New Delhi, June 22: The government wants to sell an 8 per cent stake in Maruti to financial institutions through competitive bidding.
The Centre, which owns over 18 per cent in the company after having sold off 25 per cent through an initial public offering two years ago, is now keen to divest a large chunk of its holding to financial institutions.
Senior officials said the ministry of heavy industries had initially suggested that more shares could be sold to FIs at a negotiated price. However, the cabinet note was rewritten to allow for shares worth over Rs 1,100 crore to be sold through competitive bidding.
The government wants to retain the remaining its stake of over 10 per cent for the time being as it is keen to have a nominee on the Maruti board.
The company's shares, which were sold at Rs 125 apiece by the government in 2003, are now trading between Rs 450-460; the stock hit a 52-week high of Rs 504 not long ago.
The stake sale is not expected to draw Opposition fire as it concerns only the rump holding. Also, the money collected will be used in social sector projects after being parked in the disinvestment fund floated recently.
The selloff is being planned after finance minister P. Chidambaram wrote a controversial letter asking various ministries to agree to sell small stakes in profitable firms in the market.
Officials said the government is keen to bring as many PSUs as possible to the market as 'such sales will help bolster the divestment fund kitty, out of which projects in education, health and PSU restructuring could be undertaken'. It will also 'make PSUs more accountable to market forces'.
However, the finance minister's letter has sparked a major debate among ministries. The mines, steel and petroleum ministries have refused even small selloffs to protect their turf. Even the agriculture ministry, which has nothing to do with running PSUs, has opposed the note.