According to a senior official, Maruti Suzuki India Ltd, a major automaker, has chosen to pay an amount to be determined later to buy Suzuki Motor Gujarat Pvt Ltd (SMG) from parent Suzuki Motor Corporation (SMC).
Chairman R.C.Bhargava explained the decision of the Board of Directors to media, stating that the SMG was established in Gujarat in 2014 as a 100 percent contract manufacturer for Maruti Suzuki India.
The dynamics of the automotive business have altered throughout time as a result of various powertrain technologies, including electric vehicles (EV), hybrids, compressed natural gas (CNG), ethanol, and others.
The corporation said that there would be a number of difficulties in managing a production of this size and complexity with many powertrains operating under various managements.
The Indian business stated: “The Board of Directors evaluated this and determined that it is desirable to bring all production-related operations under MSIL (Maruti Suzuki India Ltd) for the purpose of efficiency in production and supply chain.
Bhargava further said that Maruti Suzuki India and the SMG’s contract manufacturing deal will be canceled. SMG had a revenue of Rs. 31,852 crore in the most recent fiscal year, up from Rs. 24,440 crore in FY22 and Rs. 15,850 crore in FY21.
Before March 31, 2024, the deal is anticipated to be completed. Maruti Suzuki India was permitted to purchase SMG for book value under the terms of the contract manufacturing agreement. According to Bhargava, the book value is roughly Rs. 12,755 crore.
The manufacturing capacity of Maruti Suzuki India is now at 2 million, and the business is looking at a number of places to raise that to 4 million by 2030–2031.
A net profit of Rs 2,485 crore (Rs 1,012 crore) and total revenues of Rs 33,328 crore (Q1FY23: Rs 26,588 crore) were Maruti Suzuki India’s first-quarter results, respectively.