Maruti Suzuki India Ltd.'s board approved the acquisition of the contract manufacturing company Suzuki Motor Gujarat Pvt. from parent Suzuki Motor Corp. to bring all production-related activities under the Indian operations.
The board of directors decided that for the purpose of efficiency in production and supply chain, it is best to bring all production-related activities under Maruti Suzuki, the company said in a press release on Monday.
The mode of acquisition, including the amount to be paid, will be decided in a board meeting later.
Chairman RC Bhargava said the company expects to finish the acquisition by the end of the ongoing fiscal.
Presently, Suzuki Motor Corp. holds 100% of the Gujarat manufacturing facility, which sells various models, including the Baleno, Dzire, and Swift, to Maruti Suzuki at cost.
"There are no benefits in terms of cost or technology. However, it means Maruti Suzuki will actually get involved with electric vehicle production," Chairperson RC Bhargava said in a media call to discuss the company's performance in the first quarter.
Suzuki Motor Corp. is occupied with the setting up of a battery plant in Gujarat along with a new R&D centre, which leaves them with limited resources to oversee the contract manufacturing plant, according to him.
Maruti Suzuki—including Suzuki Motor Gujarat—has an annual production capacity of 22.5 lakh units. Out of this, 7.5 lakh units are produced at this Gujarat plant.
"With the growth of the Indian car market and export potential, Maruti Suzuki India Ltd. would need to increase its production capacity to about 4 million cars per annum by 2030–31, almost double from current levels," Maruti Suzuki said in the release. "This would happen over several locations, some of which are known and some being studied."
In April this year, it announced a plan to expand annual capacity by up to 10 lakh units, which will be executed alongside the under-construction Kharkhoda plant. However, the location of this plant hasn't been disclosed yet.
The plant in Kharkhoda was announced less than a year ago. Spread across 800 acres, the plant is expected to start producing 2.5 lakh units per year by 2025 and can be expanded up to 10 lakh units.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
