Maruti Suzuki India will buy its own parent company Suzuki’s plant, know what is the matter.
Maruti Suzuki, the manufacturer of India’s giant, is going to buy the Suzuki Motor plant located in Gujarat. This may surprise you somewhat. You would think why Maruti is buying its own company’s plant? The fact is that Japan-based parent company Suzuki Motor Corporation holds 100 percent stake in the Suzuki Motor Gujarat plant. This plant manufactures cars for Maruti Suzuki. Now after this change, Maruti Suzuki Gujarat will be taken over by the Indian unit Maruti Suzuki India Limited.
Vehicle maker Maruti Suzuki India has informed the stock market that it will acquire the entire stake of Suzuki Motor Gujarat from Japan-based parent company Suzuki Motor Corporation. Suzuki Motor Corporation (SMC) currently owns 100 per cent stake in Suzuki Motor Gujarat (SMG) which supplies its entire production to Maruti Suzuki.
The company said in a notice to the stock market that the Maruti Suzuki board of directors, in its meeting held on Monday, approved the termination of the contract agreement with SMG for manufacturing. The process is expected to be completed by March 31, 2024. However, the modalities of acquisition including payment to SMC will be decided in another meeting of the Board of Directors.
Why are acquisitions happening?
The company said in a release that the board of directors has decided to bring all production related activities under Maruti Suzuki to increase efficiency in production and supply chain. Chairman Bhargava said, “We will not get any benefit on the cost and technology side. But this would mean that now Maruti Suzuki will be able to get involved in electric vehicle production in real terms. Bhargava said Suzuki Motor Corp is already busy setting up a research and development center as well as a battery plant in Gujarat. This leaves them with less resources to look after contract manufacturing plants.
Capacity to make 7.5 lakh cars every year
Maruti Suzuki, including Suzuki Motor Gujarat, has the capacity to manufacture 22.5 lakh units of cars annually. Out of which the Gujarat plant has a capacity of 7.5 lakh units. In April this year, the company had talked about increasing the production capacity to one million units per year. The plant to be set up at Kharkhoda will prove helpful in this.
