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Maruti not to buy Suzuki gear-box tech

V Phani Kumar

Maruti Udyog has dropped plans to acquire the gear-box technology for its models from Suzuki Motors. The Japanese auto major holds a 50 per cent stake in Maruti, which is a joint venture with the Government of India.

Instead of financing the import of gearbox technology, Maruti now plans to spend the money to roll out new models. Senior company officials estimate that it would have cost as much as Rs 50 billion to acquire the technology from Suzuki, an amount that could be utilised more productively in other areas.

A top company official said: "The funds available with us are limited. We would rather utilise them in more important things like rolling out newer products. It would probably have made sense to acquire the technology about five years back. It does not make sense any more."

Currently, all Maruti models being offered in India have been designed and developed by Suzuki, and Maruti pays a royalty to Suzuki of about three per cent of sales on the cars sold in India.

As part of its divestment in Maruti, the government is planning to come out with a rights issue wherein it might relinquish its rights entitlement in favour of financial institutions as a prelude to the sale of its stake in the company. Senior company officials declined to divulge any details on the latest developments in the rights issue.

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