"The board of directors of Maruti Suzuki India on Tuesday approved a proposal to merge Suzuki Powertrain India Ltdwith MSI," the company said in a statement.
SPIL, which supplies diesel engines and transmissions to MSI, is a subsidiary of Suzuki Motor Corporation.
SMC holds a 70 per cent stake in SPIL, while the rest is held by MSI, it added.
"Consequent to the merger, SMC's holding in MSI will go up from 54.2 per cent to 56.2 per cent. . . MSI proposes to make a fresh issue of 13.17 million shares to SMC in lieu of SMC's 70 per cent holding in SPIL," MSI said.
The domestic car market leader said there will be no cash outflow from MSI as the merger is proposed to be effected through a share swap agreement.
As per the understanding, the swap ratio has been fixed at 1:70, which means SMC will receive one share of MSI of Rs 5 each for every 70 shares of Rs 10
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