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India raises $ 212 million from top carmaker's IPO

NEW DELHI, June 21 (Reuters) - India raised 9.93 billion rupees ($212.6 million) from its heavily oversubscribed initial public offering of shares in the country's largest car maker, Maruti Udyog Ltd -- making it the nation's biggest IPO since 1998.

The government said on Saturday that it would allot 79.4 million shares, amounting to a 27.5 percent stake, to investors, after retaining a part of the oversubscription, at 125 rupees apiece.

"This has become the first large IPO through the book building route to be priced over the floor price," Disinvestment Minister Arun Shourie told a news conference.

"This is the largest capital market transaction in the last five years and the largest book built IPO ever in India."

Shourie said the company's shares are likely to be listed in the first week of July at the Bombay Stock Exchange.

Japan's Suzuki Motor Corporation , which owns 54.2 percent in the company, had underwritten the entire offer of 72.24 million shares at a floor price of 115 rupees.

But the issue was oversubscribed more than 10 times when it closed at 3.00 p.m. (0930 GMT) on Thursday.

The Indian government's stake will fall to 18.3 percent after the offering, which was part of its drive to raise 132 billion rupees from selling stakes in state-run firms in the current fiscal year to March 2004.

It will allot 60 percent to retail investors, 40 percent to institutional investors.

BODES WELL FOR PRIVATISATION

Analysts said the overwhelming response to the Maruti IPO augured well for the country's more than a decade old privatisation programme which had been hostage to trade union and political opposition.

India has more than 230 state-run firms, half of them loss-making, which manufacture everything from condoms to steel.

The government embarked on a drive to sell stakes in these firms in 1991 to fund infrastructure projects and bridge its yawning fiscal deficit, one of the largest in the world.

Maruti, whose models account for more than half India's new car market of about 542,000 units a year, makes and sells 11 models in India.

The company, which began operations in 1983, revolutionised India's car industry by introducing modern production systems, developing a large pool of auto parts makers and boosting quality in a market stunted by decades of state controls.

Until nearly five years ago, it had a more than 80 percent share of the domestic car market, but has lost out since then to newer entrants such as Hyundai, Fiat, Ford and local firm Tata Engineering and Locomotive Company .

Maruti posted a profit of 1.46 billion rupees on revenues of 94.26 billion in the past year to March. But earnings could double next year since Maruti will stop paying royalties on four of its oldest models and will receive a a 10 percent discount on knocked-down kits from Suzuki.

(US$1 = 46.71 Indian rupees)