Maruti Suzuki Board Approves Acquisition of SMG Shares from SMC.

A file photo of Maruti Suzuki's logo

Amidst the growing Indian car market and export opportunities, Maruti Suzuki India Ltd (MSIL) aims to ramp up its production capacity to approximately 4 million cars per annum by 2030-31, nearly double its current capacity. This expansion will be carried out across multiple locations, with some already identified and others under study. Considering the demand for carbon neutrality, various powertrain technologies like EVs, Hybrids, CNG, Ethanol, etc., will co-exist for an extended period. However, managing such scale and complexity of production with multiple powertrains and diverse managements will present several challenges.

After careful consideration, the Board of Directors concluded that consolidating all production-related activities under MSIL would enhance production efficiency and optimize the supply chain. Consequently, the Board approved the termination of the contract manufacturing agreement and authorized the exercise of the option to acquire the shares of Suzuki Motor Gujarat Pvt Ltd (SMG) from Suzuki Motor Corporation (SMC). The acquisition will be subject to fulfilling all legal and regulatory requirements, including obtaining approval from minority shareholders. The specifics of the acquisition, including the consideration to be paid to SMC, will be determined in a subsequent Board meeting.

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The transition from SMG as a contract manufacturer to the new arrangement will have minimal impact on actual production, logistics, sales, and associated costs. The cars that were previously supplied by SMG will continue to be delivered as per usual, ensuring a seamless continuation of the supply chain and distribution process.

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