Ge To Buy Out Stake Of Indian Promoter In Medical Venture

General Electric of the US has decided to increase its 51 per cent equity stake in medical joint venture GE Elpro Medical Systems to 100 per cent. GE will pick up the 49 per cent stake held by Elpro International. through its Singapore-based 100 per cent subsidiary, GE Pacific Pte Ltd.

The American giants move comes close on the heels of its 100 per cent acquisition of GE Apar Lighting through a buyout of its Indian partner and its part-buyout of joint venture partner HDFCs stake in Countrywide Consumer Financial Services.

GEs plan to buy out Elpros entire stake in the venture was recently cleared by the Foreign Investment Promotion Board. The joint venture was formed in 1994 to manufacture electronic diagnostic imaging systems.

In its application to the government, GE had indicated its plans to integrate its Indian venture into its global medical systems business. GE Elpro manufactures medical equipment for radiography, fluoroscopy and surgery applications at its plant in Chinchwadgaon, Pune. GE had also stated that the manufacturing of some of these products would be progressively transferred to India from Europe.

According to GE, its decision to pick up 100 per cent in GE Elpro is necessitated by company policy, which states that GE can transfer its proprietary technology only to 100 per cent subsidiaries.

GE has already used this argument to pick up the entire stake in its lighting joint venture with Apar last year. The company has since been renamed GE Lighting (India) Ltd. GE Apar Lighting was formed in 1993 as a 50:50 joint venture. GE also recently hiked its stake in Countrywide Consumer Financial Services by buying part of the stake of its partner, HDFC. While GE subsidiary GE Capitals stake in the company has risen from 50 per cent to 55 per cent, HDFCs stake has gone down from 50 per cent to 45 per cent.

With fresh foreign direct investment (FDI) of Rs 1.52 crore as a result of the hike in GEs equity from 51 per cent to 100 per cent in GE Elpro, the total FDI in the company goes up to Rs 3.51 crore.

The company will pay $615,000 as technical know-how fees to its US parent, without any royalty payouts or export obligations. However, the company has indicated export projections of Rs 30-50 crore, comprising about 55 per cent of its sales turnover by 2002, on a capacity of 3,000 pieces of equipment per year.