Maruti Suzuki to buyout parent’s arm Suzuki Motor Gujarat to boost capacity

economictimes.indiatimes.com:

Maruti Suzuki India has received board approval to acquire Suzuki Motor Gujarat (SMG) from its Japanese parent Suzuki Motor Corporation (SMC). Currently, SMG is a wholly-owned subsidiary of Suzuki Motor Corporation and recorded a turnover of Rs 31,853 crore for FY23. In 2014, the Japanese automaker proposed to set up a separate manufacturing unit in Gujarat, to tap the fastest-growing demand.

With an aim to tap domestic demand and drive exports from India, Suzuki Motor established SMG in March 2014. In October 2020, SMG became the fastest production site of Suzuki to achieve accumulated automobile production of 1 million units. As part of the deal then, all automobiles produced in SMG were supplied to Maruti Suzuki.

With the growing demand for vehicles and export potential, Maruti Suzuki would need to increase its production capacity to about 4 million cars per annum by 2030-31, almost double from current levels. “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,” the automaker said in a release. Accordingly, the board approved the termination of the contract manufacturing agreement with SMG and exercised the option to acquire shares of SMG from Suzuki Motor Corporation, subject to regulatory approvals, including minority shareholders’ consent.

“The mode of acquisition, including consideration to be paid to SMC, shall be decided in a subsequent board meeting,” Maruti Suzuki said. The automaker expects to complete the transaction by the end of the current financial year. In terms of actual production, logistics, sales, and the costs thereof, there will be no change, as the cars earlier