The government has set in motion the process of exiting Maruti Udyog with an eye to sell its remaining 10.27% stake in India's largest car manufacturer by the end of the current fiscal.
Sources said finance ministry had initiated consultations with other ministries on the issue and was expected to float a cabinet note soon. It is, however, playing safe and is planning to replicate the earlier model of selling the stake to state-owned banks, financial institutions and insurance companies through a process of competitive bidding.
The government plans to use Maruti's closing price for July 29 (Rs 926.70) as the reserve price for this tranche of stake sale. At this price, the Centre can mobilise Rs 2,700 crore from the equity sale.
The government, during NDA regime, sold a part of its stake to Suzuki, its joint venture partner in India's largest car manufacturer, at a negotiated price. It followed it up by divesting a 25% stake through a public offer. In January this year, following a change of guard at the Centre, government opted to sell 8% stake to public sector banks, FIs and insurance firms, which helped it raise over Rs 1,560 crore. Recently, the cabinet approved the allotment of 20 shares each to the 3,500-odd MUL employees at a discount.
Unlike opposition to disinvestment in PSUs, government does not see any pressure on MUL sale with the allies not opposing the move, saying that the firm has already been privatised and even the government nominee on its board has been withdrawn. The heavy industry ministry too is on board and the proposal to sell the remaining stake had come from it. In fact, finance ministry had earlier this year advised the heavy industry ministry to postpone the sale for a while, hoping that the market conditions would improve.
The move comes at a time when the government is under pressure to meet the fiscal deficit and revenue deficit targets for the current fiscal with expenditure ballooning during the first half of the fiscal despite revenues remaining buoyant.
Sources said finance ministry had initiated consultations with other ministries on the issue and was expected to float a cabinet note soon. It is, however, playing safe and is planning to replicate the earlier model of selling the stake to state-owned banks, financial institutions and insurance companies through a process of competitive bidding.
The government plans to use Maruti's closing price for July 29 (Rs 926.70) as the reserve price for this tranche of stake sale. At this price, the Centre can mobilise Rs 2,700 crore from the equity sale.
The government, during NDA regime, sold a part of its stake to Suzuki, its joint venture partner in India's largest car manufacturer, at a negotiated price. It followed it up by divesting a 25% stake through a public offer. In January this year, following a change of guard at the Centre, government opted to sell 8% stake to public sector banks, FIs and insurance firms, which helped it raise over Rs 1,560 crore. Recently, the cabinet approved the allotment of 20 shares each to the 3,500-odd MUL employees at a discount.
Unlike opposition to disinvestment in PSUs, government does not see any pressure on MUL sale with the allies not opposing the move, saying that the firm has already been privatised and even the government nominee on its board has been withdrawn. The heavy industry ministry too is on board and the proposal to sell the remaining stake had come from it. In fact, finance ministry had earlier this year advised the heavy industry ministry to postpone the sale for a while, hoping that the market conditions would improve.
The move comes at a time when the government is under pressure to meet the fiscal deficit and revenue deficit targets for the current fiscal with expenditure ballooning during the first half of the fiscal despite revenues remaining buoyant.
No comments:
Post a Comment