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Govt, Suzuki pact over Maruti rights issue

Suzuki Motor Corporation of Japan and the Government of India have finalised the pricing of the shares for the proposed rights issue in their joint venture Maruti Udyog Limited as part of the exercise to privatise the car company, Heavy Industry Minister Manohar Joshi said in New Delhi on Thursday.

"We have recently decided the price for proposed rights issue of MUL", Joshi said when asked about the progress on Maruti divestment.

Joshi, however, declined to reveal the price that would be inclusive of the premium, saying that matter fell within the purview of divestment department.

When contacted, divestment secretary Pradeep Baijal said that negotiations were on with a high level team from Suzuki, which has been camping in Delhi for over a month.

"We would try to bring the issue at the next meeting of the Cabinet Committee on Divestment (likely to be held in Delhi on March 28), but it may not be possible as negotiations are still on," he said.

Joshi said financial institutions would be given the first preference failing which Suzuki would be asked to subscribe to the issue.

The government has decided to offload its equity in the 50:50 joint venture, beginning with a rights issue of Rs 4 billion where the Indian partner would abstain for consideration of a renunciation premium.

CCD had earlier cleared a proposal to dilute equity in the company through a rights issue to be followed by a public offering.

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