Maruti Suzuki India Ltd decided to get into a merger with Suzuki Powertrain India Ltd .This initiative will help them prepare and meet the increasing demand for diesel vehicles.
Suzuki Powertrain is a 30:70 ratio joint venture between Maruti and its Japanese parent Suzuki Motor Corp. The merger is expected to increase Suzuki’s stake in its Indian subsidiary by 2 percentage points to 56.2%.
Maruti proposes to make a fresh issue of 13.17 million shares to Suzuki in lieu of its 70% holding in Suzuki Powertrain.
The auto industry is slowly shifting towards dieselization and has reached a diesel to petrol ratio of 1:1. The proposed merger aims to bring in constructive growth and synergies in areas such as finance, capital structuring and administration.
In March 2012, the board of Maruti set up a committee of directors to advise on restructuring options to strengthen the firm’s business. Once the merger is approved, the books of accounts of Suzuki Powertrain will be merged with Maruti with effect from 1 April 2012.
Maruti Suzuki India Limited is a subsidiary of Suzuki Motor Corporation, Japan.Maruti Suzika India Limited, is known to be the first company in India to produce and sell more than a million cars. Maruti Suzuki has been the leader of the Indian car market for over two and a half decades
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