Doshi Initials Pact To Produce Palio, Siena With Fiat

Vinod Doshi, promoter of Premier Automobiles, has signed a joint venture agreement with Fiat Auto, the 100 per cent automobile subsidiary of the Italian conglomerate Fiat Spa, to set up a passenger car project in the country.

Fiat will hold 74 per cent of the equity stake in the company while Vinod Doshi and family will hold the remaining share.

The Doshis stake will, however, be through a family holding company and not through Premier Automobiles.

Under the agreement with Fiat, the Doshis will have the option to raise their equity stake in the joint venture up to 49 per cent in five to seven years. The application seeking the FIPB approval was submitted recently.

 

According to sources, the proposed joint venture company, Fiat Auto of India Ltd, will manufacture the hatchback Palio, the sedan model Siena, and the brand new, unnamed and yet-to-be-launched station wagon in the country.

The petrol versions of these cars will be launched in engine sizes of 1000cc to 1300cc, while the company plans to launch the diesel cars in the 1700cc category.

However, while the hatchback is expected to be the entry level car, the exact sequence of launch and the numbers to be produced are yet to be worked out.

The cars are slated for a late-1999 launch in the domestic market after the greenfield manufacturing plant of the joint venture begins commercial production. The company proposes to locate its factory near Pune with an installed manufacturing capacity of 100,000 cars in a year. However, Fiat has estimated to reach full capacity production only in five years.

In the FIPB application, the company has indicated that the initial indigenisation levels of these cars will vary from 60 per cent to 80 per cent depending on the model.The company also proposes a total investment of around Rs 2000 crore for this project over a period of seven years.

The total foreign direct investment inflow from Fiat will be $250 million which would be the Italian carmakers equity contribution to the project, against total equity capital of Rs 910 crore.

The joint venture agreement also envisages a lumpsum payment of $10 million by the Indian company to Fiat, and a royalty payment of 5 per cent of sales turnover to the multinational. The Pune plant would be part of Fiats world car project under which the automobile major is setting up greenfield sites in Brazil, Argentina, Morocco, and Thailand.

Fiat keen on stake in PAL Kurla plant

Krishnakoli Dutta NEW DELHI

Fiat Auto has evinced interest in picking up equity stake in Premier Automobile Ltds Kurla car factory.

According to sources, Fiat would like to invest in the factory to boost the manufacture of the 1000 cc Fiat Uno for the domestic market.The Uno would be Fiats flagship car in the country till the 1999 launch of its Palio, Siena and station wagon mode.s.