Maruti Suzuki to issue preferential shares to its parent company Suzuki Motors

Maruti Suzuki Limited announces an issue of preferential shares to its parent company Suzuki Motors Corporation (SMC) in its latest exchange filing today. 

The company mentioned that the Board of Directors organized a meeting today and has granted approval for the issuance of equity shares by the Company. This issuance will occur through preferential allotment and is intended as compensation to Suzuki Motor Corporation. 

Furthermore, the company mentioned the purpose of this issuance is to facilitate the acquisition of SMC’s entire shareholding in Suzuki Motor Gujarat Private Limited (SMG). 

The completion of this transaction is subject to obtaining the necessary regulatory and statutory approvals, including the required consent from the Company’s shareholders. Upon successful completion of this acquisition, Suzuki Motor Gujarat Private Limited (SMG) will transition into a wholly owned subsidiary of our company. 

Ahead of the acquisition of Suzuki Motor Corporation’s stake in Suzuki Motor Gujarat Private Limited, Maruti Suzuki intends to issue equity shares through a preferential allotment to Suzuki Motor Corporation. 

On July 31, the board of Maruti Suzuki sanctioned the discontinuation of the contract manufacturing agreement (CMA) with Suzuki Motor Gujarat Private Limited and the procurement of shares in SMG from Suzuki Motor Corporation (SMC). 

The Board assessed two available options for acquiring SMC’s equity in SMG the first option is cash payment, and the second is the issuance of Maruti Suzuki India’s equity shares through a preferential allotment process. 

The Board, therefore, concluded that the option of acquiring SMG shares by issue of MSIL equity shares to SMC would clearly be beneficial to minority shareholders and to MSIL. 

The total number of shares of MSIL after the swap is based on the book value of SMG at the end of FY23 and the MSIL share price of June 30, 2023, which is Rs 9789 each on the NSE. The actual would depend on when the date of the EGM or postal ballot is fixed by the Board. The comparison would be similar said in the latest filling. 

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