Nestle plans to bring in strategic investor in Excelcia
New Delhi: After having won the battle for control of its erstwhile joint venture with the Dabur group, Swiss foods company Nestle SA has decided to offload 5 per cent stake in Excelcia Foods to a strategic investor. Though the name of strategic investor is not immediately known, sources indicate that it could be an Indian financial institution.

According to reports appearing in the Economic Times, the deal is expected to be finalised shortly.

Nestle, meanwhile, has decided to completely restructure the operations of the company, with a view to rationalising manpower and making Excelcia a "low cost operator". The top management of the biscuit company has been reorganised with Mr Jurg Stocker coming in as the new chairman and the old managing director. Previous incumbent, Mr Richard Lister, has gone back to the parent company.

Excelcia Foods will now be under the overall control of the Nestle India chairman and managing director, Mr Carlo Donati, and Ms. Sangita Talwar of Nestle India would be responsible for the entire marketing activities of the company. Nestle India’s network would be used for selling Excelcia products thereby resulting in potential cost savings.

Excelcia will do away with posts of finance and human resources head in future and would draw from the expertise available within Nestle India.

Besides drawing upon the supply chain management expertise of Nestle India, the company would also plan to alter its product portfolio and add six new products to its portfolio. Before Excelcia shut operations, there were four brands in its stable— Fillins, Creamwich, Kidz and Thinz.

The company was originally set up in 1996 as a 60:40 joint venture between Dabur India and Osem of Israel. However, Osem was soon taken over by Nestle, which insisted on acquiring a majority stake in Excelcia as well.

Funding of its business plans, however, drove a wedge between the two partners, which ultimately resulted in Dabur finally exiting from the joint venture.
Back to News Review index page 

UB real estate plans near take-off
Bangalore: With the huge potential of prime property the group had, the Bangalore-based UB group had roped in consultants – Mahajan and Aibara – to prepare a blueprint for the group’s real estate plans.

The consultants, whose report was recently submitted to the management, have in their report suggested that a joint venture partner should be roped in to develop the prime property. The report suggested the following options for developing the land: A high class hotel; luxury service apartments, shopping mall or an entertainment complex.

According to a senior official of the group, it plans to hire overseas architects once plans are finalised. He said there the group has already started receveing enquiries from several companies for setting up shopping malls on the real estate property.
Back to News Review index page 

Bajaj Auto to follow five day week
Pune: In order to counter the slack demand for its products, two wheeler major, Bajaj Auto, has decided to follow a five-day week at its Akurdi production facilities. Besides the monsoons which normally affect sale of scooters, the introduction of uniform sales tax in the country has also affected the sales, particularly in the northern states.

The company, however, does not for the moment contemplate such a move for its motorcycle plant at Aurangabad. The company will extend the five day week to this plant, should the market situation demand it.

The lay-off would mean a cut in production of M-80 models, scooters and front engine autorickshaws as well as despatch of CKDs to the Satara facilities of Maharashtra Scooters, which in turn has resulted in production cut there also.
Back to News Review index page 

L&T may finally demerge its cement business
Mumbai: After months of speculation, according to a report in the Economic Times, the Larsen & Toubro (L&T) management is said to be seriously addressing the issue of demerging its cement business. It is said that the company’s board, which is meeting on July 4, is expected to consider the proposal.

According to information available, the financial institutions, the FIIs, the GDR holders and other major investors of the company, have formally approved the proposal to hive off the cement business.

International management consultants Boston Consultancy Group, which had done a comprehensive exercise on restructuring for the company, had submitted a report recommending the demerger of cement activities. But, the management could not make any progress as it involved several issues, such as taxation and stamp duty liabilities and the impact on non-cement business.

The new thought process in the management is to demerge the cement division into a separate company, initially held by the existing shareholders of the company in proportion to their current holdings. Later, the possibility of inviting an international cement player as a partner could be explored.

It is understood that L&T chief executive, Mr. A M Nayak, has had talks with leading cement majors, Lafarge, Cemex of Mexico, Holderbank and Blue Circle, for their participation in the company’s cement business. It is learnt that these major players have insisted that the cement business of the company be in a stand-alone company and not be associated with any other activity.

The company’s cement business accounts for about 27 per cent of its total sales. The company’s cement sales during 1999-2000 are estimated at Rs 1,940 crore out of the total turnover of Rs 7,424 crore. The cement business does not contribute any meaningful profits to the overall earnings kitty, although it is the largest assets division. L&T earned net profit of Rs 342 crore for 1999-00.

