TIDCO may not pump in fresh equity into Titan
Bangalore: The Tamil Nadu Industrial Development Corporation (TIDCO)has indicated that it is unlikely to pump in more equity into Titan Industries Ltd. TIDCO is the single largest shareholder with 27.88 per cent stake in the watchmaker. Titan plans to infuse additional equity in the next calendar year and had earlier said the fresh equity funding would come from the promoters, Tata and TIDCO, so as to keep their holdings unchanged. Currently, Titan's paid-up equity capital stands at Rs 42.48 crore and preference share capital at Rs 40 crore. Titan had been toying with the idea of additional capital infusion for sometime now in a bid to improve its staggering debt-equity ratio.

Top Titan sources also hinted at TIDCO's lack of interest to participate in the next round of equity injection. Earlier, they indicated that TIDCO was not keen on pumping in more money, which was perhaps the reason for the inordinate delay in finalising the equity expansion plan. The sources added that there were foreign funds, which could infuse funds even though the management has not considered the matter till date. The latest development involving the likelihood of TIDCO rejecting plans for fresh equity could throw up new vistas in this regard. However, TIDCO sources ruled out the possibility of offloading its stake in the near future through the new equity inflow corridor. "We have not thought of exiting the company yet," they said. The investment arm of the Tamil Nadu Government is not likely to offer its shares to any third party such as foreign funds at a favourable price in the near term, the sources added. It can be mentioned that foreign funds such as Morgan Stanley and IFC hold equity in Titan.

The company had Rs 467.05 crore of debts on its books as on March-end 2003. Controlling the debts has been a challenge for the company but cost control and drive towards increased productivity has helped boost efficiency, the officials said. However, Titan has not firmed up a plan to retire high-cost debts through refinancing tracking the prevailing low interest rate regime. Meanwhile, Titan expects to sell close to seven million watches in the current financial year, up from the 5.6 million units it sold last year. The cheaper sub-brand Sonata is likely to be the volume driver, but top-end sub-brands, such as Nebula, were also showing greater traction in value growth. According to a business plan authored by consultancy major McKinsey, Titan is likely to double its sales to Rs 1,500 crore by 2006-07 while net profit is seen to quadruple from last year's Rs 6.21 crore. The growth is likely to driven by better-cost management and newer revenue streams. The company recently entered the eyewear segment and plans to enter the accessories market.
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Skoda to hike Octavia price
Mumbai: Skoda Auto India has announced plans to increase the price of its premium luxury car Octavia shortly. "This would be the first-ever price increase by the company since it started operations in India," the company said in a release. Skoda cited weakening of the dollar and increase in input costs over the year as main reasons.
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AB Electrolux plans to source components from India
New Delhi: AB Electrolux, a household and outdoor appliances major, has identified India as a sourcing base for auto components. The company plans to source components from India for its outdoor division, which makes garden and forestry equipment such as chain saws, riders, lawn movers and lawn tractors. AB Electrolux is also organising a national vendor selection and sourcing meet in association with the Auto Components Manufacturers Association of India (ACMA) on November 20 here, which would see participation of a 20-member team from the company's operations from Sweden, North America and Asia Pacific and more than 40 top Indian vendors. AB Electrolux currently sources materials and parts worth $ 9 billion every year, of which 30 per cent will now be sourced from Asia Pacific, including India.

The company had set up an international purchasing office in Gurgaon, in July this year to source raw materials, components and finished goods for its global manufacturing operations. In the past few months, it has already given an order worth more than $ 1 million to the Indian piston manufacturing company, Abilities (India) Pistons & Rings Ltd. The company would commence the sourcing of other components such as forgings, needle roller bearings, ferrous and non-ferrous casting, sheet metal components and auto electricals in the next few months. Nick Sowden, vice-president, Asia Pacific purchasing, AB Electrolux, said, "India fits in well with Electrolux's growth strategy, since it has a strong supplier base which is globally recognised for its superior quality and performance benchmarks. India is certain to play a strategic role in the company's growth plans for the Asia Pacific region." AB Electrolux currently sources components from many Asian countries through its sourcing divisions in China, Taiwan, South Korea, Malaysia, and Thailand.
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ESPN takes InCable row to court
New Delhi: ESPN Software India Pvt Ltd has filed a winding up petition in the Bombay High Court against the Hinduja-promoted Indus Ind Media and Communications Ltd, InCable Network, to recover the outstanding cable subscription amount of over Rs 4 crore. According to a statement by ESPN, the actual outstanding cable subscription amount currently adds up to Rs 7.1 crore. "The Honourable Bombay High Court has accepted the petition and listed it for admission hearing on January 29, 2004," said the statement.

According to the petition, ESPN Software India Pvt Ltd had entered into various service contracts with InCable Network to distribute the popular ESPN and STAR Sports channels in Mumbai and other cities, which it services. InCable Network was to pay monthly subscription fees. But, for inexplicable reasons, InCable Network had failed to make payments towards the subscription fees in accordance with the contracts. Despite InCable Network's failure to pay the subscription fees, ESPN Software kept the services on and made bonafide attempts to persuade InCable to discharge their payment obligations.
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At IDBI Bank, they're now less averse to merger
New Delhi: The resistance to a merger with IDBI may be slowly fading within the rank and file of IDBI Bank. In fact, it could be an altogether different ending this time should a fresh proposal for merger be mooted by IDBI in the days to come. With its top brass who had vehemently opposed a merger shaven off with successive resignations, the second rung within IDBI Bank now holding charge appears to be less allergic to the idea of forming a single entity by the fusion of the two. "It is not a question of being for or against a merger or a reverse merger. What we should look for is the long-term sustainability of the merged entity. If the long-term value is preserved there might not be opposition from with IDBI Bank," a senior IDBI Bank official said.

