The Pune-based Kirloskar Oil Engines Ltd (Koel) and the US-based Cummins Engine Company, who were joint venture partners in Kirloskar Cummins Ltd, have decided to part ways.
The two companies have signed an agreement to this effect, a joint press release issued on Saturday said. The joint venture was formed in 1962 to establish an industrial enterprise to manufacture diesel engines, under trademarks, patent rights, designs and specifications of Cummins.
The decision to part ways was desirable as both Koel and KCL have been in the same line of business. The changed economic and business scenario in India, resulting from the liberalisation policies adopted by the Indian government, has made it desirable for Koel and Cummins to review their relationship and go separate ways, the release added.
As per the agreement reached between the two companies, Cummins will increase its stake in KCL by one per cent to make it 51 per cent with the purchase of shares from Koel.
In due course, it is proposed that the name of the company, too, will be changed, subject to necessary approvals. The directors on the KCL board, who represent Koel's interests, will be stepping down. We are proud of our relationship and happy to have worked together to develop the market. But with a changing business environment and new opportunities beckoning we have mutually decided to go independent, Atul Kirloskar, vice-chairman and managing director of Koel, said.
Ronald L Moore, area business manager (India), Cummins Engine Company, said that the new business climate in India means that the original arrangement created 35 years ago between Koel and ourselves is no longer appropriate. KCL, which had registered a 20 per cent sales growth in 1995-96, had reported a turnover Rs 658 crore for that year. Koel, too, had registered a sales growth of 45 per cent during the period, by reporting a turnover of Rs 615 crore.
