MUL, Bhel selloff postponed

New Delhi, Jan 25 | Updated: Jan 26 2005, 05:30am hrs
The government on Tuesday deferred its plans to divest stakes in Maruti Udyog Ltd (MUL) and Bharat Heavy Electricals Ltd (Bhel) to the next fiscal, making it clear it is going to miss the disinvestment target of Rs 4,000 crore for the current year.

We will sell 7.5% in MUL and 10% in Bhel in the next fiscal, heavy industries minister Santosh Mohan Deb said after a meeting with finance minister P Chidambaram. The key factor behind the disinvestments appears to be the Left parties opposition to the move.

The government has garnered Rs 2,684 crore, i.e., 67.1% of the target, as disinvestment proceeds so far by divesting 5.25% stake in NTPC through an IPO.

In May 02, the government had waived a rights offer in favour of Suzuki Motor Corporation, thereby reducing its stake in MUL from 49.7% to 44.5%. In June 03, the government had made a public offer of another 27.5% stake in MUL, bringing down its stake in the company to 18.28%. The government currently holds 18.28% stake in MUL, while Suzuki holds 54.21%.

Sale of another 7.5% stake in MUL would have added about Rs 800-900 crore to government coffers, given the current market price of MUL share.

As far as Bhel is concerned, the government holds 67.72% in the company. The government would have raised close to Rs 1,600 crore by divesting 10% stake in Bhel, at the current market price.

Mr Deb said that money raised from the sale of equity in MUL and Bhel would be used for social sector schemes and for recapitalisation of public sector undertakings. The Indian public and mutual funds would be given preference during the sale , he added.

Mr Chidambaram has agreed to the ministrys proposal that Bhel employees should be offered a lions share of the governments stake.