The government is likely to decide on the selling price of shares in the joint venture car company Maruti Udyog Ltd by June 21, two days after the bids for the public offer close.

The prices on the basis of bids received through the book building process for divestment of 25 per cent government equity will be finalised by the Group of Ministers on Divestment, sources associated with the MUL IPO process said.

The GOM is likely to meet the very next day of the closure of the public issue on June 19 to consider the recommendations made by the advisors for the issue in tandem with the divestment ministry to firm up the selling price for 7.2 crore (72 million) IPO, where the government had a green shoe option to offload up to another 10 per cent of the issue.

The group, comprising of ministers of finance, heavy industries, power and divestment, for the finalisation of prices of PSU shares for divestment through the public offering route, has been in existence even before the National Democratic Alliance led by A B Vajpayee came to power.

Once the price has been finalised on the basis of the bids of qualified institutional buyers, high net-worth investors and retail investors, the bids above it would be considered for allotment of shares, sources clarified.

This means that if an individual bidder quoted a price of say Rs 150 for the shares and the final offer is settled at Rs 130, then the investors would be offered shares at the latter price, they said.

Therefore, majority of the retail investors were bidding at "cut-off point" instead of quoting any price, they said.

On the contrary, if an individual has bid at a price lower than that to be finalised by the government, the application would not be considered at all, sources clarified.

Maruti has received a tremendous response from various quarters for the issue with investors booking orders for around four times the issue size of 7.9 crore (79 million) shares till Monday afternoon.

Investors have so far placed orders for close to 27 crore (270 million) shares with maximum bids coming in at Rs 120 per share.

The government is in the process of offloading 25 per cent stake in the auto major through a public issue in the joint venture where Suzuki Corporation holds majority 54 per cent.

An escrow account has been opened by the book runners to deposit the money received from prospective investors.

The government will divest its remaining shareholding in the auto company by 2004 through a second tranche of public offering.

It had earlier ceded control to Suzuki through a Rs 400 crore (Rs 4 billion) rights issue which sold for a premium of Rs 1000 crore (Rs 10 billion).