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SMC's Strategic Move: Maruti Suzuki's Board Approves Share Allotment

  • Posted on November 24, 2023
  • Business
  • By Arijit Dutta
  • 273 Views

Maruti Suzuki India plans to issue 1.23 crore shares to Suzuki Motor Corporation on a preferential basis for the acquisition of Suzuki Motor Gujarat. The move aims to increase SMC's stake in Maruti Suzuki India to 58.19%. This development aligns production operations for future growth.

SMC's Strategic Move: Maruti Suzuki's Board Approves Share Allotment Image Source -www.economictimes.indiatimes.com

In a strategic move, Maruti Suzuki India has unveiled plans to issue over 1.23 crore shares to Suzuki Motor Corporation (SMC) on a preferential basis. This issuance is part of the acquisition strategy related to Suzuki Motor Gujarat, affirming SMC's stake in Maruti Suzuki India. The allotment of shares, with a face value of Rs 5 each, at a price of Rs 10,420.85 per share, reflects a major shift in the company's ownership structure.

The approval for this allotment was granted during a recent meeting of Maruti Suzuki India's board. This decision was reached following the shareholders' approval in the previous week. The move signifies a significant change in SMC's ownership within Maruti Suzuki India, raising its stake from the earlier 56.48% to 58.19%. This substantial increase in ownership reflects the intent to streamline and consolidate operations within the automotive giant.

The decision aligns with the termination of the contract manufacturing agreement between MSI and Suzuki Motor Gujarat. This move towards consolidation under a unified management structure emphasizes the company's ambitious growth projections. R.C. Bhargava, the Chairman of MSI, highlighted the benefits of this share-swap approach for the shareholders, emphasizing a cohesive and streamlined production approach.

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The acquisition focuses on consolidating production operations under a singular management entity. Since its inception in 2014, Suzuki Motor Gujarat has been a fully-owned subsidiary of SMC, contributing solely to Maruti Suzuki India's production. This acquisition move emphasizes a strategic alignment to achieve a production target of 40 lakh units annually by 2030-31.

This significant reshaping of ownership and strategic realignment within Maruti Suzuki India reflects a forward-looking approach toward optimizing operational synergies and future growth prospects in the automotive sector.

Shares of MSI were observed trading at Rs 10,501.95 apiece on the BSE, marking a marginal increase of 0.08%.

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Arijit Dutta

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