Maruti to divest through rights issue

By Our Special Correspondent

NEW DELHI, SEPT. 5. The Government today said it would divest its equity stake in Maruti Udyog Limited (MUL) through a rights issue. It would not allow Suzuki Motors of Japan to raise its shareholding through preferential allotment of shares. This was disclosed here today by the Heavy Industries Minister, Mr. Manohar Joshi, who said there was no difference of opinion between the agencies concerned on this issue. The agencies include the Department of Disinvestment (DOD), Finance Ministry and the Heavy Industries Ministry.

He noted that the decision for the rights issue had been taken at the beginning and the Government was going to stick to it. ``We are thinking in the direction of valuation of the Government stake in MUL.''

Speaking on the sidelines of the third annual convention of the Society of Indian Automobile Manufacturers (SIAM), he clarified that Suzuki was not creating any hurdles in the process of disinvestment. The Government currently holds 49.7 per cent stake in MUL, while 50 per cent is held by Suzuki and the remaining by the employees.

Mr. Joshi, while declining to give a time-frame on the disinvestment plans, said the financial institutions' proposal would be retained. The issue would be taken up at a Cabinet meeting shortly. However, if the financial institutions were not interested the process could take some time. Earlier in his address, he noted that the automobile industry had undergone a major transformation in the recent times as it had changed from a state-controlled sector to a market- driven one. This was happening all over the world, including Asian countries.

He emphasised that the industry needed to plan and generate innovative ideas associated with design, quality and process control. Another important aspect required to be kept in mind was that research and development facilities must be inter- disciplinary. He felt they must include technical marketing and economic skills in the development of new products, process and services.

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