Maruti Suzki Fresh Investment

Fundamental Analysis
1

Fact :

  1. Recently an official annoucement was made that Suzuki Motors will be bringing in Rs10,445 Crore on the table for producing Electric Vehicle in India
  2. Currently the Public Holding in the Maruti Suzuki is less than 5%

How will the amount from Promoter Group will be introduced?

Will they be issuing fresh shares in their own name ie increasing the promoter holding?

Or Will they create a subsidary making themselves (Suzuki Motors Corporation) the sole share holder and exploiting the existing facilities of Maruti Suzuki, producing & selling EVs under the brand name of Maruti Suzuki and making profits for themselves? They may pay some royalty but I don’t think whatever they pay will be equal to the efforts put by the Maruti Suzuki Team.

Excuse my ignorace but what is the generally followed method when fresh investment by promoters comes in for fulfilling a specific objective? (When the objective is clear they may be interested in making profits for themselves only)

In what other avenue can they introduce the money so that its beneficial for the shareholders? (Or atleast in the interst of shareholders)

Any input is very much appreciated.

2

“ Finally, there’s one other thing we haven’t talked about yet. Maruti Suzuki isn’t the one making the investment right now. Rather, it’s another subsidiary set up by the Japanese parent company Suzuki Motors — called Suzuki Motors Gujarat (SMG). They’re the ones building things. So effectively, once they start production, they’ll likely transfer the cars to the Indian entity at cost i.e. the money it takes to manufacture these things. And Maruti Suzuki will likely mark it up, sell it, and pocket the difference.”

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3

Thanks for the info. Clarified my doubt.

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4

This is the biggest concern with Maruti Suzuki right now.
All fresh investments, starting from Gujarat plant they built, are being done by Suzuki directly and not through Maruti Suzuki India entity.

If this continues, Maruti Suzuki will simply become a marketing entity, dependent on whims and fancy of Suzuki corporation

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5

“ The success of the joint venture led Suzuki to increase its equity from 26% to 40% in 1987, and to 50% in 1992, and further to 56.21% as of 2013.”

6

Most of that increase in Suzuki equity was because of Suzuki buying out Govt of India equity in venture. Once GoI completely sold out, Suzuki has not bothered to increase its stake in venture.
Instead, all fresh investments are being made directly by Suzuki, sidelining the venture.

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9

Maruti Suzuki is considered as a potential investment option at this moment. A long-term increase is expected.

10

Good rally in the last 4 weeks. Main question is will it give a BO above 10k?