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Government to mull various options for Maruti divestment

The Union Cabinet will consider five different proposals to divest government equity in Maruti Udyog Ltd, the country's largest carmaker, an economic daily reported on Wednesday.

The Cabinet Committee on Divestment (CCD) is likely to take a decision at its next meeting on one of these proposals which range from partial sale to selling the entire government equity to an auto major, the Financial Express quoted unnamed government officials as saying. A scheduled meeting of the committee on Tuesday was postponed and no new date has been set.

Last week the committee said it decided to cut government stake in two other firms to 26 per cent, rekindling hopes that the much-stalled divestment process was back on rails.

The Indian government and Japan's Suzuki Motor Corp each hold 50 per cent equity in Maruti whose small cars have dominated the Indian market over the last 15 years.

But its market share has fallen to 57 per cent from over 80 per cent two years ago due to increased competition from Korea's Hyundai, Daewoo and Indian firm Tata Engineering and Locomotive Company (TELCO).

A government panel was entrusted with the task of exploring options of share sale in Maruti late last year.

The newspaper report said one proposal pertains to selling government equity to an auto major with the concurrence of Suzuki.

US auto giant General Motors, which owns 20 per cent in Suzuki is potentially a strong suitor for the Maruti stake.

Other proposals include the sale of government equity to the public, financial institutions, foreign institutional investors or employees in varying proportions.

Another proposal is for the government to bring down its holding to 26 per cent, by offering the remainder in the domestic market.

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