Fiat-Pal Firm Ind Auto Reaches Financial Closure

Ind Auto Ltd, the new joint venture between the Doshi-owned Premier Automobiles Ltd (PAL) and Fiat India Automobiles Ltd (FIAL), the 100 per cent Indian subsidiary of Italian auto major Fiat Auto Spa, achieved financial closure last week, a PAL press release issued yesterday said.

"This marks the completion of all formalities and FIAL has subscribed to the equity of the new company called Ind Auto Ltd, currently a subsidiary of PAL into which the Kurla plant was spun off as per agreement," the release said.

The board of the joint venture will consist of five members of FIAL and four from PAL, the statement said. PAL's main unit at Kurla has been transferred to the joint venture after PAL's shareholders approved the move last year.

P Sighicelli, vice president international development and member of Fiat Auto board, will be the chairman of the new company, while Arvind Doshi, will be the vice chairman, Maitreya Doshi will be managing director and G Ravina will be the executive director. Additionally, V Saitta, G Cane and E Ferrero will represent FIAL and Pravinchandra Gandhi and N N Jambusaria will represent PAL on the board of the new company.

Vinod Doshi will be the chairman of FIAL, while G Ravina will be the managing director, and Maitreya Doshi will be the director of the company. Vinod Doshi will continue to be the chairman of PAL and Arvind Doshi and Maitreya Doshi will continue as P&MD and MD of PAL respectively.

"The joint venture achieved financial closure on April 29, 1998," the release said. FIAL will hold 51 percent and PAL 49 percent of the RS 65 crore equity of the joint venture. "In addition, Fiat through FIAL will also be infusing further fresh capital of about Rs 400 crore in the form of preference shares and interest free subordinated debt which will be used to repay the liabilities of financial institutions, banks, booking refunds as well as provide for capital expenditure for the new company,'' it said.

As per the agreement arrived at with the banks and financial institutions the joint venture will arrange to repay all the liabilities and term loans acquired as part of the spin off of the Kurla plant by July 29 1998, the release added. The unit makes Fiat's Uno car under a technical collaboration.

The joint venture expects to produce about 30,000 units of Uno in the financial year 1998/99 (April-March), the statement said. The venture will also make and sell under contract to PAL 8,000 to 12,000 units of PAL's Padmini model in 1998/99, it added.

All the UNO bookings will be transferred from PAL to the new company. of the original over 2,90,000 bookings there are still 50,000 live bookings, the company release said.

Of those cancelled bookings PAL has already refunded 80 per cent of the cancellation money, prior to the spin off to the JV, the release added. "ll further cancellations will be handled by Ind Auto'' the release said.

The company was in the process of restructuring its production line to enhance the number of cars turned out per day to 120 cars (both petrol and diesel versions), the statement said.

The JV hopes to produce 30,000 cars in 1998-99.

In addition, production of Padmini cars will continue under contract for PAL.

Indigenisation level will reach 80 per cent in terms of cars by the end of 1998-99 from the current 65 per cent for the petrol version of Uno.