Govt to withdraw stake from Maruti
by Gyanendra Kumar Keshri

    New Delhi: The Government of India today announced that it will no longer have any say in the affairs of Maruti Udyog Ltd, the country's largest passenger car maker, as it has decided to withdraw its existing stake also from the company. Heavy Industry Minister Santosh Mohan Dev told reporters here that "We have offered to the Finance Ministry that it can sell 10.24 percent stake in Maruti that will be left (after the current round of disinvestment). It is up to them to decide."

   The process of sale of eight percent shares in the company by the government has reached a final stage. The financial bids have been invited from the public sector financial institutions for the stake. Wednesday is the last date for submitting the bids. Bids will be opened on Thursday. As many as 36 public sector financial institutions, including all the banks and insurance companies, have submitted expression of interest for the shares of Maruti. This year, the government's right to appoint a director on the Board of Maruti comes to an end. So, retaining the 10.24 percent stake would not make much difference, as the government would anyway be losing the opportunity to guide the company's affairs. The government has fixed the floor price at Rs 620 per share for selling eight per cent stake in Maruti, hoping to raise more than Rs 1,432 crore from the process. Though the floor price has been kept at a substantial discount to the market price, the government is expecting aggressive bidding as the offer gives the financial institutions a chance to acquire a substantial holding in a well performing company. The government has reserved the right of not selling the entire eight percent shares of Maruti that have been put on block if the bids are not to its liking, irrespective of whether or not they are above the floor price. The shares come with a lock-in period of six months. The indicative price would be fixed on the basis of the price of the Maruti shares on the stock exchanges. The government has kept the minimum bid value at Rs 10 crore and a single institution can bid for all the shares on offer. However, it has said that the present holding of the institution in Maruti and shares transferred from government to it should not exceed 10 percent equity of MUL on the date of such transfer. The government has put 23,112,804 shares of Maruti on block and after the transaction is complete its stake in the company will come down to 10.24 per cent.

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