Suzuki’s Gujarat unit will be 100 percent subsidiary

Suzuki Motor Corporation’s Gujarat unit, to come up in 2015, will be established as a wholly-owned subsidiary of the Japanese carmaker, it has been announced.
Maruti Suzuki had approved the purchase of land in Mehsana district in October 2011 for further expansion of manufacturing facilities and following the latest proposal from the parent company, it has acquired approximately 640 acres in Becharaji and approximately 550 acres in Vithalapur. The expansion of facilities was kept on hold due to market conditions.
According to Osamu Suzuki, chairman, Suzuki Motor Corporation, “The board of Maruti Suzuki has approved that a new company – Suzuki Motor Gujarat Pvt Ltd – will be set up. It will not be a listed company and will have a start-up capital of Rs 100 crore and be set up by April 2014 with the HO in Ahmedabad in the regional office of Maruti Suzuki.
“The new company will only take care of production with vehicle marketing to be done through the Maruti Suzuki network. The benefits of the business will be shared by three partners – Maruti Suzuki India, Suzuki Motor Gujarat and SMC. At present, there are no plans to increase stake in Maruti Suzuki,” Suzuki added
The land for the project would be leased by MSIL to the subsidiary company to establish the production and related facilities. The rent would be determined on an arms’ length basis.
The price of the vehicles to MSIL will include only the cost of production actually incurred by the subsidiary plus just adequate cash (net of all tax) to cover incremental capex, the company has said. MSIL retains the option of investing its own funds for strengthening its marketing network, product development, R&D and any other opportunity of growth for market leadership.
Chairman RC Bhargava said, “Production will start in the new plant by end-2016 or early 2017 and it will produce 250,000 cars in the first phase. The estimated investment in the new plant is around Rs 3,000 crore (for the first phase of 250,000 cars).”
SHOBHA MATHUR