Govt's remaining stake in Maruti sold

After 25 years of forming Maruti Udyog (MUL), the government today exited the country's largest car maker, selling its residual stake of 10.27 per cent, representing 2,96,79,709 shares, for Rs 2,360 crore to a clutch of financial institutions, including Life Insurance Corporation (LIC).

Sontosh Mohan Dev, minister of heavy industries and public enterprises told reporters after the auction, "We have sold the entire shares held by the government in MUL at an average price of Rs 797 a share to raise Rs 2,360 crore".

LIC has been allotted around 1,30,00,000 shares that it had bid for at a price of Rs 800 a share. The country's biggest insurer, which earlier held 8.1 per cent, now controls 12.5 per cent stake and has become the second-largest institutional shareholder in the company.

The increase in holding could make LIC eligible for a board position in MUL.

The largest shareholder Suzuki Motor Corporation holds 54 per cent stake in the company.

P V Bhide, secretary, Department of Disinvestment, said: "The shares would, however, be transferred to LIC in September when the shareholders of Suzuki Motor Corporation, which owns the company, amend the Articles of Association. Suzuki officials have already given a go ahead to LIC increasing its stake in MUL to over 10 per cent".

Other institutions which were allotted the shares include Corporation Bank and Exim Bank, which had submitted the highest bids at Rs 850 per share. Both were granted around 5,88,235 and 1,18,000 shares, respectively.

The State Bank of India was the second most successful bidder and got around 83,00,000 lakh shares at Rs 775 per share. The Punjab National Bank was allotted around 12,29,000 shares at Rs 815.

Among the mutual funds, Reliance Mutual Fund and HDFC Mutual Fund who were aggressive bidders, and had quoted the price of Rs 790 and Rs 782 apiece, were given around 20,00,000 and 10,00,000 shares, respectively. SBI MF also got around 49,76,000 shares at Rs 775 per share.

Financial bids for MUL shares, at a floor price of Rs 760, was deposited yesterday by 36 of the 39 companies that expressed interest to participate in the auction. However, no shares were allotted to Franklin Templeton, SIDBI, Birla Sun Life and United India Insurance because of their low bids. In all, 32 financial institutions and mutual funds were allotted shares today.

This was the third and last such sale of the government's equity in the company, which started off as an equal partnership with Japan's Suzuki Motor Corporation. In June 2003, the government had sold a 27.5 per cent stake to the public at Rs 125 per share, netting Rs 993 crore. In January 2006, it sold another eight per cent to public sector banks and financial institutions at an average price of Rs 678.24 a share, mopping up Rs 1,567 crore.

The MUL shares today closed at Rs 794.65, a drop of 1.2 per cent over the Wednesday's closing of Rs 802.85 at the Bombay Stock Exchange.