The government today fixed Rs 620 per share as the floor price for bidding for its 8 per cent stake in Maruti Udyog Ltd [Get Quote].

All the 36 state-owned banks, financial institutions and insurance companies which submitted expressions of interest for the 23.11 million shares can submit financial bids by 5 pm on 11 January, a finance ministry official said.

The floor price was decided at a meeting of the Empowered Group of Ministers with the advisers for the sale, Kotak Mahindra Capital Co Ltd and SBI [Get Quote] Capital Markets Ltd.

Finance Minister P Chidambaram, Planning Commission Deputy Chairman Montek Singh Ahluwalia and senior officials of the divestment department were present at the meeting.

The divestment department dispatched the bid details to the banks, financial institutions and the insurance companies late in the evening.

At a price of Rs 620 per share the government will earn at least Rs 1,430 crore (Rs 14.3 billion) from the transaction, which will be the first divestment during the current financial year. The floor price is at a 7.7 per cent discount to today's closing price of Rs 672.30 on the Bombay Stock Exchange.

Maruti shares closed 1.5 per cent higher on the BSE. The EGoM will meet again on January 12 to finalise the sale. Officials said the government had fixed January 15 as the deadline for completing the formalities related to the sale of shares.

Officials said that the government had decided to adopt a French auction system of multiple price bidding. They also said that the Centre was willing to sell the entire 23.11 million shares to a single bidder in case it did not breach the 10 per cent ceiling on holdings.

At present, LIC [Get Quote] is the only public institution to hold a significant stake in Maruti - 3.31 per cent at the end of September 2005.