Daewoo Precision Gets Nod To Hike Stake In Jv

Daewoo Precision Industries, group company of Daewoo Corporation, has received government approval to hike its stake in joint venture company Rico Daewoo Precision Industries from 74 per cent to 100 per cent.

The Korean firm proposes to buy out the stake of Indian partner Rico Auto Industries by acquiring 1,75,000 shares of Rs 10 each in the company, which has a paid up capital of Rs 21 crore. In its application, Daewoo Precision had proposed that it would bring in money at different stages.

The company proposal, supported by a board resolution, initially did not win the industry ministrys favour on the grounds that it did not conform to the existing guidelines.

 

However, the Foreign Investment Promotion Board after detailed discussions, decided to okay the equity hike as it involved proprietary technology and was in the auto-component sector, the thrust area in the country's automobile policy.

According to the application, the change in the equity structure was necessitated because of the reluctance of the Indian partner to meet the present and future fund requirements of the company. Rico had instead requested the Korean partner to finance the company and its operations.

Rico Daewoo Precision Industries manufactures automotive components, spares and ancillaries for the domestic automotive sector, specifically for supply to Daewoo Motors India.