Unanimous Approval for Strategic Move
In a significant development, Maruti Suzuki India announced that its shareholders have overwhelmingly approved the proposal to issue shares on a preferential basis to Suzuki Motor Corporation (SMC). This move is a crucial step in a related party transaction that involves acquiring the complete 100% stake in Suzuki Motor Gujarat (SMG). The approval was secured through a postal ballot on two special resolutions, reflecting the shareholders’ endorsement of this strategic move.
Approval Details and Shareholder Confidence
The first special resolution, focusing on the related party transaction, witnessed an impressive 98.21% in favor and a minimal 1.79% against. The second special resolution, which involved the creation, offer, issuance, and allotment of equity shares on a preferential basis to SMC, garnered robust support with 98.91% votes in favor and a mere 1.09% against. These results underscore the high level of confidence and consensus among Maruti Suzuki India’s shareholders regarding the proposed acquisition.
H2: Maruti Suzuki’s Strategic Vision Unveiled
Last month, the board of Maruti Suzuki India had already given the nod to the acquisition of SMG, outlining a total purchase consideration of Rs 12,841.1 crore. This would be facilitated through the issuance of over 1.23 crore equity shares to SMC at a price of Rs 10,420.85 per equity share. The strategic vision behind this move is to align production operations under a unified management structure, emphasizing the company’s growth trajectory with a target of achieving a total annual production of 40 lakh units by 2030-31.
Share Swap Method and Chairman’s Perspective
R.C. Bhargava, Chairman of Maruti Suzuki India, reiterated that the chosen share swap method for the acquisition of SMG is deemed more favorable for the company’s shareholders. Emphasizing the strategic importance of the acquisition, Bhargava highlighted the goal of streamlining production operations and ensuring operational efficiency.
SMG’s Integral Role and Evolution
Since 2014, SMC has invested significantly, amounting to Rs 18,000 crore, in SMG, which operates as a fully-owned subsidiary. Notably, SMG exclusively supplies its entire production to Maruti Suzuki India from its facility in Gujarat. The evolution of SMG’s ownership plan, initially proposed for Maruti Suzuki India and later shifted to SMC, underscores the adaptability and strategic decision-making in response to market dynamics.
This resounding approval paves the way for Maruti Suzuki India to advance its strategic objectives, solidifying its position in the automotive landscape.
