Stakeholders Empowerment Services (SES) and Institutional Investor Advisory Services (IiAS), both based in Mumbai, have put out contrasting notes on Hyundai’s resolutions for dealing with seven related companies.
While SEShas asked shareholders to vote against 6 out of the 7 resolutions, saying that through the proposed deals, Hyundai Motor India may end up transferring its potential profits to firms linked with its promoters, IiASdid not red flag any proposed deal with the companies, advising shareholders to approve them.
The remote e-voting on the resolutions started on 12 February and is scheduled to end on 13 March. The result will be announced on 17 March.
Last month, the Indian unit of the Seoul-based Hyundai sought the approval of shareholders for deals with companies linked to the group. The companies mentioned by Hyundai Motor India are mainly responsible for sourcing components and undertaking engineering projects for the carmaker.
In total, shareholders have to approve deals up to ₹31,528 crore for the financial year 2025-2026. Hyundai India posted ₹71,302 crore revenue in the last financial year.
SEShas questioned the size of the deals with firms linked to Hyundai. As per its analysis, the total purchases the company will make through these deals is more than 50% of the total purchases it did in the last financial year.
“For such high-value related-party transactions, investors and lawmakers not only require but expect as well that the audit committee and the board must be extra careful and cautious in approving such high-value transactions,” SESsaid in a note.
The advisory firm noted that company may be transferring its own potential profits to other companies linked to the promoters.
The SESnote highlighted three companies named in the shareholder resolutions. After analysis of Mobis India Ltd, Hyundai Transys Lear Automotive India Private Ltd and HECIndia LLP, it noted that the firms are heavily dependent on Hyundai India.
“Two of them hardly have any transactions with independent party to establish that related-party transactions are carried out at a price which would be charged from an unrelated party,” the note said.
The proxy advisory firm concluded that the company has not made enough disclosures to justify all the transactions. However, IiASfeels that the proposed deals of the company are part of ordinary business activity of the company.
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