|Sunday, November 19, 2000,
Govt to divest stake in Maruti
NEW DELHI, Nov 18 — Having resolved the inter-ministerial differences, the government today finally gave a green signal to disinvestment in Maruti Udyog Ltd and decided to set up a secretary-level committee to clinch the issue with Suzuki, the Japanese joint-venture partner.
The Cabinet Committee on Disinvestment (CCD) presided by Prime Minister Atal Behari Vajpayee set a 15-day deadline for the secretaries to report back. “A committee of secretaries will recommend optimal ways of disinvestment in Maruti, inter alia, after discussions with Suzuki Motor Company,” Minister of State for Disinvestment Arun Shourie told reporters.
The CCD altered the earlier Cabinet decision for disinvestment in the Indian Petrochemicals Ltd (IPCL) overturning the bids made by the Reliance Industries and Chatterjee Sorors Group. It has decided that the Vadodara plant of the IPCL should be transferred to the Indian Oil Corporation at a negotiated price while fresh bids will be invited for the other two units at Nagothane and Gandhar. The Vadodara plant will be hived off after which 25 per cent equity will be divested through the strategic sale as was decided earlier for the IPCL as a whole.
The CCD decided to take up simultaneously the financial restructuring and disinvestment (74 per cent) in Paradeep Phospates Ltd in view of the difficulties being faced by the DAP manufacturer. The reconstruction package prepared by the Department of Fertilisers is under consideration of the government.
As per the agreement between the government and the Suzuki Motor Company, the two joint-venture partners in MUL, neither party can sell shares without the written consent of the other.
Both disinvestment and financial restructuring will proceed simultaneously to get better value for the company, “Mr Shourie said.
He added that the telecom companies like the Mahanagar Telephone Nigam Ltd and Videsh Sanchar Nigam Ltd were never listed on the agenda.” So there was no question of dropping them.”
Meanwhile, the BJP on Saturday welcomed the government’s decision to disinvest its stake in Maruti Udyog Limited, but said it should retain adequate shares in the country’s biggest automobile production unit.
Commenting on the Union Cabinet’s decision to appoint a committee to commence preparatory work on disinvestment of Maruti Udyog Ltd senior BJP leader J.P. Mathur said the decision was just continuance of the policies initiated by the Congress government led by Mr P.V. Narasimha Rao.
Cabinet Secretary T.R. Prasad, will soon constitute the committee to talk to Suzuki Motor Corporation, a 50:50 partner in MUL with the government, for its consent for disinvestment.
The joint venture agreement says that none of the shares held by Suzuki may be transferred (whether by sale, assignment, pledge, gift or otherwise) to any other party unless the written consent of the government has been obtained. Similarly, no share held by the Government can be transferred to any party unless written consent of Suzuki is obtained.
Disinvestment Minister Arun Shourie said the committee would submit its report to the Cabinet Committee on Disinvestment within 15 days.
Mr Shourie said he had held consultations with the Law Minister, Mr Arun Jaitley, on the proposed disinvestment in Maruti Udyog Limited. The government would not allow Suzuki Motor Corporation to take advantage of the situation.
Mr Shourie said the CCD also reviewed the progress of the disinvestment process of Air India, Indian Airlines and among others.
Mr Shourie said the Comptroller and Auditor General would review the entire disinvestment process adding such an exercise would not only make the department accountable but also enable the government to learn from any mistakes that may be committed.
PTI adds: The minister said in the case of PPL, the government is considering a restructuring proposal involving a reduction of equity shares to the extent of Rs 216.81 crore by way of writing down the face value of the existing shares.
The restructuring package would also involve a reduction of preference share capital to the tune of Rs 58.82 crore along with a conversion of plan loan into equity shares to the extent of Rs 230.28 crore, he said.
Also under consideration is a proposal to write off interest and penal interest amounting to Rs 129.72 crore, besides an interest holiday and moratorium on payment of instalments on plan loan of Rs 47 crore.
There is also a proposal to infuse fresh finances into the ailing unit to the tune of Rs 70 crore, Mr Shourie said.
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