Maruti Suzuki Plans To Acquire 100 Per Cent Stake In Gujarat Facility; Stocks Gain

On October 17, Maruti Suzuki India’s board of directors will consider issuing shares to Suzuki Motor Corporation instead of cash consideration

India’s biggest carmaker Maruti Suzuki is planning to issue preferential shares to parent Suzuki Motor Corporation (SMC) to acquire a 100 per cent stake in Suzuki Motor Gujarat. The stocks of Maruti Suzuki were trading higher on Friday.

On October 17, Maruti Suzuki India’s board of directors will consider issuing shares to SMC instead of cash consideration. In turn, Maruti Suzuki will acquire SMC’s entire equity stake in Suzuki Motor Gujarat. Maruti Suzuki told stock exchanges on July 31 that its board approved the termination of the contract manufacturing agreement with Suzuki Motor Gujarat Private Limited (SMG).

SMG entered into a contract manufacturing agreement to supply the entire production for sale to Maruti Suzuki. Maruti Suzuki now plans to end its contract manufacturing agreement by acquiring 100 percent of shares held by SMC.

Nomura maintained its 'neutral' call on the stock, with a target price of Rs 10,422 on Maruti Suzuki after the company shared its plans to proceed with its proposed acquisition of SMG.

On Friday, Maruti stocks were trading at Rs 10,719.10 apiece, up Rs 1.35 per cent on the BSE.

Meanwhile, this week Maruti Suzuki India has signed an initial pact with IDBI Bank to offer financing solutions for dealers.

The new alliance will empower over 4,000 Maruti Suzuki sales outlets across the country with comprehensive inventory funding options for their working capital needs, the automaker said in a statement on Tuesday. A Memorandum of Understanding (MoU) has been signed with IDBI Bank in this regard.

"We have worked closely with IDBI Bank in developing curated products and end-to-end working capital solutions for our dealer partners across the country," Maruti Suzuki India (MSI) Senior Executive Officer (Marketing & Sales) Shashank Srivastava said.

Dealer partners are the backbone of the company's business and the automaker is committed to supporting them in enhancing their capabilities to address the growing Indian passenger vehicle market, he added.

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