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regular-article-logo Wednesday, 29 May 2024

Maruti Suzuki board approves preference shares allotment to parent Suzuki Motor Corp

With the allotment, SMC’s stake in Maruti Suzuki India (MSI) will increase to 58.19 per cent from 56.48 per cent

Our Special Correspondent New Delhi Published 25.11.23, 11:01 AM
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Representational image File picture

The Maruti Suzuki board on Friday approved the allotment of over 1.23 crore shares on a preferential basis to Suzuki Motor Corp (SMC) for the acquisition of a 100 per cent stake in Suzuki Motor Gujarat — that raises the stake of the Japanese parent in the company by 2 per cent.

The preference shares have a face value of Rs 5 each and are offered for Rs 10,420.85 a piece, the auto major said in a regulatory filing.

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According to a report by RBSA Valuation Advisors LLP, the total value of the preference shares is Rs 12,841.1 crore.

With the allotment, SMC’s stake in Maruti Suzuki India (MSI) will increase to 58.19 per cent from 56.48 per cent.

The Maruti Suzuki share price closed at Rs 10,515.65, up 0.26 per cent on the BSE.

Last week, company shareholders approved a proposal to issue shares on a preferential basis to SMC as consideration for a related party transaction to acquire 100 per cent of Suzuki Motor Gujarat (SMG).

The Maruti Suzuki board, in its meeting held on July 31, 2023, had approved the termination of the contract manufacturing agreement with SMG and the acquisition of its shares from SMC at a price to be determined following all applicable laws and regulations.

MSI chairman R.C. Bhargava had said the share-swap method adopted for the acquisition of SMG is far better for the shareholders.

He said the purpose of the acquisition was to align the production operations under a single management, taking into consideration the company’s growth prospects when it envisages a total production of 40 lakh units annually by 2030-31.

Since 2014, SMC has invested Rs 18,000 crore in SMG. A fully-owned subsidiary of SMC, SMG supplies its entire production exclusively to MSI. SMG, which was incorporated in 2014, has a production facility in Gujarat with an installed capacity of 7.5 lakh units per annum.

In October 2023, Maruti Suzuki achieved its all-time highest monthly sales, at 1.99 units. Earlier this month, the company said it wants to manufacture more high-selling utility vehicles while scaling back the release of entry-level cars.

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