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Stage set for Maruti float

New Delhi, April 17: The government today paved the way for the second stage of the divestment process in Maruti Udyog when it cleared the selloff of 6.58 million shares in the country's largest automaker to resident and non-resident shareholders.

The Maruti Udyog selloff will be through an initial public offering (IPO) which is now slated for June after being put off twice this year.

The government, which has a 45.4 per cent equity stake in the New Delhi-based automaker, plans to divest 25 per cent through the IPO.

The clearance for the selloff was given today by the Foreign Investment Promotion Board because the shares will be offered to non-resident investors also. The modalities of the IPO have not been worked out which is why the FIPB clearance did not spell out the anticipated FDI inflow through the IPO.

Earlier, it was speculated that the government would be offering 3.6 million shares through the IPO.

Todayís FIPB clearance for the sale of 6,580,181 is a pointer that the Rs 10 face value of the Maruti Udyog share will be halved before the selloff. This will ensure a wider dispersal of the shares among the public.

Japanís Suzuki Motor Corp holds a majority stake of 54.2 per cent in the countryís largest automaker which has an equity base of Rs 144 crore.

Maruti has a commanding 50.4 per cent of the car market owing to its dominance in the small car segment.

The government also cleared a proposal by Hewitt Associates, a global management consulting firm in human resource solutions, to set up a 100 per cent subsidiary in India with an investment of Rs 120 crore.

The Maruti and Hewitt proposals were among a batch of 47 that were cleared today by the government entailing foreign direct investment worth Rs 285 crore. The Hewitt subsidiary in India will focus on exclusive business process outsourcing / back office operations.

Havas Advertising International of France has been permitted to raise the foreign equity from 60 to 100 per cent in Mumbai-based Euro RSCG Advertising. It involves an FDI inflow of Rs 40 lakh.

Other proposals include that of Cargill Asia Pacific Limited, US, seeking permission to undertake trading activity on behalf of Cargill India Pvt Limited. Another proposal of US major Procter and Gamble has been cleared for product activities pertaining to Psyllium Husk and Vicks Vaporub at its Mumbai location.

German major Deutsche Post Internationalís Rs 53.72-crore proposal to acquire a 49 per cent stake in transportation, air freight and ocean freight forwarding was also cleared.

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