Maruti Suzuki India, the country’s largest automaker, has announced a significant strategic move to acquire Suzuki Motor Gujarat (SMG) from its Japanese parent company, Suzuki Motor Corporation (SMC). The board of Maruti Suzuki approved this acquisition on July 31.
The acquisition is set to be completed before March 31, 2024. Currently, SMC holds a 100 per cent equity capital of SMG. The transfer of this entire stake to Maruti Suzuki India is considered a related party transaction and will be carried out in accordance with prevailing laws and regulations.
This decision comes after Maruti Suzuki India reported a more than two-fold year-on-year surge in net profit for the June quarter of 2023, amounting to Rs 2,485 crore. This growth was attributed to increased sales volume, improved realization, cost reduction efforts, and higher non-operating income.
Despite the change in ownership, the actual production, logistics, sales, and associated costs are expected to remain unchanged. Cars previously supplied by SMG as a contract manufacturer will continue to be supplied as before. This ensures that the transition will not disrupt the company’s operations or impact its customers.
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.
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.
