The government has capped the equity a financial institution can hold in Maruti Udyog Ltd at 10% in the last tranche of its residual stake sale this year. The government has 10.27% in the car maker.
At present, various FIs together hold 31.06% in Maruti, India’s largest car company with 53% market share. State-owned Life Insurance Corporation with 8.02% and the HSBC group with 3.07% are two of its biggest institutional shareholders.
“While bidding, each institution will have to give an undertaking that its holding will not exceed 10%,” said a government official. According to government sources, this has been done to ensure that the promoter group in the company, Suzuki Motor Corporation, has a free hand in running the company.
At present, Suzuki Motor Corporation is the largest shareholder with 54.2% in Maruti. The company was floated as an equal JV between the government and Suzuki in 1981.
But it is not clear if the government wants to cap institutional holding after divestment at 10% for public sector companies.
The Cabinet Committee on Economic Affairs had given its go-ahead to the sale of the government stake on December 21, 2006. The government has also approved the appointment of SBI Capital Markets and Kotak Mahindra Capital Company as advisers to the disinvestment process.
Only public sector banks, FIs and MFs, registered in India, are allowed to participate in the bidding.
The government’s original plan had the stake sale marked for the last financial year. But a downturn in the stock markets forced a postponement. The government now hopes to complete the sell-off in the first half of 2007-08.
In January 2006, the government sold about 8% in Maruti and raked in Rs 1,567 crore.
At present, various FIs together hold 31.06% in Maruti, India’s largest car company with 53% market share. State-owned Life Insurance Corporation with 8.02% and the HSBC group with 3.07% are two of its biggest institutional shareholders.
“While bidding, each institution will have to give an undertaking that its holding will not exceed 10%,” said a government official. According to government sources, this has been done to ensure that the promoter group in the company, Suzuki Motor Corporation, has a free hand in running the company.
At present, Suzuki Motor Corporation is the largest shareholder with 54.2% in Maruti. The company was floated as an equal JV between the government and Suzuki in 1981.
But it is not clear if the government wants to cap institutional holding after divestment at 10% for public sector companies.
The Cabinet Committee on Economic Affairs had given its go-ahead to the sale of the government stake on December 21, 2006. The government has also approved the appointment of SBI Capital Markets and Kotak Mahindra Capital Company as advisers to the disinvestment process.
Only public sector banks, FIs and MFs, registered in India, are allowed to participate in the bidding.
The government’s original plan had the stake sale marked for the last financial year. But a downturn in the stock markets forced a postponement. The government now hopes to complete the sell-off in the first half of 2007-08.
In January 2006, the government sold about 8% in Maruti and raked in Rs 1,567 crore.
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