Both Mumbai-based Stakeholder Authorized Services (SES) and Institutional Investor Advisory Services (IIAS) have issued contrasting notes on Hyundai’s resolutions dealing with seven related companies.
Although SES asked shareholders to vote against the six resolutions in seven resolutions and said that with the proposed deal, Hyundai Motor India may eventually transfer its potential profits to companies linked to its promoters, IIAS did not deal with the company and recommended shareholders to approve them.
The remote electronic vote on the resolution began on February 12 and was scheduled to end on March 13. The results will be announced on March 17.
Last month, Seoul-based Hyundai’s Indian division sought shareholder approval for deals with companies related to the group. The company mentioned by Hyundai Motor India is mainly responsible for purchasing components and carrying out engineering projects for automakers.
Overall, shareholders must approve the transaction ₹The fiscal year 2025-2026 was 315.28 million. Indian Hyundai India Release ₹7.130.2 billion revenues in the last fiscal year.
SES raises concerns about profit transfer
SES questioned the size of transactions for companies related to Hyundai Motor. According to its analysis, the company will make more than 50% of the total purchases in the previous fiscal year.
“For such high-value-related party transactions, investors and lawmakers not only need, but also expect the audit committee and board to be extra careful and cautious when approving such high-value transactions,” SES said in a report.
The consulting firm noted that the company may be transferring its potential profits to other companies related to the promoters.
The SES Note highlights the three companies mentioned in the shareholder resolution. After analyzing Mobis India Ltd, Hyundai Transys Lear Automotive India Ltd and HEC India LLP, the company noted that these companies depend heavily on Hyundai India.
The note said: “Two of them had barely any transactions with any independent party to determine that the RPT (related party shipping) was conducted at a cost charged from the unrelated party.”
The agency consulting firm concluded that the company did not conduct sufficient disclosures to justify all transactions.
IIAS’s proposal to support modernity
However, IIAS believes that the company’s proposed transaction is part of the company’s general business activities.
The consulting firm said the deals were in line with Hyundai’s global practice. This is also satisfied with the transaction pricing of the company mentioned in the resolution.
Therefore, IIAS requires shareholders to approve all resolutions.
Hyundai India dismissed shareholders’ “isolated opinion”.
Responding to MINT’s questions, the company said: “Another well-known agency consulting firm, Institutional Investor Advisory Services (IIAS), shared the opposite opinion on the SES’ recommendations, favoring all seven resolutions and conducting explicit research. Our commitment to the highest standards of corporate governance remains uncompromising and we will continue to safeguard the interests of all stakeholders.”
Shareholder voting and market impact
All resolutions voted are ordinary resolutions and require a simple majority of more than 50% to pass. According to the rules, the promoters and relevant parties are not allowed to vote on resolutions related to relevant party transactions.
This means that Hyundai will need a majority vote of minority shareholders.
The promoters of Hyundai India own 82.5% of the company, while domestic institutions such as mutual funds and insurance companies own 7.1% of the shares at the end of December 2024. Foreign investors hold a 6.7% shareholding rate, and the remaining shares are owned by the public.
Minority shareholders include HDFC mutual fund and India Life Insurance Company.
Institutional investors use advice from agency consulting firms such as SES and IIA to understand corporate governance standards. Resolutions from companies facing resistance have increased recently.
Four Gokaldas Export resolutions were defeated in January after IIA recommended shareholders to vote against the company’s proposal.
This is the second vote on modern resolutions since its listing in India in October 2024.
this ₹The £2.787 billion IPO is the largest ever in India. The company did not get any gains from the IPO as it was an offer for the promoter to reduce its 17.5% stake in the Indian unit.
The company sold 540,000 passenger cars in the country in the last fiscal year, with a market share of 14.2%, lagging behind market leader Maruti Suzuki. In February, it fell to fourth place, with market share falling 1.5%, behind Mahindra and Tata Motors.
So far, Hyundai Motor India’s shares have fallen by 4.5% in NSE, while Nifty Auto’s 8% decline. It has almost no change ₹Friday was 1,716.90 on NSE.
