NEW DELHI (NNN-PTI): Suzuki Motor Corporation’s stake in domestic car market leader Maruti Suzuki is expected to go up 2 per cent to 56.2 per cent.
This follows a proposal to merge Suzuki Powertrain India Ltd with Maruti Suzuki, a move that was approved at a board meeting of the latter on Tuesday.
The regulatory approvals and legal requirements for the merger is likely to be completed by December. “Once the merger is approved, the books of accounts of Suzuki Powertrain will be merged with Maruti Suzuki with effect from April 1, 2012,” a company statement said.
Suzuki Powertrain supplies diesel engines and transmissions for Maruti’s vehicles. Suzuki Motor holds a 70 per cent share in Suzuki Powertrain, while the remaining 30 per cent is held by Maruti. The petrol engines are made by Maruti in-house.
“There will be no cash outflow from Maruti Suzuki. The swap ratio has been fixed at 1:70. As such, Suzuki Motor will receive one share of Maruti Suzuki (of Rs 5 each) for every 70 shares (of Rs 10 each) it holds in Suzuki Powertrain,” the statement said.
Maruti has proposed a fresh issue of 13.17 million shares to Suzuki Motor in lieu of Suzuki Motor’s 70 per cent holding in Suzuki Powertrain. This would increase Suzuki Motor’s holding in Maruti from 54.2 per cent to 56.2 per cent.
This move will enable Maruti to bring its entire diesel engine capacity under its own control. Initiatives to increase efficiency, such as sourcing, localisation, production planning, manufacturing flexibility will be under the Maruti management.
“The proposed merger also promises benefits for the combined entity through synergies in areas like finance, capital structuring and administration and consequent reduction of transaction costs,” the company said.
Maruti Suzuki shares on the BSE were up 0.99 per cent to Rs 1,120.25 at 1:30 p.m. on Tuesday.
"We saw it as the right move to withdraw...Those technical consultations have been completed largely, and so it was determined that they could return home," he added.
"We are ready to send officials back to Islamabad when the Pakistani government is ready to conclude the agreement. And it certainly remains our goal to complete an agreement as soon as possible, and I would note that the Pakistani government has said the same thing," he said in response to a question.
The Pakistani government has said that they want this agreement concluded, and the US looks forward to that taking place, he said.
"I think there are still some remaining issues that need to be resolved, but they do not require the kind of technical people that were involved in the GLOC consultations for the past 45 days," he said. -NNN-PTI
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