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Govt clears way for majority Suzuki stake in Maruti

BS Economy Bureau

The Cabinet Committee on Divestment on Thursday effectively cleared the way for Suzuki Motor Corporation or its associate General Motors to pick up a majority stake in Maruti.

Though the CCD maintained that the government will renounce its portion of the rights issue in Maruti to the "highest bidder", financial institutions have already said that they are not interested in picking up any stake in Maruti. This leaves only Suzuki or its associates in the fray.

"The government will get a negotiated control premium and a renunciation premium for its portion of the Rs 4-billion rights issue," said Pradip Baijal, divestment secretary. The government has also drawn up a timetable according to which the rights issue will be completed by December and the subsequent step of offloading government equity (approximately 6.6 million shares) will be finalised before the end of this fiscal, he added. The immediate step to be taken is the appointment of three valuers for the company.

Among the other decisions taken at the CCD is the adoption of a timetable for divestment of 13 units within this fiscal. "The prime minister emphasised that the timetable should be adhered to," said Arun Shourie, Divestment Minister. "It will now be the personal responsibility of the secretary of the administrative ministry to ensure that the issues which arise are sorted out. The DoD will report to the CCD on the progress every month," he added.

Financial bids for Hindustan Teleprinters Ltd were submitted by two parties today and for CMC, the financial bids will come in by tomorrow, he said. The CCD will meet again on October 1 to assess the bids.

Among the 13 companies, which the government expects to privatise before the end of the fiscal, are Hindustan Zinc, Hotel Corporation of India, IBP, Indian Petrochemicals Corporation Ltd, Instrumentation Ltd, Jessop, Maruti, NEPA and Videsh Sanchar Nigam Ltd.

The CCD also decided to reduce government equity in National Aluminium Company from the current level of 87 per cent to 57 per cent.

"Since the company is listed on the New York Stock Exchange, it will be easier and faster to reduce government stake via this route," Baijal said.

The government will however go in for induction of a strategic partner at a later stage, he added.

In case of State Trading Corporation and Mines and Mineral Trading Corporation it was decided that Rs 1 billion of the combined reserves of Rs 9 billion will be transferred to the government, while the proceeds of Hotel Corporation of India sell-off would go to Air-India.

The employee stock option schemes for VSNL and CMC were also approved. The staff will be offered employee stock options at one-third of the last one month average market price. The Esops will have a one-year lock-in period and the final transfer of shares will take place only after privatisation.

In VSNL, 1.97 per cent equity is to be offered to employees, while in CMC it is 6.31 per cent.

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