New Delhi: India's largest passenger car maker Maruti Suzuki India Ltd (MSIL) Tuesday said it has received the board's approval to merge its engine and transmission making subsidiary Suzuki Powertrain India Ltd with itself.
"With the merger, MSIL will be able to bring its entire diesel engine capacity under a single management control. All key initiatives to strengthen the business, including sourcing, localization, production planning, manufacturing flexibility and cost reduction can be controlled, monitored and improved by the MSIL management," Maruti Suzuki said in a filing to the stock exchanges.
Japan's Suzuki Motor Corp, the parent firm of Maruti Suzuki, owns 70% stake in Suzuki Powertrain, while the remaining 30% is held by the Indian auto giant.
The board also gave nod to the share exchange ratio of 1:70, under which Suzuki Motor Corp's shareholders will receive one share of Maruti Suzuki of Rs 5 each for every 70 shares of Rs 10 each they hold in Suzuki Powertrain.
The appointed date for the proposed scheme of amalgamation will be April 1, 2012, the statement added.
Maruti Suzuki plans to issue fresh 13.17 million shares to the Japanese parent in lieu of the latter's 70% stake in Suzuki Powertrain. Following the merger, Suzuki Motor Corp's stake in the Indian automaker will rise to 56.2% from 54.2%.
The company expects to receive all the necessary regulatory approvals and complete legal requirements for the merger by the end of December 2012.
Shares of Maruti Suzuki closed at Rs 1,146.3, up 3.34%, on the Bombay Stock Exchange today.