24-Nov-2023
2 mins read
Preferential Share Allotment to Suzuki Motor Corporation
In a significant development, Maruti Suzuki India’s Board of Directors has given the green light to the allotment of 1,23,22,514 equity shares to Suzuki Motor Corporation (SMC) on a preferential basis. This decision follows the automobile major’s earlier resolution in October to issue and allot 1.23 crore fully paid-up equity shares, each valued at Rs 5, to Suzuki Motor at a substantial price of Rs 10,420.85 per share. The total consideration for this preferential share issue amounts to a substantial Rs 12,800 crore.
Strategic Plant Transfer
Simultaneously, SMC has agreed to transfer ownership of its manufacturing plant in Gujarat to Maruti Suzuki India Limited (MSIL). This strategic move involves a total value consideration of Rs 12,800 crore. This transfer aligns with the broader corporate strategy and underscores the collaboration between the two automotive giants.
Financial Implications and Shareholder Impact
The preferential share issue results in an increase in SMC’s equity share in MSIL from 56.48% to 58.19%. The valuation for the preferential share issue was determined at Rs 10,420.85 per equity share, as per the Valuation Report dated 17th October, 2023, issued by RBSA Valuation Advisors LLP, the Independent Registered Valuer. This financial manoeuvre is anticipated to strengthen the partnership and financial structure between Maruti Suzuki and Suzuki Motor Corporation.
Record-breaking Sales and Financial Performance
Maruti Suzuki’s recent financial achievements are worth noting. In October 2023, the company achieved its highest-ever monthly sales, reaching an outstanding 199,217 units. This surge in sales contributed to the company’s robust year-to-date sales performance, recording an 8.36% increase compared to October 2022.
In the July-September quarter, Maruti Suzuki reported a substantial YoY growth of 80.3% in profit, reaching Rs 3,716.5 crore. The company’s net sales for the quarter also grew by 24.5%, reaching Rs 35,535.10 crore. The positive performance was attributed to higher sales volume and an improved product mix.
Outlook and Future Prospects
As Maruti Suzuki forges ahead with its strategic initiatives, including the preferential share issue and plant acquisition, the company is positioned for continued growth in the highly competitive automotive market. The collaboration with Suzuki Motor Corporation remains a key driver of success, and the recent financial achievements underscore Maruti Suzuki’s resilience and adaptability in a dynamic industry landscape.
In conclusion, Maruti Suzuki’s recent corporate decisions reflect a forward-thinking approach, blending financial acumen with operational strategy to bolster its market position and foster sustainable growth.