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FIs agree to subscribe to Maruti rights issue

Financial institutions have agreed to subscribe to the Rs 4-billion rights issue of Maruti Udyog Ltd in the run-up to the divestment of the country's largest car maker.

This came about following a high-level meeting between the financial institutions and finance ministry officials.

''The financial institutions agreed to subscribe to the rights issue of MUL at the meeting," top-level sources said.

As per the road-map worked out by the committee of secretaries, it was decided to float a rights issue of Rs 4 billion, of which the government's part would be subscribed by the financial institutions.

In its last meeting on September 27, the Cabinet Committee on Divestment had decided to go in for a rights issue of Rs 4 billion with the government renouncing its rights and bringing its equity below 50 per cent in the joint venture with the Suzuki Corporation of Japan.

MUL was among the 13 public sector units for which the CCD had given a deadline of March 31, 2002 for completion of divestment.

It was also decided to get the valuation of the company done by three valuers to be appointed; one each by the government and Suzuki, and a common one to the two partners. The government was to get two premia -- one for the rights and the other for the shedding management control.
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