Larsen & Toubro is the largest cement player in the country with a capacity of 14 million tonnes which is being raised to around 18 million tonnes. The enterprise value of the cement business is placed at over Rs 7,000 crore.
Back to News Review index page 

Voltas cracks Rs 900 crore deal with LG
Mumbai: Voltas, the engineering and air-conditioning major of the Tata group, is said to have struck a major deal with South Korean giant, LG Electronics India, under which the engineering giant will supply the Korean major approximately 1.2 million refrigerators over three years. These would be sold under the LG brand in India. The deal is said to be worth Rs 900 crore.

The Korean company earlier had a contract manufacturing arrangement with Voltas and has already purchased 2.25 lakh refrigerators from it. The arrangement with LG comes as a major shot in the arm for the ailing Voltas, which can garner substantial revenues from the deal.

Voltas, which had earlier sold part of its white goods business to Sweden's Electrolux AB but had retained a refrigerator-making unit, had been scouting for long-term sourcing agreements with other white goods majors for some time.

Earlier, it used to manufacture refrigerators under the Voltas and Allwyn brands which have now been phased out. Voltas had also integrated the air-conditioning and refrigeration businesses under one focused group. While the company’s main business continues to be air-conditioners, it also manufactures cooling systems, or chillers, for companies like Pepsi, Nestle and others.
Back to News Review index page 

Greaves Limited in for a major restructuring exercise
New Delhi: Financially strapped Thapar group company, Greaves Ltd., has decided to go in for a major restructuring exercise and has appointed Price waterhouseCoopers for this purpose. It is said that PwC will submit a final report on the restructuring agenda in three months.

According to the managing director, Mr. Praveen Sachdev, the restructuring would also involve a certain amount of downsizing of the 6,000 people employed in the company. To improve manpower efficiency, the company would also be hiring about 30-40 specialists in IT, manufacturing process and R&D. This would mean that at least 1,000 persons would have to be retrenched.

Mr. Sachdev also said that the company has bagged substantial defence orders worth Rs 50 crore for diesel engines for repowering defence engines and for diesel generating sets. The company is also planning to aggressively tap the export markets in south east Asia, Africa and Europe.
Back to News Review index page 

Hindustan Inks follows European model for board of directors
Mumbai: Basing itself on the European multinational model, printing ink major, Hindustan Inks & Resins, has reconstituted its board into two tiers. In the process, it has also inducted four new faces into the board.

The company will henceforth have a supervisory board called board of directors for corporate governance and management plans, and an executive board, for managing day-to-day operations.

The six-member board of directors headed by company chairman, Mr. Yunus Bilakhia, will act in a supervisory capacity, and will discharge statutory responsibilities.

The executive board comprising of nine senior executives, who are heads of various divisions, will be headed by the managing director of the company Mr. Anjum Bilakhia.

While the executive board is expected to meet frequently, the board of directors will meet at least once a month for important decisions on policy matters and corporate governance.
Back to News Review index page 

LML reports lower net profit
New Delhi: Scoorer manufacturer LML Ltd. reported a sharp fall in net profit for the year 1999-2000, as a result of which the board of directors have recommended non-payment of any dividend. The net profit for the year stood at Rs 6.19 crore as compared to Rs 39.47 crore in eighteen months ended March 1999.

According to a release from the company, the performance was hit due to continous and significant shift of the market from metal body geared scooters to motorcycles especially in the urban areas. Sales were also affected as some models of the company at higher price points lost to lower priced motorcycles.

In view of the changing profile of the two wheeler industry, the company has planned to introduce new four-stroke mobikes and scooters and two-stroke plastic body gearless scooters during the year. The company is said to have taken several strategic initiatives including comprehensive corporate and industrial restructuring and enlargement of portfolio.
Back to News Review index page 

SkyTeam may jointly bid for A-I
New Delhi: In a move that is likely to add a new twist to the Air India disinvestment saga, four major airlines – Air France, Delta Air Lines, Korean Air and Aeromexico – have formed an alliance christened "Skyteam" to jointly bid for the Air India stake.

The newly-formed alliance is said to be waiting for the details of the disinvestment program for which the government is scheduled to appoint a global advisor within a matter of days.

The steering committee of SkyTeam alliance would consider the proposal once the a global tender is formally floated for selling 40 per cent stake in Air-India to strategic partners. Foreign carriers can take up to 26 per cent equity in the national carrier while the remaining 14 per cent is reserved for domestic strategic partners. According to a spokesperson for the alliance, The future course of action would depend on the terms and conditions governing sale of equity in Air-India.

