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 SES has 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, IiAS did 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.
SES raises concerns over profit transfers
SES has 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,” SES said in a note.
The advisory firm noted that company may be transferring its own potential profits to other companies linked to the promoters.
The SES note highlighted three companies named in the shareholder resolutions. After analysis of Mobis India Ltd, Hyundai Transys Lear Automotive India Private Ltd and HEC India LLP, it noted that the firms are heavily dependent on Hyundai India.
“Two of them hardly have any transactions with any independent party to establish that RPTs (related-party transctions) 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.
IiAS backs Hyundai’s proposals
However, IiAS feels that the proposed deals of the company are part of ordinary business activity of the company.
The advisory firm said that the deals are in line with the global practices of the Hyundai group. It was also satisfied with the pricing of the deals with the companies mentioned in the resolution.
Thus, IiAS has asked shareholders to approve all the resolutions.
Hyundai India dismissed the SES advice to shareholders as an “isolated opinion”.
The firm said in response to Mint’s queries, “Another reputed proxy advisory firm Institutional Investor Advisory Services (IiAS) has shared a contrary opinion to recommendations of SES, favouring all the seven resolutions and giving a clear go-ahead. Our commitment to highest standards of corporate governance remains uncompromising, and we shall continue to uphold the interest of all stakeholders.”
Shareholder vote and market impact
All the resolutions up for voting are ordinary resolutions which require a simple majority of over 50% to pass. As per rules, promoters and related parties are not allowed to vote on resolutions pertaining to related-party transactions.
This means that the Hyundai will require majority votes of the minority shareholders.
Hyundai India’s promoters owned 82.5% shares of the company while domestic institutions like mutual funds and insurance firms owned 7.1% share at the end of December 2024. Foreign investor holding was at 6.7% and the remaining shares were owned by the public.
Top minority shareholders include HDFC Mutual Fund and Life Insurance Corporation of India.
Institutional investors use the advice of proxy advisory firms like SES and IiAS to understand corporate governance standards of companies. Their impact has increased recently with resolutions floated by companies facing resistance.
In January, four resolutions of Gokaldas Exports were defeated after IiAS advised shareholders to vote against the company’s proposals.
This is the second such vote on resolutions of Hyundai since its listing in India in October 2024.
The ₹27,870-crore initial public offering is so far the largest ever in India. The company did not receive any proceeds from the IPO as it was an offer for sale by promoters to shed 17.5% stake in the Indian unit.
The company sold 5.4 lakh passenger vehicles in the country in the previous financial year, with a market share of 14.2%, behind market leader Maruti Suzuki. In February, it fell to the fourth spot with a decline of 1.5% market share, behind Mahindra and Tata Motors.
In 2025 so far, Hyundai Motor India’s share price has declined 4.5% on the NSE, as against Nifty Auto’s 8% fall. It closed little changed at ₹1,716.90 on the NSE on Friday.
