Maruti Suzuki India to buy out Suzuki Motor Corp share in Gujarat plant

By siliconindia  |  Monday, 31 July 2023, 05:37:16 PM IST

Maruti Suzuki India to buy out Suzuki Motor Corp share in Gujarat plant
Automobile major Maruti Suzuki India Ltd has decided to acquire Suzuki Motor Gujarat Pvt Ltd (SMG) from its Suzuki Motor Corporation (SMC) for a sum to be arrived at later, a top official said. Briefing about the Board of Directors' decision, Chairman R.C.Bhargava said the SMG was set up as a 100 percent contract manufacturer for Maruti Suzuki India in Gujarat in 2014. Over the years, the dynamics of the automobile industry have changed with several powertrain technologies like electric vehicles (EV), hybrids, CNG, ethanol and others.
"Managing this scale and complexity of production with multiple powertrains, under different managements, would pose several challenges," the company said. "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 MSIL (Maruti Suzuki India Ltd)," the Indian company said. Bhargava also said the contract manufacturing agreement between Maruti Suzuki India and SMG will be terminated. Last fiscal, SMG clocked a turnover of 31,852 crore up from 24,440 crore in FY22 and 15,850 crore in FY21. 
The transaction is expected to be completed before March 31, 2024. As per the contract manufacturing agreement, Maruti Suzuki India could buy SMG at the book value. The book value is about 12,755 crore, Bhargava said. Maruti Suzuki India has a production capacity of about 2 million and it needs to increase that to 4 million by 2030-31 and the company is looking at various locations. Meanwhile, Maruti Suzuki India closed the first quarter with a total income of Rs 33,328 crore (Q1FY23 Rs 26,588 crore) and a net profit of Rs 2,485 crore (Rs 1,012 crore).
Source: IANS

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