The unsecured creditors of Maruti Suzuki have approved a scheme to amalgamate the company with Suzuki Powertrain, the company said in a statement to stock exchanges. The final approval has to come from the Delhi High Court.
“At the court convened meeting of the unsecured creditors of the company, held on September 29, 2012, the unsecured creditors have approved the Scheme of Amalgamation between Maruti Suzuki India Ltd and Suzuki Powertrain India Limited and their respective shareholders and creditors. The scheme is now subject to the final approval of the Hon'ble High Court of Delhi,” Maruti Suzuki said.
Once implemented, the scheme will bring under a single management all diesel manufacturing facilities at Maruti Suzuki India Ltd (MSIL). It aims to bring synergies in areas such as finance, capital structuring and administration, leading to a reduction in transaction costs.
Subsequent to this merger, Suzuki Motor Corporation's (SMC) stake in Maruti Suzuki will go up to 56.2 per cent from the current 54.2 per cent. The merger will be effected through a share swap. There will be no cash outflow from MSIL.
“With the merger, MSIL will be able to bring its entire diesel engine capacity under a single management control. All key initiatives to strengthen the business, including sourcing, localization, production planning, manufacturing flexibility and cost reduction can be controlled, monitored and improved by the MSIL management”, the company had said in a statement in June this year.
Suzuki Powertrain, which is a 70:30 joint venture between parent SMC and the Indian subsidiary MSIL, supplies 300,000 diesel engines and transmissions to the company annually. As per the understanding, the swap ratio has been fixed at 1:70. SMC will receive one share of Maruti Suzuki of Rs 5 each for every 70 shares of Rs 10 each it holds in SPIL.
MSIL proposes to make a fresh issue of 13.17 million shares to SMC in lieu of its 70 per cent holding in Suzuki Powertrain. Once the merger is approved, the books of accounts of Suzuki Powertrain will be merged with Maruti with effect from 1 April, 2012.
SPIL currently has 2,592 employees all of whom will be absorbed into Maruti Suzuki. SPIL's turnover in the last financial year stood at Rs 4,550 crore. It recorded net profit of Rs 150 crore. Suzuki Powertrain has debt of Rs 550 crore which will go into Maruti Suzuki’s book.
