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Govt, Suzuki officials to meet on Feb 12

Partha Ghosh

Representatives of Suzuki Motor Corporation will hold meetings with senior government officials in New Delhi on February 12 to discuss the divestment procedure of Maruti Udyog Ltd.

The meeting will be attended by directors of Suzuki and senior officials of the divestment ministry, secretary of the department of heavy industries, Ravindra Gupta, and joint secretary of the department of heavy industries, Pradeep Kumar, who is also a director on the MUL board.

The government and the Japanese firm are equal partners in the country's largest car manufacturer and the former has decided to divest its shares by renouncing its entitlement of a proposed Rs 4 billion rights issue. The government will charge a renunciation premium as well as a control premium from whoever picks up its shares.

As per an agreement reached in 1998, Suzuki holds the right of first refusal in case the government decides to offload its stake. The government, through a Cabinet decision last year, had proposed to offer its shares to the Indian financial institutions, failing which, the shares would be given to Suzuki.

According to sources, Suzuki has forwarded its no-objection. But as the financial institutions are not flush with funds, it is likely that Suzuki may have to partly or fully subscribe to the government's entitlement of the rights issue. Suzuki, according to divestment secretary Pradip Baijal, has agreed to invest in Maruti in case of issuance of fresh equity shares.

Executives in Maruti, however, declined to comment on the issue. Officials in the government said they were not aware of the names of the representatives of Suzuki.

Meanwhile, divestment minister Arun Shourie told the press in New Delhi that the divestment process in respect of Maruti would be taken up after March 15 and completed by the first week of April. This makes the February 12 meeting extremely important.

The government plans to shed its shares in the car-maker as a part of the divestment of its holding in public sector firms, and thereby raise money for capital account investment. The government had plans to raise close to Rs 12 billion through the divestment process this year. However, it has been able to raise Rs 64 billion so far.

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