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Investors would be rewarded for confidence in Maruti: Shourie
July 09, 2003 19:07 IST
Delighted with the response to Maruti Udyog Ltd shares on the first day of its listing at the Bombay Stock Exchange and National Stock Exchange, Divestment Minister Arun Shourie on Wednesday said the investors would be well rewarded for their confidence in the enterprise.
"I believe with the success of MUL issue, we have another reason to be proud. It is 'the moment' for India today all over the world," Shourie told reporters on the sidelines of a Bharat Sanchar Nigam Limited-conference in New Delhi.
Asserting that the response to MUL public offer had vindicated the government's position regarding divestment through the strategic route, he said, "In MUL, there was a strategic partner (Suzuki Motor Corporation) and it had a majority holding. When the initial public offering happened Suzuki had 54 per cent stake. Due to this, investor had faith that it will not run with the government culture. It was because of this MUL succeeded."
He said the chairman of SMC, O Suzuki, had met him recently and had assured to make MUL its export, research and development hub.
"If he does, and MUL continues to be a first rate company, then investors would be well rewarded for the confidence that they have reposed in the enterprise," Shourie said.
Taking a dig at the detractors of divestment in Maruti, he pointed that though all sorts of doubts were raised two years ago about the MUL divestment, terming it as "a strategic enterprise and pride of the nation," today everyone was owing success of the issue.
Uday Kotak, vice chairman, Kotak Investment Banking, which is the book running lead manager to the Maruti IPO, termed the response as "mature, balancing the interests of investors as well as the company."
"The price much above the issue price is creating a strong base for the future trading in the car company's scrip," Kotak said.
"The response of investors is also indicative of the confidence in the quality of the Indian capital market besides the world-class manufacturing capabilities of MUL," he added.
M Karthikeyan, research head, Falcon Corporate Advisors, said, "Overall the response was much higher. However, the price to equity ratio looks much higher compared to the valuation of global car companies listed on the overseas exchanges."
"The market is betting on the growth prospects of MUL, which has a predominant presence in the Indian car market," he said.
Despite the volatile movement in the Maruti scrip, the Sensex fell by 0.2 per cent to 3620.79 points, a fall of 8.89 points.
Market sources attributed the decline to offloading of blue-chip shares by foreign investors and mutual funds for buying Maruti shares.