Maruti Suzuki to buy Gujarat plant from Japanese parent for Rs 12,841 crore

The move will simplify the management of Maruti Suzuki's various operations in the country, the automaker said.
Maruti Suzuki to buy Gujarat plant from Japanese parent for Rs 12,841 crore

India’s largest carmaker Maruti Suzuki (MSIL) will buy Suzuki Motor Gujarat Private Limited (SMG), owned by parent Suzuki Motor Corporation, for a total purchase consideration of Rs 12,841.1 Crores. The transaction is expected to be completed before 31st March 2024, the carmaker said in a regulatory filing. 

SMG operates a car manufacturing plant, one of the largest in India, in Gujarat, and provides finished cars to Maruti Suzuki on a no-profit-no-loss basis.

Maruti Suzuki, which is also majority owned by Suzuki Motor Corporation, said the acquisition of the Japanese parent's 100% subsidiary will simplify operations on the ground.

"With the growth of the Indian car market and export potential, the Company would need to increase its production capacity to about 4 million cars per annum by 2030-31, almost double from current levels. This would happen over several locations, some of which are known and some being studied.

"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. Managing this scale and complexity of production with multiple powertrains, under different managements, would pose several challenges.

"The Board 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 Indian company said.

At present, SMG does contract manufacturing for MSIL and sells its production completely to the latter. The turnover of SMG in the last financial year ended on 31 March 2023 was Rs 3,185 core.

The proposed transaction is being done at “arm's length”, taking into account the valuation report issued by RBSA Valuation Advisors LLP, Independent Registered Valuer, in accordance with the applicable laws, MSIL said.

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