Suzuki Japan takes 100% control of Gujarat unit

In a surprising announcement, Maruti Suzuki India Limited (MSIL) has revealed that the Gujarat facility that is being developed will be a wholly-owned subsidiary of Suzuki Motor Corporation, Japan.

A new company by the name of Suzuki Motor Gujarat Private Limited (SMGPL) will be floated. It will have a start-up capital of Rs. 100 crore and will begin operations in April 2014. The company will not be listed and have its own management. The headquarters of SMGPL will be in Ahmedabad. It will manufacture and sell cars exclusively to MSIL. This will mean that in future, SMGPL will handle the production of vehicles and MSIL will take care of the sales and marketing.

MSIL had paid Rs. 250 crore to acquire 1,190 acres of land in Mehsana district of Gujarat for the expansion of its manufacturing facilities. However, it had to put its plans on hold due to unfavourable market conditions. The land will now be transferred to its parent company in lieu of an annual rental fee.

Production at the new plant is expected to start by the end of 2016 or in early 2017.

Source: Economic Times