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India for competitive bids to sell stake in Maruti

The Indian government would prefer to sell its nearly 50 per cent equity in the country's largest car maker, Maruti Udyog Ltd, through an international competitive bid, an economic daily said on Monday.

The Department of Divestment is expected to recommend that it invite bids from international automobile firms acceptable to Suzuki to sell its stake in the car firm, a financial daily said.

It said the government felt this option had the best chance of maximising revenues for it and disfavoured a negotiated sale with a single car firm.

A government panel is currently exploring options of share sale in Maruti Udyog, an equal venture of the Indian government and Japan's Suzuki Motor Corp, and is expected to submit recommendations by December 23.

Any buyer must have Suzuki's consent.

India has not yet revealed how much it plans to divest in the firm.

The government feels that an auto firm that does not compete with Suzuki in the small car segment and can help Maruti with a mid-size sedan would be its most appropriate partner, the daily said.

US auto giant General Motors holds a 20 per cent stake in Suzuki and is potentially a strong suitor for the Maruti stake.

Divestment Minister Arun Shourie told Parliament earlier this month his ministry would ask Suzuki to give it a list of acceptable partners for Maruti.

The buyer would be selected through a competitive bid, he said.

Maruti controls 54.5 per cent of the Indian market, beaten down from more than 80 per cent two years ago by growing competition.

It ran up a loss of Rs 1.28 billion in the first seven months of 2000-01 (April-March), down from a profit of Rs 3.3 billion in 1999-00.

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