Suzuki Motor raises stake in Maruti Suzuki to 56.21 per cent

Japanese auto major Suzuki Motor Corp has increased its stake in its India subsidiary Maruti Suzuki India Ltd (MSI) to 56.21 per cent from 54.2 per cent with the merger of its engine and transmission unit Suzuki Powertrain.

MSI, the car market leader in India, said the increase in stake followed a share swap agreement with Suzuki Powertrain India Ltd (SPIL), the company said in a filing with the Bombay Stock Exchange (BSE).

Prior to the merger, Suzuki Motor Corp held 70 per cent in  Suzuki Powertrain India, while the rest was held by Maruti Suzuki India.

MSI had, in June last year, announced plans to merge SPIL with itself in order to prepare itself to meet increasing demand for diesel vehicles. At that time, SPIL was supplying 3 lakh diesel engines and transmissions every year to MSI.

As per the merger agreement, the swap ratio was fixed at 1:70, which meant SMC received one share of MSI of Rs5 face value each for every 70 shares of Rs10 face value each it held in SPIL.

MSI made a fresh issue of 13.17 million shares to SMC in lieu of the Japanese parent's 70 per cent holding in SPIL.

There is no cash outflow from MSI as the merger was effected through a pure share swap agreement.

SPIL recorded a net profit of Rs150 crore on a turnover of Rs4,550 crore in 2011-12. It also had a debt of Rs550 crore, which went into MSI's book.

Shares of MSI were trading 0.10 per cent up at Rs1,281 on BSE during in late afternoon session.