Senior Government functionaries have once again sent out signals recently that a fresh attempt might be made to merge the two entities after the passage of the Bill to restructure IDBI in Parliament. The Bill is aimed at enabling IDBI to convert itself into a commercial bank with development financial institution characteristics. The talks of fresh merger proposal has started doing its rounds ever since the talk has been going around that the present UTI Chairman, Mr M. Damodaran, is to take over as the next Chairman of IDBI, a post that he has been holding concurrently. "We have heard of Mr Damodaran taking over at IDBI. We see it as a positive development since he is known to be a pragmatic person. Whenever there are such changes it is hoped that all the options would be revisited," IDBI Bank sources said.

Earlier, the then top brass of IDBI Bank including its Chairman, Mr M.S. Verma, and Chief Executive, Mr Gunit Chaddha, were known to have opposed any merger of the two institutions. Both have subsequently left the bank, with Mr Ajay Bhimbet, who later took over charge also resigning to join another bank. The Reserve Bank of India too is understood to have had reservations against the merger since it felt that IDBI, with its weak financials and a heavy load of non-performing assets (NPA)s, might become a drag on IDBI Bank, which is seen as one of the better performing private banks. However, it appears that the next proposal for a merger or a reverse merger might come only after IDBI has completed its cleaning up act. Ministry of Finance officials had recently said that the NPAs of IDBI would be gradually shifted to asset reconstruction companies for recovery and resolution.
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Sona Koyo hopes to hit Rs 100-cr exports by '07
New Delhi: Sona Koyo Steering Systems Ltd, a leading automobile ancillary maker, expects its revenues from exports to swell to 20 per cent of turnover by 2007 compared with just 2 per cent today, as the company is giving a new thrust to catering to global markets. "Our aim is to achieve Rs 100 crore from exports by 2007, out of a turnover of Rs 500 crore we have targeted for the year," said Dr Surinder Kapur, chairman and managing director of Sona Koyo. Dr Kapur said Sona Koyo, a joint venture between the Sona Group and Japan's Koyo Seiko Company, has recently bagged an order worth $35 million for supplying steering gear to the US and another order of about $10 million from South Korea. These orders are to be executed over the next five years, he said, but declined to divulge names of the automobile manufacturers who have placed the orders.

"We will piggyback on our partner, Koyo Seiko, to increase our exports. We would be doing contract manufacturing for them," Dr Kapur said, adding that Sona Koyo would supply low-cost systems in large volumes to its partner. India's potential to emerge as a global supplier of quality auto components is another factor that would help companies such as Sona Koyo, which recently won the Deming Prize for quality. The auto component industry in the country has set a target of $2.5 billion worth of exports by 2010. In 2002-03, exports of components from India grew by 35 per cent to $800 million from $578 million in the previous year. Another strategy is to target vehicle manufacturers of smaller size in other countries, for whom Sona Koyo would not only supply products, but also provide complete design and development of components.

The company plans to beef up its facility in Chennai, which is a 100 per cent export-oriented unit, in view of the anticipated increase in exports. "We will be investing Rs 15 crore in this facility," Dr Kapur, said. Over the next two-and-a-half years, Sona Koyo would invest Rs 100 crore in expanding its facilities, situated in Chennai and Gurgaon. The company would use internal accruals and borrowings to fund this expansion. In addition to this, the company is also toying with the idea of acquisitions of facilities abroad. Dr Kapur said total revenues of Sona Koyo, which supplies steering gear and steering column assemblies to a number of domestic manufacturers, would touch Rs 260 crore this fiscal against Rs 220 crore in 2002-03. "We will also be improving our profit margins to around 14 per cent as against 12 per cent last year," he said.
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Murugappa may divest further in Godavari Fert
Chennai: The Murugappa group is likely to further divest its stake in Godavari Fertilisers, a company in which it acquired a 56 per cent stake in August. The group may sell 5 per cent of Godavari's equity to a Tunisian company, Groupe Chimique Tunisien (GCT). Last month, the group agreed to sell a similar stake in Godavari to Fosker Ltd, a South African company that will supply it phosphoric acid to make fertilisers. Both Fosker and GCT had competed with the Murugappa group - but lost - to acquire a controlling stake in Godavari Fertilisers after the Andhra Pradesh Government decided to sell its 25.88 per cent equity in the Kakinada-based company.

The Murugappa group bought out the Government for Rs 102.67 crore, offering Rs 124 a share. Fosker and GCT offered Rs 96 and Rs 70 a share respectively. The group's acquisition of the 56 per cent stake in Godavari was done in three phases — first through purchase of shares from the market, then the buy-out of the Andhra Pradesh Government's stake and finally through an open offer to the public. In all, the group spent about Rs 170 crore. Alongside the sale of stock, Murugappa is talking to GCT to buy phosphoric acid for Godavari, which needs about 200,000 tonnes of acid every year.
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