RC Bhargava, Chairman of Maruti Suzuki India, reiterated at a press meet on Tuesday that the decision to buy out Suzuki Motor Gujarat (SMG) was in the best interests of everyone concerned.
With the company looking to double capacity to four million units and getting into a host of new areas like electric, biogas, CNG, ethanol etc., it was imperative to “reorganise Maruti and facilitate our ability for smooth working.” This was the reason to go for the SMG buyout from the parent company, Suzuki Motor Corporation, by way of allotting preferential shares.
The Maruti Suzuki Board had given the go-ahead to this proposal which will now need the approval of other stakeholders. The feedback coming in thus far has been a “universal positive” which, the management believes, augurs well for minority shareholders.
If everything goes according to plan, Suzuki Motor’s share in Maruti will increase from 56.48% to 58.28%. The parent company had taken charge of executing the Gujarat plant in 2015 and has spent around INR 18,000 crore thus far.
According to Bhargava, things had changed quite rapidly for Maruti since then with more capacities planned coupled with a host of new challenges in the mobility arena. “We were a different company then (at the time of commissioning Gujarat). Managements should be aware of what is happening worldwide and take appropriate action to ensure that they are ahead of the curve,” he said.
Once the shift in ownership happens, the Japanese management at Gujarat will gradually give way to greater ‘Indianisation’ of the plant as Maruti steps into the picture. This facility will also be home to the company’s electric programme with six EVs between now and 2031. In the process, its engineers and managers will have a bigger role to play in the overall electric story.
Suzuki Motor has by itself planned a battery plant in Gujarat. Beyond this, the Japanese parent company proposes to tie up with Amul for a biogas plant while Maruti will have its own for its facilities in Gujarat and Haryana.
Exports will be a key component of the Maruti growth strategy for the remainder of this decade with numbers slated to touch 800,000 units by 2031. Gujarat will clearly play a key role here by virtue of its proximity to the port and it is also likely that Suzuki’s global ally, Toyota Motor Corporation, will be integral to the EV plans.
These will be part of the overall global script which will see the duo collaborate even more extensively in the coming years with Gujarat possibly emerging as a key EV laboratory of sorts.
Bhargava also made it clear that while sales of small cars may have fallen in recent years, they still take up a sizable share of the overall market. This, he added, was enough reason for Maruti to continue producing them even while customers are rapidly moving to pricier SUVs.
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