Maruti's Board Approves Pact for Suzuki’s New Gujarat Plant

  • Manufacturing agreement with Suzuki for as long as 30 years
  • Some Maruti shareholders earlier protested Gujarat proposal

Maruti Suzuki India Ltd., India’s biggest automaker, said its board approved a contract manufacturing agreement with a local unit of Suzuki Motor Corp. to build a new factory in Gujarat.

Suzuki Motor Gujarat Pvt. will make vehicles and parts exclusively for Maruti for as long as 30 years, once the deal is passed by minority shareholders and receives necessary regulatory approvals, the New Delhi-based carmaker said in a filing Saturday to the Bombay stock exchange.

Suzuki said in January 2014 it would spend 50 billion yen ($417 million) on the factory. Due to start production in 2017, the plant will have an initial annual capacity of 100,000 cars, and all its output will go to Maruti, Suzuki said at the time.

Maruti is planning to seek minority shareholders’ approval to allow Suzuki to own and invest in the Gujarat plant, Maruti chairman R. C. Bhargava said last month. Shareholders protested the plan when it was proposed last year.

Shares of Maruti fell 2.3 percent to close at 4,580.35 rupees in Mumbai trading Thursday, their biggest decline since Sept. 1, as the benchmark S&P BSE Sensex rose 0.3 percent. Indian markets were closed Friday for a holiday.

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