In a joint board meeting, Suzuki Motor Corporation, Maruti Suzuki India Limited , and Suzuki Motor Gujarat Private Limited have given their approval for the conversion of SMG, a wholly-owned subsidiary of Suzuki, into a subsidiary of MSIL. The decision has been taken apparently to improve efficiency in automobile production in order to meet the demand of the growing market and to achieve carbon neutrality.
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MSIL is trying to secure a total production capacity of approximately 4 million units in India by FY 2030
As part of this plan, MSIL has announced the construction of new plants with a manufacturing capacity of one million units, in addition to the existing facilities. The new plants, located in Kharkhoda, Haryana, are scheduled to commence operations in 2025. Furthermore, MSIL is trying to secure a total production capacity of approximately 4 million units in India by the financial year 2030.
Suzuki intends to focus on strengthening research and development efforts in futuristic technologies. To achieve this, Suzuki R&D Center India Private Limited, a wholly-owned subsidiary in India, will serve as the focal point for investments in advanced technology development, battery manufacturing for electric vehicles, biogas business, and other related ventures.
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SMG and MSIL entered into a contract manufacturing agreement in 2017, with SMG taking up the production of automobiles exclusively for MSIL. According to the terms of the agreement, MSIL holds the right to acquire all shares of SMG owned by Suzuki if the contract manufacturing agreement is terminated. Through the termination of this agreement and the subsequent acquisition of all SMG shares, SMG is set to become a subsidiary of MSIL.
However, the subsidiarisation process is contingent on receiving approval from the shareholders of MSIL and the Government of India. Although the timeline will be influenced by the progress of the necessary procedures, it is anticipated that the subsidiarisation will be concluded by the end of the current financial year.
