Siel Backs Out Of Compressor Venture With Tecumseh
Siddharth Shriram flagship Siel Ltd has completely withdrawn from its 50:50 compressor joint venture with the US-based multinational Tecumseh, one of the leading compressor manufacturers in the world.
The Foreign Investment Promotion Board (FIPB) has given its approval to Tecumseh to pick up the entire 100 per cent equity stake in the joint venture company by buying out Siel's shareholding in the company.
With this buy-out, Tecumseh will bring in the entire Rs 40 crore to set up the initial equity capital base of the company. The equity change will involve Tecumseh buying out the Hyderabad manufacturing unit of Siel along with its entire assets, which in turn will oust the Siddharth Shriram group from the compressor business altogether.
Siel had been manufacturing compressors at the Hyderabad factory of its subsidiary company Shriram Refrigeration Industries (SRI), which was later merged into the parent flagship, for over a decade now.
In 1995, the company decided to enter into an equity joint venture with Tecumseh, its technical collaborator for 10 years who had planned to mark a more direct and aggressive presence in the Indian market in order to face the competition from its international rival Copeland. Copeland has a domestic presence through the Indian joint venture Kirloskar Copeland.
However, owing to financial constraints of Siel, which reported losses in its last financial year, talks were on for over a year for the multinational to hike its stake in the proposed joint venture.
Meanwhile, Siel Ltd recently entered into a 50:50 joint venture with Plansee TIZIT of Austria by making a fresh offer of 15 million equity shares of its wholly owned subsidiary Indian Hard Metals.
The new company, Siel TIZIT Ltd, will manufacture hard metal cutting tools at Siel's manufacturing facility in Calcutta using technology from the Austrian firm.
ny to form the third largest tools company after Sandvik and Widier. The joint venture has already been approved by the FIPB and the RBI.
Plansee TIZIT, is the hard metals & tooling divison of the $ 410-million Plansee group.