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NEW DELHI, July 25 (Reuters) - India's northern Punjab state said on Friday it had approved the sale of its controlling stake in Punjab Tractors Ltd to Commonwealth Development Corporation, a British government-owned investment institution.
The state government invited bids last December for the strategic sale of its 23.49 percent holding in India's third-largest tractor maker as part of its privatisation drive.
A Punjab government official told Reuters on the phone from the state capital, Chandigarh, the state cabinet had approved the sale of its stake in Punjab Tractors at a price of 153 rupees a share.
The sale, approved at a 3.4 percent discount to Punjab Tractor's closing price of 158.4 rupees on Friday at the Bombay Stock Exchange, will raise 2.18 billion rupees ($47.4 million) for the Punjab government.
"This is the first case of an FDI (foreign direct investment) in disinvestment," Vini Mahajan, disinvestment director in the Punjab government, told Reuters, adding that CDC was the sole bidder for the government's stake.
Several domestic and foreign firms had initially expressed interest in buying the government's stake in the firm.
Punjab Tractors , which has the capacity to make 60,000 tractors a year, sold 24,200 tractors in 2002/03, accounting for 15.03 percent volume sales in the sector, data from an industry association showed.
It also owns 33 percent of Swaraj Mazda Ltd, which makes light trucks and buses with Mazda's technology, and 29 percent of Swaraj Engines Ltd , which makes diesel engines in collaboration with Kirloskar Oil Engines Ltd .
India is the world's largest market by unit sales.
Mahajan said it was still unclear if CDC would be required to make an open offer for a further 20 percent stake in the firm as is mandatory under Indian takeover regulations. ($1 = 46.05 rupees)