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Maruti IPO turns into bonanza

By Our Special Correspondent

NEW DELHI JUNE 20. The Maruti Udyog Limited (MUL) public issue looks set to be a bonanza for the Exchequer with the Government expected to raise around Rs. 920 crores to Rs. 1,000 crores. Even at the floor price of Rs. 115 per share, the resource mobilisation will not be less than Rs. 920 crores while at the higher bid of Rs. 125, it would be possible to raise Rs. 1,000 crores.

According to official sources, the inter-ministerial group on disinvestment (IMG) in MUL held a meeting here today to finalise the price for the public offer. Though full data were not available as the IPO closed only yesterday, it appears the price may be finalised in the range of Rs. 120 to Rs. 125 per share while the effort will be to ensure maximum dispersal of shareholding. Towards this end, it is proposed to raise the allocation of shares for retail investors beyond the limit of 25 per cent kept for this category.

The success of the Maruti's IPO has come as a shot in the arm for the disinvestment process, prompting the Government to considering early launch of other public issues for companies such as Bharat Petroleum Corporation Limited (BPCL) and the National Aluminium Company (NALCO). Through the public issue, the Government has sought to divest 25 per equity in the joint venture with Suzuki Motor Corporation of Japan.

The Disinvestment Minister, Arun Shourie, is leaving for Thailand this evening but is expected to announce the decisions on pricing and allocation of shares tomorrow at a video conference for the media. A final decision will have to be taken by the Union Finance Minister, Jaswant Singh, on the recommendations of the IMG by tomorrow evening.

As the public issue has been oversubscribed by about eight times, the Government is expected to avail of the greenshoe option of retaining up to 10 per cent of the oversubscription. With the IPO being for 7.2 crore shares, the additional 10 per cent will be 72 lakh shares which may be given over entirely to individual investors. The aim is to ensure maximum dispersal of shareholding so that it is not possible for a single entity to corner large chunks of equity in the company.

Earlier, the Managing Director of MUL, Jagdish Khattar, issued a statement thanking investors for the overwhelming response to the public offer while assuring them the company would strive to meet global benchmarks and while committing the company to deliver value to the investors by being focused on the business. "By investing in this company, investors have shown their faith in the reform programme,'' he said as the Maruti public issue was seen as a symbol of India's reform programme.

Mr. Khattar said Maruti's dream was to put "India on four wheels'' and also stressed the goals of the Japanese company, Suzuki which said it would make Maruti its R & D hub for Asia outside Japan and make it the base for export of small cars. "By investing in this company, investors have shown their faith in India's manufacturing ability,'' he said.

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