The Maruti - Suzuki Conflict

As R.C. Bhargava reportedly shared a good rapport with the secretary and other higher officials at the Industry ministry, the relations between SMC and GoI remained cordial. The first signs of dispute surfaced in late 1993, when SMC proposed a Rs 2,200 crore expansion and modernization plan. The plan envisaged increasing the production by 1,00,000 vehicles to effectively meet the growing competition in the sector. The Heavy Industry secretary Ashok Chandra and the Finance secretary, Montek Singh Ahluwalia suggested SMC, in an informal discussion, to go in for a public issue to raise the finance for the expansion plan. Though initially SMC was reluctant to go for a public issue, Bhargava managed to persuade it in 1995 for the same. However, things changed with K.Karunakaran (Karunakaran) becoming the Union minister for Industries in 1995...

The second and final phase of MUL disinvestment was to be completed by the end of 2002, wherein GoI would divest its remaining equity holding in MUL through a public offering. The GoI was to sell its interest to the best bidder at a premium. However, subject to a clause in the MUL joint venture agreement, the GoI could not sell its stake without the written consent of SMC. This was expected to complicate the disvestment process of MUL. In January 2002, the GoI announced its willingness to renounce its portion of the rights in favour of SMC during the rights issue. The negotiations between the GoI and SMC to fix the renunciation premium and the control premium were scheduled to begin in January 2002. GoI was reportedly hopeful of getting a substantial 'control premium' for letting SMC get MUL's full control...