Suzuki seeks control of TVS firm
tvssuzuki.com
(Saturday, August 28, 1999)
Suveen K Sinha & Surajeet Das Gupta in New Delhi(BS)
Japanese automobile major Suzuki Motor Company (SMC) has informed the Chennai-based TVS group that it would like to acquire a majority stake in their two-wheeler joint venture, TVS-Suzuki.
SMC holds 25.9 per cent equity in TVS-Suzuki. The TVS group has an equity of 32 per cent. Of the remaining equity, 17.1 per cent is with non-resident Indians, foreign institutional investors and domestic financial institutions, while 25 per cent is with the public. Venu Srinivasan, the TVS family scion, is designated the chairman and management director.
Suzuki has indicated to the TVS group that if it did not agree to the Japanese company's acquiring a majority stake, it should allow Suzuki to set up a 100 per cent subsidiary.The TVS group has objected to the Suzuki move, the second such attempt by the Japanese company. A few years ago, the Japanese company dropped its move to acquire a majority stake in TVS-Suzuki in the face of opposition from the TVS group.
A questionnaire faxed to SMC president and chief executive officer O Suzuki on Tuesday remained unanswered. Srinivasan could not be contacted as he was out of the country.
Industry chambers have taken up the issue of Suzuki's planned move at the highest level in the government as it comes in the wake of similar developments in other foreign joint ventures harming the interests of the stakeholders. The chambers see in the Suzuki move a new trend among Japanese companies to set up wholly owned subsidiaries at the expense of their existing joint ventures.
One industry association has brought to the attention of the government how the share price of a healthy Indo-Japanese automobile joint venture has started to move southwards following its Japanese parent's decision to set up a 100 per cent subsidiary. The same Japanese company recently walked out of another automobile venture.
TVS-Suzuki Ltd, incorporated in 1982, has been a star performer in the Indian two-wheeler market, especially dominant in the south.
Under the terms of the collaboration agreement, Suzuki is to provide complete technical information and know-how.
The joint venture recorded sales of Rs 1,313.18 crore for the year ended March 31, 1999, up 28.9 per cent from the previous year. Profit after tax stood at Rs 81.39 crore, 18.36 per cent more than the previous year's Rs 68.76 crore.
The company, which diversified into the scooter segment early this year with the launch of the four-stroke Spectra, has a slew of launches slated in the coming months.
A four-stroke 150 cc motorcycle is slated for launch in the third quarter of 1999-2000. An all new Shaolin with improved engine and new styling is to be launched in the first quarter of 1999-2000. A new 15 BHP Shogun with disc brakes and mag alloy wheels is to be launched in the second quarter of 1999-2000. In mopeds, a 70 cc Champ will be introduced in the third quarter of 1999-2000.
An electric start version of Spectra is also to be introduced shortly. |
