Siel to buy back 15% Honda stake

NEW DELHI, MARCH 30: Siel Ltd received shareholders' approval at its annual general meeting here on Tuesday to buy back 15 per cent equit...

NEW DELHI, MARCH 30: Siel Ltd received shareholders’ approval at its annual general meeting here on Tuesday to buy back 15 per cent equity stake in its joint venture Honda Siel Cars India by pumping in Rs 54 crore.

The additional 15 per cent equity stake in Honda Siel will take up its stake to 20 per cent and an investment of Rs 72 crore. As per the existing agreement, Siel can acquire these shares by October 2000. "We are keeping that option open, though we would not be able to purchase it in one year,” a company official said.

The company took this proposal as an enabling resolution. The buy-back of shares may be funded through internal accruals and sale of assets. The company has land which has become vacant, with Shriram Foods and Fertilisers’ factory shifting to another place.

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SIEL Limited had, during the year ended September 30, 1998, recorded a net profit of Rs 16.29 crore, down over 56 per cent from Rs 37.28 crore in the same period the previous year.

SIEL is also freezing all capitalexpenditure and selling off non-core businesses, including the financial services venture, as well as its immovable assets to raise funds and help the company reduce its debt burden. The group will now concentrate on its core competencies and intends to remain in oil, sugar and chemicals businesses. Besides, the company has also decided to ask all its joint venture partners in varied businesses to buy out the ventures "so that we can concentrate on our core competency”.

The company is also hopeful of finalising a joint venture partner for its airconditioner manufacturing venture — SIEL Aircon.

On business restructuring, chairman and managing director Siddharth Shriram said, "Over the last few years, we had made a lot of bad investment decisions and are now in the process of correcting them. So we are closing down everything that is not our core business… We want to stay in oil, sugar and chemicals.”

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The group, Shriram said, had recently sold off its compressor business for Rs 90 crore and divestedits stake in Shriram Honda Power Equipment for Rs 80 crore. The company’s sugar operations have registered an improvement in the year ended September 30, 1998, due to increase in volume of cane crush and high recovery and efficiency level.

Regarding Siel Overseas Limited (SOL), the UK-based subsidiary of Siel Limited, Shriram said, the company has been converted into a 50:50 joint venture by divesting stake in favour of Thorn and Longley, Britain. The investment in Covrad Heat Transfer Limited (CHTL), another UK-based company, has been exchanged as part of the restructuring programme of Sol.

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