from Aditya Kondawar | by Aditya Kondawar

The story of how Maruti Udyog became Maruti Suzuki, a company owned majority by Suzuki Also, did you know that the LIC chairman at that time called their IPO expensive? Here's the story - t.co/vSiDP97UKn

1/n On 30 May 2002, following the rights issue which brought down the government's stake to 45.4%, Suzuki took complete control of the steering wheel at Maruti. This was followed in 2003 by Maruti's IPO with the government offloading ~27.1% of its stake in the company.

2/n The Rs. 100 face value of the equity was considered too high and it was decided to keep the face value at Rs. 5. The price band was Rs 115-125 It was perhaps not a great time to go to the market, which was a bit bearish. However, that did not seem to matter.

3/n The issue was oversubscribed 10x, and the price for the IPO was determined to be Rs 125 Many people thought that this was too high a price. Even the chairman of LIC who was a very large investor in the stock market said that he would not subscribe to the IPO at this price

4/n Later, LIC was to buy Maruti shares at a much higher price! The shares opened at Rs. 165 at the time of listing and kept rising. Many retail shareholders sold their shares and the number of individual shareholders declined over the years

5/n The initial price of the shares also prompted the government to exercise the green-shoe option (where more shares than originally planned can be sold) and it sold another 10% of its holding, bringing its stake in the company down to 18.3%

6/n Over the next 3 years, the Govt. sold off its stake in two tranches. It sold 8% in Jan2006 and the rest in May 2007, twenty-six years after it had established a 100% owned company in Feb 1981. Four months later, Maruti Udyog Ltd was rechristened Maruti Suzuki India Ltd!

7/n Src – The Maruti Story No reco.