Dubbing the settlement as a "happy ending" in national interest, Santosh Mohan Dev, minister of heavy industries, said the new car facility, part of the Rs 1,000 crore investment announced by SMC in India, would be "under the flagship of Maruti Udyog (MUL)".
He exuded confidence that the settlement would not only protect the interest of existing shareholders in MUL, where government has 18.4% stake, but also enhance and expand the reach of the Indian car company which would market the product from the new ventures.
He, however, clarified, that the final decision on the structure of new ventures would be taken by MUL, a JV between government and SMC, tomorrow at its board meeting.
"We can have up to 70% equity in the car venture. In the diesel unit, they have offered us as much equity as we want but the propriety demands that the decision be taken by the MUL board," Dev said after a two-hour long meeting that SMC delegation led by S Nakanishi had with top officials of the ministry of heavy industry.
The government had threatened last week to stall Suzuki's investments, announced by SMC chief Osamu Suzuki in Tokyo, saying it would not allow any competition from the Japanese firm.
As part of the settlement, Maruti would have a "significant" presence in the diesel venture. However, as per available indication, it would have up to 49% equity as Suzuki was bringing in the latest technology, including that for gear box and foundry for producton of engines for both domestic and exports markets.
SMC representative Nakanishi, who is also the chairman of MUL, accompanied by MUL managing director Jagdish Khattar and two other officials, declined to entertain any query about the marathon meeting, which acording to Dev was the outcome of the government's "reaction" three days ago.
Dev said the Japanese delegation expressed regrets over the "confusion" caused by the "communication gap".
He, however, said "let bygones be bygones" and added that the government would not take any "legal" action against Suzuki for unilaterally announcing the Rs 1,000 crore investment in India which is against 'press note 18' that mandates any foreign investor to take consent of its existing JV partner for entering the same business.
As a prelude to today's meeting, Suzuki had last week called up the mandarins of heavy industry ministry from Japan.
The government took a tough stand after SMC announced that it would pump in over Rs 1,000 crore in India to set up a new company for car assembly with a production capacity of 2,50,000 units, a diesel engine manufacturing unit and a motorcycle venture which shaved off Rs 250-300 crore of value of government holding in MUL in two days from September 13.
"SMC officials profusely apologised for their action, which led to a dip in MUL scrip value and the market capitalisation of India's car market leader," Dev added.
