Maruti Suzuki: Good Company or Good Stock (A)

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Case

Reference no. 9B17N014

Subject category: Finance, Accounting and Control

Authors: Pitabas Mohanty (XLRI Xavier School of Management); Supriti Mishra (International Management Institute, Bhubaneswar)

Published by: Ivey Publishing

Originally published in: 2017

Version: 2017-07-31

Length: 15 pages

Data source: Published sources

Topics: Corporate governance; Minority shareholders; Finance; International

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Abstract

On January 28, 2014, the management of Maruti Suzuki India Limited (MSIL) surprised the market by announcing that its plant in Gujarat would be operated as a subsidiary of Suzuki Motor Company of Japan, MSIL's parent company, rather than by MSIL. The stock price fell by 8 per cent that day. The days following this announcement were marked by justifications by MSIL management about the benefits of the new structure and allegations by some analysts and fund managers that it was against the interests of minority shareholders. MSIL management took more than 20 months to send a letter to shareholders asking for their approval of the decision taken by the board. At that point, the shareholders needed to decide whether to support or oppose the decision.

Location:

India

Industry:

Manufacturing

Size:

Large

Other setting(s):

2015