Passenger car market leader Maruti Suzuki India on Monday said it would acquire 100 per cent of Suzuki Motor Gujarat (SMG). Suzuki Motor Gujarat supplies its entire production exclusively to Maruti Suzuki India.

Maruti said its board has agreed to exercise the option of taking over SMG as it wanted to bring all its production activities under one entity.

The deal is subject to all legal and regulatory compliances including minority shareholders’ approval. Suzuki Motor Gujarat is a wholly owned subsidiary of Japan’s Suzuki Motor Corporation, which owns 56.48 per cent of Maruti Suzuki India.

R.C. Bhargava, chairman of Maruti Suzuki India, said the deal would be completed before March 31, 2024. “We are yet to decide on how to acquire it,” he added. The modalities of this acquisition will be decided in the forthcoming board meetings.

“The result of this will not affect either the production or profits as far as customers or shareholders are concerned. But, it will facilitate Maruti’s working and to the extent that Maruti’s working becomes more streamlined and easier to handle,” Bhargava said.

When asked about the expected purchase amount, Bhargava said: “At this stage, we can only say that the contract manufacturing agreement provides that Maruti will acquire shares at the book value of SMC.” That book value last known was at around Rs 12,000 crore.

The turnover of SMG in the last financial year was Rs 31,852.5 crore. It has an installed production capacity of 7.5 lakh units per annum.

Initially, the Gujarat plant was proposed to be owned by MSI but the plan was changed later with SMC announcing that it would invest $488 million to build the plant.

The plan was opposed by the institutional investors forcing the company to seek minority shareholders’ approval on the matter.

The battery plant and R&D will continue to remain with the Japanese parent company.

Maruti reported a two-fold jump in consolidated net profit to Rs 2,525 crore in the first quarter of the fiscal from Rs 1,036 crore a year ago. Total revenue from operations increased to Rs 32,338 crore from Rs 26,512 a year ago.

Maruti Suzuki shares on Monday ended 1.56 per cent up at Rs 9,819.55 apiece on the BSE.