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Journalism of Courage
MUMBAI, May 30: Ind Auto Ltd, the joint venture company of Italian car major Fiat and Premier Automobiles of the Doshis, is planning a preference share issue of Rs 400 crore in favour of the multinational partner of the company. The proceeds of the issue will be used to meet the working capital requirements of the company.
An application to the Foreign Investment Promotion Board has been already been made by Fiat to invest in the company. Premier officials said that as of today there are no plans by PAL to disinvest its 49 per cent stake in Ind Auto Ltd in favour of Fiat. Fiat is a majority shareholder in joint venture with 51 per cent stake.
According to the company officials, the preference share issue will help the company to launch the new diesel Uno model, besides increasing the production of cars per day. The company at is producing about 40 Unos per day at its Kurla plant in Mumbai. The company has live bookings of over 60,000 customers.
With the preference share issue, the company will also beable to tide over the immediate fund requirements, till its sales in the country pick up. "The company requires huge infusion of funds to survive the current recession in the auto industry, hence Fiat is bringing more funds," sources add.
According to the application made to the FIPB by Fiat, the cumulative participating preference shares would be redeemed from the seventh to tenth year onwards.
Fiat is also investing around Rs 3,000 crore in a greenfield plant in Ranjangaon, near Pune. The MNC has floated a 100 per cent subsidiary, Fiat India Automobiles Private Ltd (FIAL) to invest in the new plant. FIAL plans to launch its Palio model in India to coincide with its worldwide launch.
