Maruti Suzuki acquires Sumitomo's stake in JJ Impex

Maruti Suzuki India on Wednesday (13 May 2020) said its board took a slew of decisions, including acquisition of Delhi-based JJ Impex, and supply of Vitara Brezza to Toyota Kirloskar Motor (TKM).

The car major on said its board has approved acquiring 39.13% equity stake held by Sumitomo Corporation, Japan and 10% held by Sumitomo Corporation India in JJ Impex (Delhi), a company engaged in automobile service and repair business.

The cost of acquisition or the price at which the shares are to be acquired is fixed at Rs 21.73 crore, the company said.

After the acquisition, the company shall become the wholly-owned subsidiary of MSIL. MSIL shall have the right to nominate/ appoint all the directors on the board of the company. The nominee Directors of Sumitomo Group shall resign from the board of the company, Maruti Suzuki India (MSIL) said. The acquisition does not require any government approvals, it added.

In a separate announcement, MSIL said its board has approved supply of another product (derivative model of Vitara Brezza currently being manufactured by the company) to TKM. This will result in incremental sales for the company, it said.

The board has also approved the appointment of Maheshwar Sahu as an Independent Director of the MSIL for a period of five years (from 14 May 2020 till 13 May 2025) subject to shareholders' approval in the ensuing annual general meeting.

Sahu is an ex-senior civil servant with over 30 years of leadership experience in Central and State governments.

Maruti Suzuki India's profit after tax (PAT) fell 28.1% to Rs 1291.70 crore on a 17.1% decline in net sales to Rs 17,185.70 crore in Q4 March 2020 over Q4 March 2019. The auto maker attributed the decline in profitability to lower capacity utilisation and higher sales promotion expense, partially offset by lower operating expenses, cost reduction efforts and reduction in corporate tax rate.

Maruti Suzuki India is engaged in the manufacture, purchase and sale of motor vehicles, components and spare parts (automobiles).

Shares of Maruti Suzuki were down 0.62% at Rs 5004.

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