Fiat set to hike stake in Ind Auto

NEW DELHI, MAR 13: Fiat Spa of Italy has been allowed by the Foreign Investment Promotion Board FIPB to subscribe to Rs 106 crore worth...

NEW DELHI, MAR 13: Fiat Spa of Italy has been allowed by the Foreign Investment Promotion Board FIPB to subscribe to Rs 106 crore worth preference shares in Ind Auto Limited, which if converted to equity would hike up the Italian giant8217;s stake from 51 per cent to 81.4 per cent.

Though Fiat is not making any immediate move towards hiking stake in Ind Auto, the Italian company has, in its application with the FIPB, stated that it was not averse to the idea of converting the joint venture into a wholly-owned subsidiary. The preference shares can be converted into equity shares at any point of time. Ind Auto is a joint venture between the Doshi-run Premier Automobiles Limited and Fiat India Automobiles Limited FIAL, a wholly-owned subsidiary of Fiat Spa. FIAL has the controlling 51 per cent stake in the venture while the Doshis hold the rest of the Rs 65 crore share capital of Ind Auto.

Fiat has also sought extension of the maturity period of the preference shares, which was allowed by the board.Meanwhile, FIAL is all set to roll out its three-box car Siena, with a base price of Rs six lakh. The car would reach the showrooms and bookings would commence by April this year, company sources said.

Four versions of the Siena would be launched in India and would be priced within Rs six lakh to Rs seven lakh. The price range has already been indicated to the dealers. The Siena is part of the Italian auto giant8217;s world car project under which two more cars 8212; Palio and Palio Weekend 8212; would be introduced in India. The Palio would be launched in the second half of next year.

Fiat Spa had earlier planned to produce the world cars from a new unit being set up at Ranjangaon near Pune. However, in view of the severe demand recession, Fiat has stalled work at the unit and shifted the production base to Premier Auto8217;s Kurla unit in Maharashtra.

The Kurla plant is presently being utilised to produce the Padmini and Uno. The company has already set up separate assembly lines for the Siena and trial productionof the car had commenced in December-end. The plant has a total capacity to produce 60,000 cars which will be divided between the three models.

The Foreign Investment Promotion Board FIPB on Saturday has cleared 34 proposals involving foreign direct investment inflow of Rs 500 crore including nine applications pertaining to the union information and broadcasting ministry. FIPB however, rejected General Motor8217;s proposal envisaging royalty from its wholly-owned subsidiary in India on the grounds that foreign companies can not seek royalty from their 100 per cent subsidiaries.

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The proposals related to the Iamp;B ministry cleared by the board included, the application of Walt Disney India Ltd, Sony and Bloomberg. Walt Disney has been allowed to expand activities in India by setting up a 51:49 joint venture in the country.

Sony has been allowed to set up a wholly-owned subsidiary for production and export of commercial and feature films. The board allowed Bloomberg to collect information from official sourcesand export them on to its parent company in the US.

The other media related proposals cleared included, applications by RK Swamy, Zen, Optima, Mudra Communications and Chaitra Leo Burnett.

Publicis Worldwide BV of Holland will be holding 60 per cent stake in Zen while, Kadar group will have 51 per cent share in Optima. Vertigo Asia of Hong Kong has been allowed to pick up 49 per cent in Mudra and Leo Burnett would hike its stake up to 74 per cent in Chaitra.