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June 18, 2001
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Money > Business Headlines > Report June 18, 2001 |
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Telco bid for foreign stake in three subsidiaries flopsArijit De After the domestic slowdown, the global auto recession is now taking its toll on Tata Engineering. Telco's bid to offload stakes in the three sub-assemblies that were hived off as subsidiaries last year has come a cropper, with the US and European companies that it was in negotiations with pulling out. The three sub-assemblies include the machine tools and growth divisions at Jamshedpur and Pune (as two separate companies) and the heavy transmission axles and wheels division, also located in Jamshedpur. Confirming the development, executive director Ravi Kant said: "Talks have fallen through with the US and European companies. Because of the global recession, they appear to have deferred their investment decisions." "We are still hopeful of concluding the deals this year, probably in the second half," he added. He indicated that the conclusion of the deals depended on how quickly the global auto sector bounced back. Telco was willing to offer equal stake or even more, company officials had earlier told Business Standard. The sub-assemblies were transferred at a book value of Rs 3.83 billion, and analysts estimate them to have annual revenues of close to Rs 10 billion. Analysts have valued the three subsidiaries at around Rs 10 billion, and said the dilution could fetch Telco as much as Rs 5 billion, "if it got the best deal out of all three." Telco is looking to tie up with international auto ancillary majors, which in turn could grow the businesses into major sourcing hubs. Telco was reportedly in talks with many international companies, including Eaton Corporation of the US and Meritor, a part of the Rockwell group. Telco decided on transferring the three divisions in mid-1999 and the transfer took place with effect from April 1, 2000, which also reduced 4,000 workers from its payrolls. The company's original plan was to complete the deals by April 2000, but the deadline was later deferred to March 2001. Powered by YOU MAY ALSO WANT TO READ:
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