Maruti Udyog to buy out and merge subsidiary
New Delhi, Apr 13 (UNI) India's biggest car company, Maruti Udyog Ltd (MUL), today said it will buy Suzuki's entire stake in Maruti Suzuki Automobile India Ltd (MSAIL) and merge the subsidiary with itself.
''Maruti will use its cash reserves to buy Suzuki's stake in the joint venture,'' MUL Managing Director Jagdish Khattar said here.
The Company will buy out the entire 30 per cent stake held by Suzuki Motor Corporation (SMC) in MSAIL for an undisclosed amount.
Mr Khattar said that a five-member sub-committee has been formed to look into the financial and legal details of the merger. ''The committee will submit its report by September 2006,'' he added.
Of the total cost of Rs 1,524 crore for the Manesar project, only around Rs 250-300 crore has been invested till date.
''The money has been invested in the ratio of 70:30, which effectively means that a nominal amount will be transferred into MUL's books,'' Mr Khattar said.
''There will be a very nominal change in the equity structure of MUL post merger,'' he added.
Mr Khattar further said that the merger will add value for shareholders and eliminate all potential issues relating to inter-company transactions.
According to an agreement in September 2004, MSAIL was set up as a subsidiary to operate a new car plant in Manesar, which will initially have a capacity of 1,00,000 cars a year.
A new car plant at Manesar is coming up at an investment of Rs 1524.2 crore. The capacity is being scaled up to 2,50,000 cars per annum by 2008-09.
The new car plant will begin commercial production on schedule, by the end of 2006.
The company has also undertaken a change in its directorate.
MUL Director (Marketing&Sales) Kinji Saito has been replaced by Shuji Oishi.
Saito has been with the company for the last four years.
The company has also appointed Amal Ganguli as the non-executive independent Director and Chairman Audit Committee in place of Kalyan Bose who resigned from the Board.
UNI SR SBJ HT1715