Competitive bidding likely

Our Bureau

New Delhi, Dec. 21

The Government on Thursday decided to sell its residual 10.27 per cent stake in Maruti Udyog Ltd, which at the current price would fetch about Rs 2,800 crore. The 29.68 million shares will be sold to Indian public sector financial institutions, domestic public sector and private sector banks and mutual funds through a competitive bidding process.

"The process of calling bids will begin soon but the timing will be decided by the Finance Ministry," the Union Finance Minister, Mr P. Chidambaram, told presspersons after a Cabinet meeting. The sale "will be in the same pattern and terms as done in January this year," he added.

Earlier this year, the Government had sold 8 per cent stake in Maruti to eight Indian financial institutions for about Rs 1,567 crore through the French auction method. It had invited bids from only domestic public financial institutions and public sector banks.

However, this time around the Government has decided to throw open the bidding process to private sector banks and domestic mutual funds also, a move analysts state will help to achieve higher price realisations.

According to Mr Harinder Kumar, Head (Research), ICICI Direct, there is unlikely to be any significant impact on the scrip in the short-term as the market had already taken this development into account. He, however, added that the price might move marginally once the price discovery process starts.

Maruti's shares closed at Rs 926 on Thursday, up 0.33 per cent.

Related Stories:
8 pc of Maruti fetches Rs 1,567 cr Average price at Rs 678.24 per share
Heavy Industries Ministry nod to exit Maruti, Finance Ministry to take final decision

(This article was published in the Business Line print edition dated December 22, 2006)
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