Maruti Suzuki to issue 1.23 cr shares to Suzuki Motor Corp for local plant

Maruti Suzuki India Ltd (MSIL), the country's top carmaker by sales, is set to issue over 1.23 crore equity shares having a face value of Rs 5 each to Suzuki Motor Corporation as part of its acquisition of a local manufacturing plant from the Japanese automaker, according to the company's exchange filing on Tuesday.

The shares will be issued at a price of Rs 10,420.85 per share. This is a 2.7 per cent discount to the automaker's closing price on Monday.

It is for the first time that Maruti Suzuki has disclosed the value of the plant located in Gujarat.

“We wish to inform that the Board of Directors of the Company, at its meeting held on 17th October, 2023, approved the acquisition of 12,84,11,07,500 equity shares of INR 10 each representing 100% paid-up equity share capital (“Purchase Shares”) of Suzuki Motor Gujarat Private Limited (“SMG”), owned by Suzuki Motor Corporation, Japan (“SMC”), for a total purchase consideration of INR 12,841.1 Crores (“Purchase Consideration”),” Maruti Suzuki said in its filing.

“The Purchase Consideration payable by the Company for such purchase of 100 per cent of SMG’s equity shares shall be discharged by way of issue and allotment of 1,23,22,514 equity shares of the Company having face value of INR 5 each to SMC, at a price of INR 10,420.85 per equity share, on a preferential basis,” it added.

The share issue will raise Suzuki's stake in Maruti to 58.19 per cent from the existing 56.48 per cent, roughly in line with the company's estimate in August.

Suzuki has since 2014 has put in about 180 billion rupees in the plant, which manufactures cars for Maruti. The plant began operations in 2017 and has an annual capacity of 750,000 units.

"With the growth of the Indian car market and export potential, MSIL would need to increase its production capacity to about 4 million cars per annum by 2030-31, almost double from current levels," the company said.

"This would happen over several locations, some of which are known and some being studied. On the other hand, given the carbon neutrality requirements, several powertrain technologies like EVs, Hybrids, CNG, Ethanol etc. will co-exist for a reasonably long period of time. Managing this scale and complexity of production with multiple powertrains, under different managements, would pose several challenges," it added.

At around 10:18 am, Maruti Suzuki's shares were trading 0.5 per cent lower at Rs 10,650 per share.

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