Maruti Suzuki Chairman RC Bhargava mentioned during a press conference that Suzuki’s stake in India’s largest passenger car manufacturer will increase by about 1.8 percent post the sale of the Gujarat plant.
Suzuki Motor’s stake is likely to increase to 58.28 percent from 56.48 percent currently. Bhargava also mentioned that just over 4 percent shares will be diluted basis the June 30 valuation. However, the exact stake dilution will only be known once the AGM date is fixed, Bhargava said.
India’s largest passenger carmaker approved the issue of equity shares of the company on a preferential allotment basis to Suzuki Motor Corporation to acquire 100 percent stake of SMC in Suzuki Motor Gujarat Pvt. Ltd.
The board evaluated two options for acquiring SMC’s equity in SMG – one was payment in cash and the issue of equity shares on a preferential basis.
Post the evaluation of the options, the board concluded that the option of acquiring SMG shares by issue of Maruti Suzuki India equity shares to SMC would clearly be beneficial to minority shareholders and to the company.Based on the data,
- Net profit of Maruti Suzuki would be higher in the share swap option in each year, increasing by over Rs 1,400 crore in 2030-2031.
- EPS would also be higher in the swap option, starting from Rs 7 per share and going up to Rs 20 in 2030-2031.
Maruti Suzuki’s Net Profit (Rs. Crore) | ||
Year | Cash | Swap |
March 2023 | 8,049 | 8,049 |
March 2024 | 8,164 | 9,057 |
March 2025 | 9,236 | 10,192 |
March 2026 | 10,446 | 11,468 |
March 2027 | 11,811 | 12,905 |
March 2028 | 13,351 | 14,521 |
March 2029 | 15,087 | 16,340 |
March 2030 | 17,046 | 18,386 |
March 2031 | 19,255 | 20,689 |
While the March 2023 figures are actual, Maruti has calculated the future net profit figures based on an assumed growth of 12.5 percent growth each year. The company has also clarified that it is not supposed to be taken as the company’s profit projections for the future.
The company would seek approval of minority shareholders at an Extrordinay General Meeting or through a postal ballott on a date to be fixed for terminating the current agreement, acquiring the shares of SMG from SMC and approving the said acquisition through the issue of equity shares.
The total number of securities proposed to be issued to SMC as consideration for the stake purchase will be decided in a subsequent board meeting.
Maruti Suzuki’s RC Bhargava told CNBC-TV18 on August 1 that growth in Maruti will not be possible without reorganising the company. He further said that it makes sense for one management controls the total production of the car and technologies.
Shares of Maruti Suzuki India are off the opening highs, currently trading 0.6 percent higher at Rs 9,577.25.