Sumitomo to raise stake in Swaraj Mazda

Japanese giant to be largest shareholder with 25% stake.

The battle for Swaraj Mazda has taken a decisive turn, with Punjab Tractors agreeing to offload 15 per cent stake to Japan's Sumitomo Corporation.

After the deal, Sumitomo will become the largest shareholder in Swaraj Mazda with a 25 per cent stake.

Punjab Tractors now holds a 29.04 per cent stake, Mazda Motor 15.62 per cent and Sumitomo 10.41 per cent.

Sources close to Punjab Tractors said: "Sumitomo has approached the company to buy 1,573,000 equity shares, representing a 14.99 per cent stake of Swaraj Mazda. The Punjab Tractors board has decided to positively consider the Sumitomo proposal."

The sources, however, did not reveal the price of the proposed acquisition.

Stock market sources said the amount could not be less than the price of Rs 400 per share offered by private equity fund Actis. At this price, a 15 per cent stake will cost about Rs 63 crore.

Yash Mahajan, vice-chairman and managing director of Punjab Tractors, could not be reached for comments.

Swaraj Mazda will be required to have a fresh technical alliance, as the previous one with Mazda Motor Corporation has expired.

Mazda had also withdrawn from the manufacture of commercial vehicles.