Indian carmaker Maruti Suzuki (MSIL) has approved to merge the Suzuki Motor's (SMC) subsidiary, Suzuki Powertrain India (SPIL), with itself following a stock swap transaction with Japanese parent company Suzuki Motor.
SPIL, the supplier of diesel engine and transmission to MSIL, holds 70% stake of SMC and the remaining 30% of Maruti Suzuki.
After the merger, Japan's Suzuki Motor stake in MSIL will increase to 56.2% from the current 54.2%.a
The decision to merge follows the bid by Japanese car maker, Suzuki Motor, to line up the engine manufacturer with expansion plans of Maruti Suzuki, which has plans to raise its production of diesel powered cars.
The unification allows MSIL to bring its complete diesel engine capacity under a single organisation control, which includes control of sourcing, localisation, production planning, manufacturing flexibility and reduction in costs.
According to the company, the merger is expected to be completed by end of December 2012, following which SPIL's accounts will be combined with MSI with effect from 01 April 2013.
