New Delhi: An offer by the Indian government to hand control of the country's largest carmaker Maruti Udyog Ltd. to joint venture partner Suzuki Motor Corp will boost the company's competitive muscle, analysts said on May 15.

Japan's Suzuki would boost its stake from 50 per cent to 54.2 per cent by taking up a new share issue, the government said on May 14.

The government will reduce its 50 per cent equity to 25 per cent by March 2003 and the rest would be divested in 2004, Disinvestment Minister Arun Shourie said.

While some of the government's shares will go to retail investors, the rest would be available for Suzuki to buy if it wanted.

Maruti's market share has fallen from over 90 per cent in the early 1990s to below 60 per cent in 2001 with the entry of several global firms in India such as Ford, Fiat, Hyundai and Toyota.

The company returned to profit this financial year due to higher sales and cost- cutting measures.

Analysts said the profitability of the company was bound to increase with Suzuki getting a freer hand to cut costs.

"Once the control goes in the hands of Suzuki, the company will be free from time- consuming small issues. They can decide aggressively on the introduction of new models," one automobile analyst said.

"Suzuki will be able to bring in many Japanese management practices, some of which are already being followed in Maruti. However, the legacy of government ownership in the firm will mean a slow changeover," he added.