Some mutual fund houses are piqued at being kept in the dark about setting up a committee by their industry association Association of Mutual Funds of India to discuss the common stand on Maruti’s controversial plan to set up a plant in Gujarat, industry sources said here today.
The AMFI panel has been formed to discuss Maruti’s plans to set up its Gujarat plant as a fully-owned arm of its Japanese parent Suzuki as well as take a common position on similar cases where minority shareholders’ interests are involved.
After Maruti rejected mutual funds’ demand not go ahead with the Gujarat plan and instead hold an extraordinary general body meeting later this month, the Association of Mutual Funds of India (AMFI) had set up a panel to take a common mutual fund industry position on the issue.
As many as seven MFs hold 6.5 per cent stake in the country’s largest car maker, while LIC holds 6.83 per cent.
Some fund houses felt that AMFI should have informed them about the decision to form the panel on the issue. They have contended that the committee’s decision would not be binding on them while using their voting rights.
SBI Mutual Fund, which holds some stake in Maruti-Suzuki and has been kept out of the process, has been very critical about the manner in which the AMFI board constituted the committee.
Though the talks were on among mutual fund houses about formation of the committee for quite some time, many fund houses were not informed about the decision to set up the committee, the SBI MF said.
“Normally we are informed about any such decisions taken by the AMFI. However, this time we didn’t receive any communication from the association. Once we get some mail from AMFI in this connection, we will definitely take a call on whether to raise a questions about the issue,” SBI MF Managing Director and Chief Executive Dinesh Khara told PTI.
Maruti-Suzuki’s plan to set up a car plant in Gujarat as a fully-owned subsidiary of its Japanese parent has already been objected to by seven mutual fund houses holding stakes in the car company.
A decision on the proposed plant is likely to be taken by Maruti after its forthcoming extraordinary general meeting which is likely to be held later this month. It needs to get the permission of at least 75 per cent of shareholders for investment in the plant.
LIC Nomura MF, which holds 0.04 per cent stake in Maruti, has also been kept in the dark about the decision. However, it felt that it will raise objections in case any decision is taken by the committee and which was not informed to the MF house in advance.
“Formation of a committee was within the purview of the AFMI. However, we will raise a question before the association in case any decision is taken by the committee without keeping us informed,” LIC Nomura MF Chief Executive Nilesh Sathe said.
While LIC is the single largest minority investor in the country’s largest car maker with 6.8 per cent holding, seven mutual funds hold around 6.53 per cent and domestic financial institutions hold 7.95 per cent in the country’s largest carmaker.
An official of LIC said the financial giant is yet to take a view on the Maruti-Suzuki’s plan.
“A committee is a good forum to have consultation within the industry on issues related to corporate governance. However, any decision to be taken by the committee will not be binding on us when we exercise our voting rights,” Union KBC Mutual Fund Chief Executive G Pradeepkumar said.
However, the Institutional Investor Advisory Services (IIAS) has welcomed the AMFI move.
“It’s good to know that mutual funds and institutional investors are thinking about some critical transactions and getting more active, because every single vote of mutual fund houses, big or small, will count during the EGM of the company,” IIAS Chief Operating Officer Hetal Dalal said.