Peugeot to sell stake in JV to Premier Automobiles
10 Aug 1999
Peugeot of France is giving up its entire 31.96 per cent stake in PAL-Peugeot, the French company''s joint venture with the Doshis of Premier Automobiles Ltd. Peugeot is gifting the stake to the Doshis for free.
The joint venture, launched with much fanfare for the manufacture of Peugeot passenger cars in India, came a cropper when Peugeot, which had an equal stake along with the Doshis, pulled out of the venture after disagreements with the Indian promoters.
The two partners have secured approval from the Reserve Bank of India for the transfer of shares, and the Premier Automobiles management has informed the Bombay Stock Exchange that the foreign partner will be transferring its share in the company to PAL.
Peugeot has been wanting to sell its share in the joint venture, but PAL had not shown any interest earlier in acquiring the stake. Later, the company told its erstwhile collaborator that it is willing to pick up the stake but there will be no payments. In its desperation to get out of the venture, started in 1995, Peugeot finally agreed to give the shares away.
PAL-Peugeot''s plant at Kalyan has been at a standstill ever since Peugeot''s exit, except for the production of a couple of Premier 118 NE models. The Doshis had approached Mahindra & Mahindra as well as Skoda of Czechoslovakia for sale of the plant. But these companies did not bite.
Financial institutions, including ICICI and Industrial Development Bank of India, have a substantial interest in the company, including a large debt exposure. ICICI, which has an exposure of Rs 107 crore through loans and debentures, has taken the company to court.
The Doshis have recently put forward a revival proposal to ICICI and the response is awaited.
The company has plans to manufacture a limited edition of the Peugeot 309GLD at a price of Rs 4.84 lakh (diesel version, ex-showroom, Mumbai). That would be almost Rs 2 lakh cheaper than the earlier launch price. The company claims that its dealers have responded well to revival plans as they feel that customers continue to have faith in the product.
Demand for the Peugeot model has always been encouraging. The company has CKD kits of the Peugeot 309 lying at the customs warehouse in Mumbai, which have not been cleared for want of funds.