Search the Internet          Tips  Sites: Finance, Investment

Govt, Suzuki decide premium for control of Maruti

The government and Suzuki Motor Corp have agreed on the premium the Japanese car maker will pay to gain control of Maruti Udyog Ltd, India's largest carmaker, an official of ministry of divestment said on Tuesday.

Maruti, which holds a commanding 59 per cent share of the new-car market, is a joint venture between the Indian government and Suzuki, Japan's leading mini-car maker.

"We've agreed on the amount Suzuki will pay to pick up a further four to five per cent through the rights offer," the official said, adding the proposed agreement would now be taken to the Indian Cabinet for approval.

"We expect a decision within 10 to 15 days."

The Indian government, which holds a 49.74 per cent stake in the automaker, and Suzuki, which holds 50 per cent, have been negotiating for months the price for transferring majority control to the Japanese carmaker.

An employee trust holds the remaining 0.26 per cent.

The government aims to reduce its stake in the automaker through a two-step process, beginning with a Rs 4-billion ($81.7 million) rights issue.

The government will renounce its portion of the rights to Suzuki in return for a control premium.

Divestment Minister Arun Shourie said last Friday that Maruti's privatisation and that of another state-run firm, Indian Petrochemicals Corporation Ltd, would be discussed at the next meeting of the Cabinet Committee on Divestment.

He said that meeting will be held after the current parliament session ends on May 17.

ALSO READ:
The Maruti Saga
The Rediff Budget Special
Money

Tell us what you think of this report