Maruti Suzuki, Suzuki Motor Gujarat merger approved: Why it matters
What's the story
The National Company Law Tribunal (NCLT) has approved the merger between Suzuki Motor Gujarat and its parent company, Maruti Suzuki India. A two-member bench of the Delhi-based Principal Bench of NCLT accepted a joint petition filed by both companies. The appointed date for this merger scheme has been set as April 1, 2025.
Approval details
No reason not to approve the merger scheme: NCLT bench
The NCLT bench, comprising President Ramlingam Sudhakar and Member Ravindra Chaturvedi, said there was no reason not to approve the merger scheme. They noted that it serves the interests of both companies, their shareholders, creditors, employees and other stakeholders. The Income Tax Department and other statutory authorities such as RBI, SEBI, BSE and NSE had not raised any objections against this proposed merger scheme.
Strategic benefits
Strategic benefits highlighted in joint petition
The joint petition filed by Suzuki Motor Gujarat and Maruti Suzuki India highlighted several strategic benefits of the merger. These include focused growth, operational efficiencies, enhanced business synergies and simplification of group structure. The companies also said that this move would improve agility for quick decision-making in operations and align each business unit toward common goals.
Cost benefits
Proposed merger to eliminate administrative duplications
The proposed merger is also expected to eliminate administrative duplications, thereby cutting down on the costs of maintaining separate entities. It would enable sharing of best practices, cross-functional learnings and efficient utilization of facilities. The companies said this would help improve various performance indicators for manufacturing such as HPV (Hours per vehicle), direct pass rate etc, leading to rationalization of cost and maximization shareholder value.
Employee transition
All employees to be retained post-merger
As part of the merger scheme, all employees of Suzuki Motor Gujarat who are on its payroll immediately before the effective date, will become employees of Maruti Suzuki India from that date. This move is aimed at ensuring a smooth transition and continuity for all staff members involved in this major corporate restructuring process.