Abb To Up Stake In Venture With Universal Cables
Electrical engineering giant Asea Brown Boveri (ABB) is increasing its stake to 74 per cent in the joint venture with Universal Cables, a M P Birla group company.
ABB has already signed an agreement with the Birlas to increase its equity in Universal ABB Power Cables Ltd from the present 51 per cent and would soon be approaching the Foreign Investment Promotion Board (FIPB) for bringing in the foreign investment, top company sources said.
After the equity restructuring, Universal Cables' stake in the joint venture would also go up from the present 24 per cent to 26 per cent as both the companies would be subscribing to the 25 per cent kept apart for the public, chief financial officer of ABB India, S K Nagpal said.
With this, the joint venture would become a privately held company. Universal ABB Power Cables was inaugurated during the weekend here, though the company had started commercial production in November 1997. Nagpal said ABB and Universal Cables decided to subscribe to the portion kept apart for the public, in view of the dull capital market conditions. ABB has already brought in the money to buy the additional 23 per cent stake in the form of loans and would convert it to equity once the FIPB approval comes through, company sources said.
With a total investment of Rs 88.5 crore, Universal ABB was incorporated in 1995 to manufacture high- and extra-high voltage XLPE power cables. Besides the joint venture, ABB also has a technology agreement with Universal Cables for manufacture of power cables.
Of the total investment of Rs 88.5 crore, Rs 36 crore would come in the form of equity and the remaining Rs 52.5 crore as term-loan from the IDBI. ABB has invested in Universal ABB through ABB Holdings (South Asia), the holding company of ABB India.
The Birla group has invested through Universal Cables and its affiliates. The new company would manufacture high voltage cables from 66 KV to 400 KV voltage class and conductor sizes upto 2000 sq.mm. of copper or aluminium. It has already supplied 66 KV cables to Electricite De Portugal (EDP), the major power utility in Portugal and 220 KV cable to the Tamil Nadu Electricity Board (TNEB). It also has the distinction of having the tallest vulcanisation line in the world for manufacturing of cables through vertical continuos vulcanisation process.
The automated vulcanisation line at Satna has a height of 105 metres.