The new partners believe that India could be a good base for hub-and-spoke operations between Europe and the Gulf region on the one hand, and South East Asia on the other.

According to media reports, several leading airlines like Singapore Airlines, British Airways, Emirates and Lufthansa are also expected to bid for Air India. Some of these airlines had earlier denied any such move on their part for acquiring a stake in Air India.
Back to News Review index page 

Mittals might seek strategic partner for flagship company
Mumbai: According to a report appearing in the Business Standard, the Mittals of the cash-strapped Ispat group, are seeking to infuse funds into the group flagship Ispat Industries, by offloading a 20 per cent stake to a strategic partner. The same principle is expected to be applied to other ailing group companies as well at a later stage. This move has been confirmed by the group’s finance head.

The group has had a massive time and cost overrun on its 3 million ton capacity hot strip mill in Dolvi, Maharastra, and has so far been able to commision only upto 1.5 million tonne of the capacity. The completion of the project has been held up due to non-availability of funds. It requires approximately Rs 600 crore to complete the project.

According to the finance chief, the financial institutions have in-principle approved the remainder of the loans required to pull the project through, but no disbursals have been made yet.

If the Ispat Industries experiment works out, it is learnt that the same policy of a strategic partner could be extended to other ailing group companies as well.
Back to News Review index page 

Nirma approaching arch rival, HLL, for sale of LAB unit
Mumbai: It is understood that the Patel family of detergents major Nirma, have initiated negotiations with rival FMCG giant Hindustan Lever to sell its linear alkaline benzene (LAB) division, a key input required in detergent making.

While both companies have refused to comment, informed sources state that the multinational giant is looking at the proposal seriously and may used its group company, Hindlever Chemicals to buy the LAB unit for a right price. To sell the division, Nirma will first have to hive off the unit.

Both HLL and Nirma are major consumers of LAB, the two strongest players in the detergents industry. While HLL entirely outsources its LAB requirement, Nirma has a 75,000 tonne unit which grossed Rs 76.12 crore in the 1998-99 fiscal.

The sale is being contemplated by Nirma because LAB imports have now been freed. This coupled with the fact that international price cartels are wreaking havoc in the Indian market and Nirma has to constantly upgrade technology at a high cost, have forced the company to sell off the unit.

HLL, on the other hand, has been looking at the option of setting up its own LAB unit for some time as it will insulate the company from future price fluctuations. It was earlier granted a license in Punjab in the licensing era, but did not proceed with its plan.
Back to News Review index page 

South Korean government tells Hyundai to spin off auto units
Seoul: Beleaguered South Korean conglomerate, Hyundai, has been told by its government that it should spin off its automobile units as part of the restructuring exercise being carried out.

The conglomerate had earlier stated that it was against any such move to make the automobile units separate from the group. It had, instead, proposed to spin off 25 of its 35 companies, including Hyundai Engineering and Construction as well as Hyundai Electronics.

Hyundai Group officials earlier said the founder’s shareholdings in the 25 affiliates it now plans to hive off were all lower than three per cent each and they expected no problem in obtaining FTC approval. The FTC bars conglomerates from holding more than a three per cent stake in any outside firm.
Back to News Review index page 

Ford wins the race for Daewoo
Seoul: Beating all other contenders US automobile giant, Ford Motor Company, has won the mandate to be the exclusive bidder for the ailing South Korean automotive group, Daewoo Motors. Ford has reportedly offered an estimated $6.8 billion for the insolvent South Korean automotive group.

The restructuring committee that is handling the international auction of the South Korean company on behalf of creditors, abandoned plans on Thursday to select two preferred bidders in favour of a sole approach from Ford. Earlier, Daewoo's creditors rejected joint bids by GM-Fiat and DaimlerChrysler-Hyundai after reportedly receiving assurances from Ford over future employee numbers, vehicle platforms and union agreements.

Ford now has 60 days to finalise takeover terms for the debt-ridden Daewoo. The company was put up for sale last year after its liabilities were assessed at $16 billion.

Ford is expected to acquire Daewoo's domestic plants free of debt. It will also take on plants and sales operations overseas, which are likely to be heavily restructured.

The takeover would mean a lot for the Ford-Daewoo combine in the Indian markets, and is likely to nudge the combine into a neck-to-neck race with Hyundai, which is currently a distant second in the marketplace to Maruti Udyog.

The deal would also give Ford an impressive range of brands. With the Cielo, Ikon and Matiz in its kitty, it would also be able to straddle both the premium and small car segments.
Back to News Review index page