New Delhi: Suzuki Motor Corp. is trying to insulate its Indian unit from the risks involved in developing electric vehicles even as the outcome of such efforts will benefit Maruti Suzuki India Ltd directly.

Driven by a policy push in India and a desire to keep its market share intact, Suzuki has formed two crucial partnerships—one where it will produce lithium ion batteries in collaboration with Denso Corp. and Toshiba Corp.; and another with the world’s largest automaker Toyota Motor Corp. to introduce electric vehicles in India by 2020.

In both the cases, while there is no direct involvement of Maruti in any manner, the fact that the Indian company does not have any equity participation means that it is unlikely to face any risk even if India’s electric vehicle drive fails to take off.

The role of Maruti in these partnerships may best be limited to that of a procurer of lithium ion battery packs (from the tripartite joint venture) and of electric vehicle platforms from the Toyota-Suzuki partnership. It will, of course, sell those to Indian customers if the electric vehicle market takes off in the country.

“The whole tie-up between Suzuki and Toyota is specifically for the Indian market. Hence, it is solely going to benefit Maruti. The Gujarat plant is also operated (and owned) by Suzuki but it has benefitted only Maruti," R.C. Bhargava, chairman of Maruti Suzuki, told Mint.

While the equity structure of the Toyota-Suzuki partnership is not known, in case of the joint venture for battery packs, the initial capital expenditure will be 20 billion Japanese yen (around $184 million). The joint venture company will be led by Suzuki, which will hold a 50% share.

Toshiba and Denso will have 40% and 10%, respectively, Suzuki Motor said in a statement. The collaboration between Toyota and Suzuki will also work in the areas such as environment-friendly technologies, hybrids, fuel cell tech, safety and connected technologies. The two companies will also source component from each other as a part of the agreement.

According to Puneet Gupta, associate director of consultancy firm IHS Markit, Suzuki has played it very safe to get maximum return in the country.

“It’s a smart move to invest in a technology that will help them stay relevant in the in the future when Suzuki on its own cannot expect to develop these technologies. Maruti being the most important subsidiary of Suzuki now, its interests have to be guarded," said Gupta.

Suzuki has adopted a similar strategy earlier, albeit for a different purpose, when it stopped Maruti Suzuki from making an investment of as much as $2 billion in Gujarat for capacity expansion and went ahead to invest its own cash to build the facilities.

Suzuki Motor Gujarat (SMG), another unit of the Japanese company, has a contract manufacturing agreement with India’s largest carmaker under which Maruti Suzuki buys produce from SMG at cost price.

The move, initially criticized by minority shareholders, left Maruti Suzuki with a lot of cash and allowed it to expand its marketing and sales infrastructure rapidly.

At the end of September, Maruti Suzuki was sitting on a cash pile of more than Rs30,000 crore—enough ammunition required to see through any conventional disruption in the Indian market.

Ever since Suzuki’s investment in Gujarat, Maruti Suzuki share price has jumped 73% and on Friday it rose 2.11% to a record high of Rs9,072, pegging its market capitalization at Rs2.74 trillion, exceeding India’s largest lender State Bank of India’s Rs2.71 trillion valuation.

Maruti Suzuki’s factories for internal combustion engine vehicles in Gurgaon and Manesar are already running to capacity and offer little room for a separate assembly line for electric vehicles in the foreseeable future. The factories owned by Suzuki Motor Gujarat will have six assembly lines, which are expected to produce 1.5 million vehicles by 2025. Of these, one line is fully functional and Suzuki has started work on the second.

According to several people Mint spoke with, all of whom spoke on condition of anonymity given the sensitivity of the matter, the partnership between Suzuki and Toyota could see the latter providing technology support in terms of motor, powertrain and back-end configuration, while Suzuki’s role may come in body building, painting and assembly.

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