Maruti Suzuki and Suzuki Power Train to merge

The board of directors of Maruti Suzuki India Limited (MSIL) today approved a proposal to merge Suzuki Powertrain India Limited (SPIL) with MSIL.

SPIL, which supplies diesel engines as well as transmissions for vehicles to MSIL, is a subsidiary of Suzuki Motor Corporation (SMC), Japan. SMC holds a 70 per cent share in SPIL and the remaining 30 per cent is held by MSIL.

With the merger the Japanese parent's stake in domestic car market leader Maruti Suzuki Ltd will go up by 2 per cent to 56.2 per cent.

''The merger will bring MSIL's entire diesel engine capacity under a single management control. All key initiatives to strengthen the business, including sourcing, localisation, production planning, manufacturing flexibility and cost reduction can be controlled, monitored and improved by the MSIL management,'' Maruti Suzuki said in a release.

The merger, which is subject to statutory approvals, also promises benefits of synergies in areas like finance, capital structuring and administration and consequent reduction of transaction costs.

Maruti Suzuki said there will be no  job reductions because of the merger. There will also be no cash outflow from MSIL.