Govt to finish Maruti stake sale by end-March

The government said on Tuesday it will wrap up the sale of nine more state-run firms, including the country's largest car-maker, Maruti Udyog Limited and Indian Petrochmicals Corp by the end of the financial year in March.

The Economic Survey, an annual review of the economy for the current financial year, said the government would also complete stake sales in metals firm Hindustan Zinc by March.

Other firms on the block include Bharat Heavy Plates and Vessels Ltd, paper-mill NEPA Ltd, Instrumentation Control Valves Ltd, loss-making diversified engineering firm Jessop and Company Ltd and some properties of the India Tourism Development Corporation and Hotel Corporation of India.

The privatisation of Maruti, an equal joint venture between the government and Japan's Suzuki Motor Corp, is among the high profile stake sales planned by the government.

The government, which otherwise sells strategic chunks of its equity in state-run firms under its privatisation programme, is following a different game-plan in Maruti's case.

It has announced a two-step plan to withdraw from the car maker.

Under the first step, the company will issue a rights issue of shares worth four billion rupees. Suzuki would get the right to buy its share of the offer as well as its partner's share, which the government will renounce in return for control premium.

In the second stage, the government will sell what is left of its remaining minority stake in the company.

India's decade-old privatisation programme, which has been largely unsuccesful so far, got a fresh lease of life earlier this month when the government sold controlling stakes in overseas telecoms monopoly Videsh Sanchar Nigam Ltd and oil retailing firm IBP.

The government has so far raised about Rs 50 billion through stake sales but this is far short of the Rs 120 billion targeted for the current financial year.

The government has prepared a fresh shareholders agreement in the case of Hindustan Zinc after the stake sale in the company received a setback in November when the government rejected the sole bid of metals firm Sterlite Industries, as it was found to be too low.

It now plans to call for fresh bids from the existing bidders for a 26 per cent controlling stake, which included at least two foreign metals firms. Five bidders had pulled out at the last stage dealing a blow to the government's efforts to privatise the zinc and lead producer in which it holds 75.92 per cent.

Reuters

YOU MAY ALSO WANT TO READ:
The Rediff Budget Special
The Rail Budget 2002-03
The Economic Survey 2001-02
The Maruti Saga
The Divestment Development
Run-Up To The Budget
Money