Excise cut boosts value of govt stake in Maruti

The value of the government's 10.28 per cent stake in Maruti Udyog Ltd has grown by about Rs 386.25 crore since February 28, when Finance Minister P Chidambaram announced an excise duty cut on small cars from 24 per cent to 16 per cent.

This is almost half of the revenue loss of Rs 800 crore the government expected to suffer during 2006-07 on account of the duty cut.

Less than two months ago, the government had offloaded 23.11 million Maruti shares, representing 8 per cent of the company's paid up capital, to eight state-owned banks and financial institutions at an average price of Rs 678.24 per share, generating an income of Rs 1,567.60 crore.

Chaidambaram had then said that the government would sell its remaining 10 per cent stake in Maruti at a suitable time in accordance with the established procedures.

Today's closing price of the Maruti Udyog stock on the National Stock Exchange was Rs 919.25 against a closing price of Rs 788.75 on February 27, a day before the Budget. The government holds close to 29.6 million shares in the company, the biggest beneficiary of the excise cut.

Maruti 800, Omni, Alto, Zen and WagonR qualify for the reduced excise from Maruti's stable. Hyundai Motor's Santro and Tata Motors' Indica-Diesel have also benefitted.

The excise cuts were given for petrol cars with an engine capacity of 1200 cc and diesel cars with an engine capacity of 1500 cc not exceeding four meters in length.