Shillong, July 31: Maruti Suzuki India Ltd, a prominent automobile company, has announced its decision to acquire Suzuki Motor Gujarat Pvt Ltd (SMG) from Suzuki Motor Corporation (SMC). The acquisition will be completed for an undisclosed sum at a later date, according to Chairman R.C. Bhargava.
SMG was originally established in 2014 as a 100% contract manufacturer for Maruti Suzuki India in Gujarat. However, with the changing dynamics of the automobile industry, which now involves various powertrain technologies such as electric vehicles (EV), hybrids, CNG, and ethanol, the company recognized the need for increased efficiency in production and supply chain management.
IANS reported that considering the challenges posed by managing multiple powertrains under different managements, the Board of Directors decided that consolidating all production-related activities under Maruti Suzuki India Ltd (MSIL) would be the most efficient approach.
As a result of this decision, the contract manufacturing agreement between Maruti Suzuki India and SMG will be terminated. In the previous fiscal year, SMG reported a turnover of Rs. 31,852 crore, a significant increase from Rs. 24,440 crore in FY22 and Rs. 15,850 crore in FY21.
The transaction is expected to be finalized before March 31, 2024, and Maruti Suzuki India will be able to acquire SMG at the book value, which amounts to approximately Rs. 12,755 crore, as stated by Bhargava.
Maruti Suzuki India aims to expand its production capacity from about 2 million to 4 million vehicles by 2030-31, and the company is actively exploring various locations for this purpose.
In the first quarter, Maruti Suzuki India achieved a total income of Rs. 33,328 crore, up from Rs. 26,588 crore in Q1FY23, and a net profit of Rs. 2,485 crore compared to Rs. 1,012 crore in the corresponding period of the previous year.