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A day after Italian auto major Fiat replaced the chairman and managing director of its Indian operations, its global auto finance subsidiary, Fidis has also exited from its Indian operations.
Fidis (SpA), Fiat Auto's wholly owned subsidiary, today sold its entire 51 per cent stake in Fiat Sundaram Auto Finance to its joint venture partner, Sundaram Finance, for a consideration of Rs 33 crore (Rs 330 million). The agreement was signed between Fidis and Sundaram Finance in Chennai on Friday.
Confirming the development, AN Raju, Sundaram Finance's senior vice-president (operations) told Business Standard, "In an amicable settlement, we today bought out Fidis' 51 per cent stake in Fisaf. However, we will continue to be a preferred financier for Fiat India's car sales in India."
Fisaf, which currently has an asset base of Rs 170 crore (Rs 1.7 billion), was formed primarily to finance customers' purchase of Fiat India's cars.
The move is part of Fidis' global restructuring plans and comes in the wake of Fiat Auto's poor financial state at present.
Following this, Fisaf becomes a wholly owned arm of Sundaram Finance, which earlier owned a 49 per cent stake in the company.
He added that as Sundaram Finance was responsible for the back-end operations of Fisaf even earlier, there will be no major changes in the functioning of Fisaf, which will now become a "shell company" with some investments.
The company has, however, requested Oscar Madeddu, the current CEO of Fisaf, to continue in his position till the end of February.
Sundaram Finance, which used to manage and administer Fisaf's portfolio till date, will now finance Fiat India's cars directly.
Industry sources said Sundaram Finance's board of directors may now consider merging Fisaf with itself at a later date.
Earlier on Thursday, Fiat India announced that has replaced its chairman and managing director Maurizio Paulo Bianchi with Alberto Montanari amid a financial crisis which has plagued the Italian auto maker back home and in India.
Montanari, who arrived in India today, has already taken charge of Fiat India's operations, while Bianchi has been relocated to Fiat's headquarters at Turin, "to take up a senior position." Montanari was Fiat's head of South African operations.
In a press statement issued on Friday, Fiat India said Bianchi has "successfully completed" his tenure in India, and credited him with "turning around the Indian operations of Fiat."
Bianchi's replacement has been announced only three days after he returned back from Italy following a Christmas and New Year vacation for around two weeks.