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MUL divestment to be referred to CCD

BS Economy Bureau

Heavy Industry Minister Manohar Joshi has said that his ministry is firming up another option for Maruti Udyog Ltd divestment, which included the Suzuki Motor Company infusing further capital and hiking its stake.

Talking to reporters after the National Development Council meeting in New Delhi on Friday, Joshi said: "We will be taking this alternative to the Cabinet committee on divestment soon."

The minister said that Suzuki pumping in equity for launch of new models and subsequently increasing its stake in MUL is one of the better approaches for the company's divestment.

In an interview to Business Standard last week, minister of state for heavy industry Vallabhbhai Kathiria had said that the government will not invest in MUL anymore. The government holds 49.5 per cent stake in the company, Suzuki 50 per cent and the employees' trust 0.5 per cent.

Joshi said that the alternative MUL divestment plan was discussed with Kathiria. "He has only put across the ministry's point of view," he said.

MUL is one of the big-ticket companies lined up for divestment in the current financial year. The CCD at its February meeting had decided a two-stage divestment for MUL.

In the first stage, the government and Suzuki were to subscribe to a 15 per cent rights issue. The financial institutions were supposed to pick up the government's portion of the rights issue by paying a renunciation premium.

The company was supposed to come out with an initial public offering in the second stage.

The government officials had, however, said that divestment would fetch the government a better value only after Maruti posted net profits. "The company is likely to post net profits only in the second half of the current fiscal," an official said.

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