The Hindu : Business : Government exits Maruti Udyog

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Friday, May 11, 2007
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Government exits Maruti Udyog

Special Correspondent

Residual stake fetches Rs. 2,360 cr.; LIC emerges second largest shareholder

NEW DELHI: The Centre on Thursday marked its exit from Maruti Udyog Limited (MUL), the country's largest car manufacturer, with the sale of its 10.27 residual stake to a number of financial institutions and mutual funds for Rs. 2,360 crore.

Briefing newspersons after the bids were opened here, Minister for Heavy Industries and Public Enterprises Sontosh Mohan Dev said: "We have sold the entire shares held by the Government in Maruti at an average price of Rs. 797 a share to raise Rs. 2,360 crore."

With this, the Government's 23-year association with its Japanese partner Suzuki Motor Corporation (SMC) comes to an end. For the sale of its 10.27 per cent residual stake in MUL comprising 2.96 crore shares, the Government had fixed a floor price of Rs. 760 a share. Of this, the Life Insurance Corporation (LIC) has received the entire 1.3 crore shares it had bid for at a price of Rs. 800 a share. With this acquisition, LIC has emerged as the second-largest shareholder of Maruti after SMC with an equity holding of 12.5 per cent, which includes the 8.1 per cent it held earlier.

Disinvestment Secretary P.V. Bhide explained to newspersons that the shares allotted to LIC would be transferred to it in September when the shareholders of SMC amend the Articles of Association. In all, 36 institutions and mutual funds submitted financial bids for the Maruti shares on offer.

After LIC, State Bank of India emerged as the next most successful bidder with an allotment of 83 lakh shares at Rs. 775 a share. However, Corporation Bank and Exim Bank were the highest bidders at Rs. 850 a share and were granted 5.88 lakh and 1.18 lakh shares, respectively. Next in line was Bank of Baroda with a bid price of Rs. 826 a share.

In the mutual funds category, Reliance and HDFC sought Maruti shares at Rs. 790 and Rs. 782 a share. The two were allotted 20 lakh and 10 lakh shares, respectively.

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