Nifty Loser: Maruti Suzuki Shares Slide Over 2% on Friday; Here’s Why

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Nifty Loser: Maruti Suzuki Shares Slide Over 2% on Friday; Here’s Why

By Malvika Gurung

Investing.com -- Shares of the auto giant Maruti Suzuki (NS: MRTI ) India tumbled 2.12% to Rs 7,397.3 apiece at 12:10 pm on Friday, after the proxy advisory firm IiAS initiated a negative report on the carmaker, citing a development that could affect the company’s shareholders.

IiAS has reportedly raised concerns on Japan’s auto manufacturer Suzuki Motor Corporation’s subsidiary Suzuki Motor Gujarat (SMG) making direct investments in the electric vehicles and batteries project in India, rather than taking the route through Maruti Suzuki India .

On March 20, the Japanese automaker announced to invest about Rs 10,400 crore over the next four years in the Gujarat-based subsidiary for manufacturing EVs and batteries locally in the country.

IiAS noted that this move could affect the shareholders of MSI, adding it could ‘make it easier for MNCs to hollow out the listed subsidiary and reduce its value’, leaving Maruti with a legacy portfolio of cars with a limited future.

To this, MSI’s chairman RC Bhargava clarified that no part of the EV investment plan was in any way against the interests of its shareholders, as it was a part of an earlier arrangement.

He stated that all the cars manufactured in Gujarat, including EVs would be sold to MSI, following which the latter will sell them in Indian markets, as per a deal signed in 2014.

Bhargava added that ​​the current arrangement of SMG producing cars for Maruti has worked well, as there has been zero capital investment and capital cost by Maruti and its needs are fulfilled.

MSI was among the top losers on the Nifty 50 index, second to Titan (NS: TITN ), at the time of writing.

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