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Suzuki says no to 50% govt stake in Maruti

Japan's Suzuki Motor Corp has confirmed it is not interested in buying out the Indian government's 50 per cent stake in Maruti Udyog Ltd, the Indo-Japanese joint venture that dominates India's new car market with almost a 60 per cent share, a financial daily reported.

The Economic Times said Suzuki's waiver of its right of first refusal meant the government could now proceed to sell its stake in the joint venture to either a new partner, or to the public.

It said the latter option was more likely as it would be "impossible to induct a new partner without Suzuki's approval."

It noted that Ford Motor Co and Rahul Bajaj, the chairman of Bajaj Auto, India's largest two-wheeler maker, had been mentioned as potential buyers.

The report cited only one source, the secretary of the Department of Divestment, Pradip Baijal, but in a context that made it unclear if he had provided or confirmed the major details of the story.

Baijal was only quoted as saying it was possible that a "control premium" could be charged to Suzuki if the 50 per cent stake were sold to public. A public offer would automatically mean control of Maruti passes to Suzuki, Japan's leading mini-vehicle maker.

"In case SMC is unwilling to pay this premium, the government would refuse to exit the company, creating a nuisance value," the newspaper said.

The government had dropped its earlier plan to sell the stake to financial institutions, which were expected to sell their holdings to other investors at a later date, the report added.

That plan was abandoned because financial institutions had shown little interest.

Maruti has dominated the Indian auto market with its inexpensive, small, fuel-efficient cars since production began in 1983. But it has faced increasing competition in recent years after Hyundai, Daewoo and Ford began selling cars in India.

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