As per an agreement between the government and Suzuki--which holds a 50 per cent stake in the company--the holding will first be offered to the Japanese car-maker. Only if Suzuki decides to reject the offer will the government be free to offer it to others.

Well-placed sources said that the ministry had sent an emissary to industry minister Sikander Bhakt for his approval for an outright sale of the stake. The ministry is of the view that intense competition will bring down Maruti's profit levels and earnings per share in the coming years. As a consequence, the asking price for the government's equity will fall proportionately. The ministry argues that the right time to sell is now.

But the industry minister, whileacknowledging the finance ministry's view, has turned down the idea on the plea that he had given a specific assurance to parliament that government's stake in Maruti would not be sold.

The finance ministry is now thinking of warehousing the stake with institutions and banks to soften the political blow that could have resulted from an ouright sale to Suzuki. This process will be the first step in taking the shares out of the "government system". Bhakt's views on warehousing are yet to be solicited by the finance ministry.

The sale, if it takes place, will be a landmark of sorts. Suzuki and the government have fought a bitter battle as to who should run the company. An uneasy compromise has since been hammered out, but intense competition can prise open old wounds.

The government's stake can fetch a good price in the market. Maruti has a strong balance sheet with a share capital of Rs 132 crore and reserves and surplus of over Rs 2,000 crore. In 1997-98, the company made a profit after tax of around Rs65 crore.