New Delhi : The Indian government Thursday approved the sale of its residual stake of 10.27 percent in the country's largest carmaker Maruti Udyog Ltd. (MUL) in which Japanese carmaker Suzuki Motor Co. has a majority stake.
This marks the government's complete exit from the car project that had started as a 50:50 joint venture with Suzuki to bring an affordable small car to the Indian consumer.
The government will receive Rs.23.68 billion (approx. $575 million) through sale of its stake to 32 banks, insurance companies and mutual funds. It had received 36 bids in all for the purchase of its stake.
An empowered group of ministers, headed by Finance Minister P. Chidambaram, approved the sale of its stake in MUL for Rs.796 rupees per share.
According to industry sources, the government has sold almost 10 million shares to LIC for Rs.800 per share, the largest to any bidder. LIC, which earlier held 8.1 percent in MUL, would now command 12.5 percent stake.
Amongst other successful bidders, Reliance Mutual Fund and HDFC Mutual Fund would receive 2 million and 1 million shares respectively, officials said. In addition to this, SBI Mutual Fund received 4.98 million shares along with 1.2 million to Punjab National Bank.
Bidders who failed to get Maruti's shares are Templeton, SIDBI and Birla Mutual Fund.
On Wednesday, the government received the 36 bids with bids ranging between Rs.765 to Rs.850 a share against a floor price of 760 rupees set by the government.
In February, the government had asked for expressions of interest for the stake but it was later deferred for an approval from Suzuki.
Suzuki still has more than 50 percent stake in the car venture that has been the forerunner of the passenger car revolution in the country.
The Maruti saga began in the 1970s when Suzuki chairman O. Suzuki responded to the invitation of then prime minister Indira Gandhi to set up a car factory in India in collaboration with her favourite son Sanjay Gandhi's prototype small car project. Sanjay Gandhi later died in an air crash in 1980.