since PTL sold a 15 per cent stake, from its shareholding of 29 per cent, to Sumitomo two years ago.

Actis has opposed the move and fought a series of boardroom battles with PTL Managing Director Mahajan. Actis MD Donald Peck resigned from the PTL board as a consequence of the battle. PTL went to the Company Law Board against Sumitomo and Mahajan. Actis also managed to drive Mahajan out of his office. But Mahajan was again reinstated by Sumitomo.