Smc Majority In Gearbox Jv Ruled Out

The government is not in favour of Suzuki Motor proposal to set up a separate Rs 1,200 crore joint venture to manufacture gearboxes in which the latter will have a majority stake.

Instead, the government is weighing the option of setting up the project within Maruti Udyog itself, while providing adequate safeguards to ensure that Suzukis technology is protected.

However, a final decision will be taken only after Maruti Udyog management submits its report on the Suzuki Motor proposal to the government.

Sources in the government said: We are weighing the different options proposed by Suzuki. We would not prefer to give it a majority equity in a separate venture, but we will have to build in necessary safeguards to address their concerns over proprietary technology if we do it within Maruti.

 

Suzuki Motor has submitted a detailed project report to Maruti for its consideration which envisages a phased investment of over Rs 1,200 crore to set up the project.

The project according to the DPR would be implemented in two phases the first phase being completed in 24 months and the second in 13 months.

The Japanese giant had suggested two options either to set up the project within MUL, or to set it up as a separate joint venture.

The transfer of technology of the gearbox has been a contentious issue between the two shareholders with the government contending that the Japanese partner was refusing to give the technology because it wanted MUL to import it from Japan and increase its component earnings.

Suzuki, however, had contended that it has no problem in transferring the technology provided that there are economies of scale for such a capital-intensive project.