Maruti Suzuki, India's largest automaker by sales, announced on Aug 8 that it would pay Suzuki Motors in preference shares to take over a local manufacturing plant, in a deal that will increase Suzuki Motor's stake in the company.

According to Maruti's chief financial officer Ajay Seth, the share allotment will increase Suzuki's stake in the Indian automaker by about 1.8%. Suzuki currently owns 56.48 percent of Maruti. The final deal value, which will be based on the plant's book value as of August 29, as well as the number of shares to be issued and the price, will be determined later, according to Maruti, who did not specify a date.

The plant, located in the western Indian state of Gujarat, is currently worth around 128 billion Indian rupees ($1.55 billion) after depreciation. Suzuki owns the plant, in which it has invested approximately 180 billion rupees since 2014. However, the plant produces cars for Maruti. The plant has a capacity of 750,000 units per year.

The agreement, announced by Maruti last week, will give the company a better grip on production, including electric vehicles (EVs), and will allow it to adjust production to changes in demand, according to Chairman RC Bhargava.

Maruti intends to produce six electric vehicles (EVs) at its Gujarat plant by 2030.

"With Maruti engineers taking over production at the plant, we will get a better understanding of EV manufacturing which will be important for the future," Bhargava said.

He added the deal will require the approval of minority shareholders. The share issue will dilute Maruti's outstanding shares by a little over 4 per cent, the company said.