Marut Suzuki India on Monday said its board has approved the acquisition of the entire stake in Suzuki Motor Gujarat from Japan-based parent Suzuki Motor Corporation.
Currently, Suzuki Motor Corporation (SMC) owns a 100 per cent stake in Suzuki Motor Gujarat (SMG) which supplies its entire production to Maruti Suzuki.
Maruti Suzuki board in its meeting held on Monday approved the termination of the contract manufacturing agreement with SMG, the auto major said in a regulatory filing.
The company’s board also approved to exercise the option to acquire SMG stake from SMC subject to all legal and regulatory compliances including minority shareholders’ approval.
The auto major expects to complete the transaction by March 31, 2024.
It noted that the mode of acquisition including consideration to be paid to SMC shall be decided in a subsequent board meeting.
With the growth of the Indian car market and export potential, Maruti Suzuki would need to increase its production capacity to about 40 lakh cars per annum by 2030-31, almost double from current levels, the auto major said elaborating on the rationale behind the development.
This would happen over several locations, some of which are known and some being studied, it added.
On the other hand, given the carbon neutrality requirements, several powertrain technologies like EVs, Hybrids, CNG, Ethanol etc. will co-exist for a reasonably long period of time, MSI said.
“Managing this scale and complexity of production with multiple powertrains, under different managements, would pose several challenges. The Board of Directors considered this and decided that for the purpose of efficiency in production and supply chain, it is best to bring all production-related activities under the company,” the auto major stated.
In terms of actual production, logistics, sales and the cost thereof, there will be no change as the cars earlier supplied by SMG as a contract manufacturer, will now continue to be supplied as before, MSI said.
SMG currently has an installed production capacity of 7.5 lakh units per annum.
Maruti Suzuki shares on Monday ended 1.56 per cent up at Rs 9,819.55 apiece on the BSE.
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