|LONG WAY: Sanjay Gandhi inside the original Maruti
June 12: Sanjay Gandhi had wanted Maruti to be the people’s car. Today, the company that makes the car began the journey to become partly owned by people, some people. Just as the car is some people’s car.
Investors scrambled to pick up a piece of Maruti Udyog Ltd, the country’s largest car maker, as its first issue of shares to the public hit a market thirsty for instruments to put money into.
In a signal of the investor’s appetite for stock reviving with a vengeance, Maruti’s offer of 7.2 crore shares at Rs 5 each was oversubscribed 1.5 times on the very first day.
The government, which has a 45.4 per cent stake in the company, is offloading 25 per cent of its holding. The rest of the shares are with Suzuki.
On Day I, investors submitted bids for 10.54 crore shares in an auction under which they can offer to buy shares at any price above a floor of Rs 115 per share.
The offers ranged from Rs 115 to Rs 175, with Rs 120 proving to be the most popular bid.
Merchant banking circles said the combined value of the bids on the first day makes the Maruti issue one of the most successful public offers in the history of the Indian capital market. They added that when the issue closes on June 19, oversubscription could be over nine times.
“It is a sign of investors’ confidence in India and in its manufacturing abilities,” managing director Jagdish Khattar told PTI.
Maruti’s success rekindles memories of the Harshad Mehta days of the early nineties when public issues were a rage until the stock market scam of 1992 destroyed the trust of the common investor.
Is Maruti then the turning point' The answer will be available if some of the other companies, encouraged by the Maruti experience, step into the market with their awaited issues.
It could also embolden the government to take the plunge with the controversy-ridden divestment from Bharat Petroleum Company, in which it intends to sell shares to the public. “I am delighted with the response. It is a vindication of the government’s policies,” disinvestment minister Arun Shourie said.
Maruti has not been a bad bargain for the government. The amount raised through the offer — at least Rs 800 crore — will flow entirely into its coffers. The government had invested only Rs 45 crore at the time of setting up the joint venture.
This is a stunning tribute to the incredible twists and turns Maruti has negotiated to become the best-selling car brand in the country. Conceived by Sanjay Gandhi in the seventies, Maruti was the stillborn that forced Indira Gandhi’s son to seek refuge in politics.
After Sanjay’s death in 1980, a professional management breathed life back into Maruti under a joint venture three years later.