Maruti Suzuki India Ltd (MSIL) is facing stiff resistance from private sector mutual funds and insurance companies, which own almost 7 per cent of the company, for its decision to allow Suzuki Motor to make cars for MSIL at a proposed plant in Gujarat instead of manufacturing the vehicles itself.
Separately, state-run Life Insurance Corporation of India (LIC) has sought clarifications from MSIL about the Gujarat project. The private institutions are trying to rope in LIC to jointly oppose the company's decision.
Sources said representatives of 16 institutional investors met Sebi officials at its headquarters here today and submitted a memorandum addressed to Chairman U K Sinha.
Sebi was approached days after the 16 investors wrote to MSIL Chairman R C Bhargava and other board members, seeking quashing of the "oppressive transaction" to save the company from becoming a "shell" entity.
Maruti has maintained the deal is in the best interests of shareholders and is in compliance with all norms.
There have been reports that some independent directors of MSIL are becoming sceptical about the deal and the matter is expected to be discussed in detail during a board meeting scheduled for March 15.
Earlier, seven mutual fund investors in MSIL had written to company Bhargava about their concerns and they were later joined by nine other institutional investors.
Along with LIC's 6.93 per cent stake, the institutional investors hold almost 14 per cent in MSIL, while the promoters have a 56.21 per cent shareholding.
The Securities and Exchange Board of India had already started looking into the issue and is currently studying the regulatory framework with regard to its possible line of action against the company and its promoters.
While a new set of norms proposed by Sebi, which come into effect on October 1, requires such transactions to be approved by public shareholders of a listed company, there is some ambiguity about the existing law.
Promoters and related shareholders would not be allowed to vote while seeking approval for such transactions.