The government on Thursday approved the sale of its 10.27 per cent stake in the country’s largest car manufacturer Maruti Udyog to a clutch of banks, financial institutions and mutual funds that will fetch it Rs 2,360 crore and end a more-than two-decade-old association with the company.
"We have sold all the remaining shares held by the government in Maruti Udyog at an average price of Rs 797 a share to raise Rs 2,360 crore," Minister of Heavy Industries and Public Enterprises Santosh Mohan Dev said after an inter-ministerial group headed by Finance Minister P Chidambaram approved the sale.
In June 2003, the government had divested a 25 per cent stake in Maruti Udyog at Rs 125 per share, raising Rs 993 crore. Besides, the government had also received Rs 1,000 crore as a control premium from Japanese major Suzuki Motor Corporation, the joint venture partner.
Suzuki Motor Corporation holds 54.2 per cent in Maruti Udyog, while Indian banks and financial institutions hold 35.5 per cent. The government holds the remaining, which the inter-ministerial group decided to sell on Thursday.
State-owned insurance behemoth Life Insurance Corporation (LIC), which already holds 8.1 per cent in the automobile major, received the highest number of shares (13 million). LIC bid Rs 800 a share and was the second highest bidder. After the transfer of the new lot of shares, LIC’s stake in Maruti will go up to 12.5 per cent.
"The shares will be transferred to LIC in September, when the shareholders of Suzuki Motor Corporation amend the Articles of Association. Suzuki has allowed LIC to increase its stake in Maruti Udyog to above 10 per cent," P V Bhide, secretary, department of disinvestment, said.
The average bid was Rs 797 a share, against the floor price of Rs 760 set by the government. In all, 32 of the 36 financial institutions that bid received Maruti shares. Franklin Templeton, SIDBI, Birla Sun Life and United India Insurance were not allotted any because of low bids, government sources said.
Corporation Bank, which made the highest bid at Rs 850 a share, has been allotted 588,000 shares. The country’s largest public sector bank State Bank of India was the second most successful bidder and received 8.3 million shares at Rs 775 each. Exim Bank, which too offered a price of Rs 850 a share, received 118,000 shares.
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