Maruti May Be Put On Sell-Off List

A proposal is gaining ground in the government that Maruti Udyog should not be excluded from the list of companies being considered for divestment.

"We have no reason to have a special policy for Maruti Udyog as the government plan is to get out of the business of running businesses," a senior functionary associated with the divestment process said.

Divesting its stake in Maruti Udyog could help the government achieve its ambitious divestment target set out in this year's budget. However, industry minister Sikandar Bhakt has said on a number of occasions that there is no move to divest government stake in the company.

The government owns 50 per cent of Maruti Udyog's equity. The other half is owned by Japan's Suzuki Motor Corp.

Earlier attempts to sell the government's stake in Maruti fell through. As industry minister in the United Front government, Murasoli Maran had made overtures to General Motors to buy the government stake. The deal did not materialise.

And during R C Bhargava's tenure as managing director of Maruti Udyog, the company had considered divesting a part of the government stake to the public to finance expansion. However, the government shot down the proposal and decided to finance the expansion through internal accruals.

A market study during Bhargava's tenure showed the government could mop up Rs 5,000-6,000 crore if it divested its 50 per cent stake. And the shares could be sold at a premium of Rs 800-1,000. MUL's total equity capital is around Rs 66 crore.

"With management control (in Maruti Udyog) already with the Japanese, we have to ensure that we get the best price for the shares," the divestment functionary said.

Under the new divestment structure being worked out, the government plans to set up a statutory body under the finance ministry to which PSUs identified for divestment will report. The administrative ministry will then transfer the responsibility of the PSUs to the new body.