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India consults Suzuki on Maruti sale

The Indian government has completed informal negotiations with Japan's Suzuki on plans to sell the state's nearly 50 per cent stake in the country's largest carmaker, Maruti Udyog Ltd, a business daily said on Wednesday.

The Financial Express quoted divestment secretary Pradip Baijal as saying the government had agreed in principle to Suzuki Corporation's condition that it should not sell its stake to an auto company that Suzuki considers unfriendly.

The next step now is for the cabinet to clear the plan.

Baijal would not give a time frame for the sell-off but the newspaper quoted him as saying the government expected to sign a memorandum of understanding with Suzuki soon. "We have completed informal negotiations with Suzuki," he told the newspaper.

The signing of the memorandum will formally launch the sale process. Under its equal venture with Suzuki, the government needs the Japanese carmaker's consent to dispose of its stake to a third party.

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

Divestment Minister Arun Shourie told Parliament 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 domestic market, down from more than 80 per cent two years ago as a result of 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 1999-2000.

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