After announcing that it will acquire 100 per cent shares of Suzuki Motor Gujarat (SMG), Maruti Suzuki India Limited (MSIL) said this move would pave the way for the company to make electric vehicles rather than Suzuki doing it.
Earlier it was planned that SMG will make the e-vehicles. MSIL, on Monday, said it was going to acquire 100 per cent shares of SMG and the deal was expected to close by March 2024.
Eager to be a part of the Centre’s EV push, Maruti, presently with a capacity of manufacturing two million cars annually, is moving towards production capacity of four million by 2030-31, which will include EVs, the first EV being rolled out in 2024-25.
“…The EVs will also be made by MSIL and not by SMG (as earlier part of the plan). The export production will continue as it was from Gujarat, but nothing will change the way production or the marketing is managed,” RC Bhargava, Chairman, MSIL, told reporters.
The technology (for EVs) is all coming from Suzuki (Japan), he said, adding that the benefit was that MSIL employees would actually get involved in manufacturing of EVs and in the longer term (three-four years), “we will acquire much more knowledge and expertise than they would have done otherwise”.
He said because of the plan of reducing the carbon footprint, the company is considering various alternative technologies because of which the whole problem of coordinating production, distribution and spare parts were becoming more complex.
SMG was incorporated under the Companies Act at Hansalpur, Ahmedabad, in 2015 and is a wholly-owned subsidiary of Suzuki Motor Corporation (SMC, Japan).
The turnover of SMG in the last financial year ended on March 31, 2023, was ₹31,852.5 crore. Currently, SMC holds 100 per cent equity capital of SMG. The decision was taken in the board meeting and many more board meetings would take place in the coming days to streamline the transition, Bhargava said.
“The transaction shall be completed after taking all the government approvals, as required, under Foreign Exchange Management Act and mode of acquisition, including consideration to be paid to SMC, will be decided in a subsequent board meeting,” he said.
Bhargava also mentioned that the contract manufacturing agreement (CMA) has a provision, wherein it says that in the event of the contract being terminated, and Maruti buying the shares of SMG, they will be transferred to MSIL at the book value of the last audited balance sheet.
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