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Govt pushed to sell-off Maruti stake

The body that oversees the privatisation of India's state-run firms is pushing the government to move forward with the sale of its stake in the country's largest automaker, Maruti Udyog Ltd. The Department of Divestment said Friday that it had sent off a proposal for New Delhi's stake in the company to be sold to the highest overseas bidder.

Japan's Suzuki Motor Corp and the Indian government are equal partners in Maruti, which has a 60 per cent share of the domestic car market.

"Maruti is a very attractive buy. A lot of global car companies would be interested. Inviting bids from them would ensure the government realised the price for its lucrative shares," said a senior official at DoD, who did not want to be named.

"But this bidding process can only be kicked off after Suzuki gives its approval to the sell-off decision," he added.

Suzuki's consent is binding on the government.

An agreement between the two lays down that the Japanese firm will have the first right of refusal in the event of any government sell-off.

The DoD has forwarded its written recommendation to Murli Manohar Joshi, Indian minister for heavy industries and public enterprises. He will vet the proposal before tabling it before the Cabinet.

Jagdish Khattar, managing director of Maruti refused to comment on the latest development, while Suzuki Motor said "it was unaware" of any purported sell-off.

Analysts say that despite being dogged by falling sales and labour unrest, Maruti is still a very attractive buy.

The Indian market had been dominated for over four decades by antiquated versions of British cars and from the 1980s by Maruti-Suzuki.

But the sector was opened to foreign companies following market reforms launched in 1991.

The government is currently processing share sell-offs in 24 out of 70 state-owned companies it has earmarked for privatisation as part of an exercise launched in 1997.

The government is hoping to generate revenues by selling the family silver, including shares in firms such as Air-India, Indian Airlines and Indian Tourism Development Corp, which has a chain of 36 luxury hotels.

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