Tvs Drops Plan To Merge Arm With Self

The Rs 1,000-crore two-wheeler company, TVS Suzuki Ltd, has dropped plans to merge Sundaram Two Wheelers Private Ltd with itself.

The board of directors of the two companies had considered and cleared a scheme of amalgamation with effect from February 1, 1998.

However, the merger has been called off as certain legal issues pertaining to Sundaram Two Wheelers are yet to be resolved, company sources said.

The board of TVS Suzuki which met recently has rescinded its earlier resolution which had cleared the merger. Company sources, however, declined to clarify on the exact nature of the legal issue pertaining to Sundaram Two Wheelers. Sundaram Two Wheelers was reportedly promoted by the TVS group about six years ago for a scooter project. The company, it is said, was floated as a vehicle to implement a scooter project independent of TVS Suzuki, if the collaborator Suzuki was not open to the project.

 

In another unrelated development, Lakshmi Auto Components Ltd (LAC), a subsidiary of TVS Suzuki listed on the Madras Stock Exchange, has firmed up plans for a rights issue to finance a Rs 50-crore expansion programme.

LAC supplies critical engine components for motorcycles, mopeds and scooterettes manufactured by TVS Suzuki. LAC is planning to come out with the issue in the ratio of one share for every two shares held, later this year. The issue, to be made at a premium of Rs 10 per share, will raise Rs 9 crore. The funds raised will part-finance the Rs 50-crore expansion plan drawn up by the company. A Rs 20-crore term loan-from the State Bank of India and internal accruals will also finance the capex programme.

LAC's proposed expansion is aimed at creating capacities to cater to TVS Suzuki's requirements for the new scooter project coming up at Byathahalli, near Mysore. The company will also be manufacturing critical components for new four-stroke motorcycles, mopeds and scooters to be launched by its parent.

Meanwhile, TVS Suzuki's Rs 300-crore scooter plant, with an initial capacity of 1.5 lakh vehicles per annum, is likely to commence operations in the last quarter of the current year. A Rs 100-crore non-convertible debenture issue has been completed at a coupon of 15.5 per cent and negotiations with banks for a Rs 50-crore term loan are on. The balance funds required for the scooter project will come from internal accruals.