Financial Daily from THE HINDU group of publications
Friday, Mar 18, 2005
Mergers & Acquisitions
Tata Motors signs pact with Spanish bus firm Hispano Carrocera for 21 pc stake
(Left to right) Mr Andres Mugica, Director (Operations) Hispano Carrocera; Mr Gerardo Mugica, CEO, Hispano Carrocera; Mr Ravi Kant, Executive Director, Tata Motors, and Mr R.S. Thakur, General Manager (Corporate Finance), after the signing of the investment agreement in Madrid on Thursday.
Mumbai , March 17
MR Ravi Kant, Executive Director, Tata Motors, has been appointed Chairman, Hispano Carrocera SA, following the formal agreement on Tata Motors' acquisition of a 21 per cent equity stake in the Spanish bus company.
Mr Gerardo Mugica, CEO, Hispano Carrocera, handed over the share certificates to Mr Ravi Kant at a meeting in Madrid on Thursday. Also present was Mr Andres Mugica, Director (Operations), Hispano Carrocera, an official statement said.
Tata Motors has a call option on the remaining 79 per cent shareholding. With the signing of the investment agreement, Tata Motors will have the licence for technology and brand rights from Hispano Carrocera.
The 21 per cent equity stake for a total price of 12 million euros comprises equity, debt and technology licensing.
Mr Ravi Kant has been appointed Chairman of the Spanish company. The board additionally has Mr R.S. Thakur, General Manager (Corporate Finance), Tata Motors, Mr Gerardo Mugica and Mr Andres Mugica.
The immediate priority, Mr Ravi Kant said, would be to infuse adequate funds into the financially constrained bus manufacturer and enhance its top line through a mixture of growth in the existing markets, tapping new ones and moving its buses through Tata Motors' international network.
The funds infusion would be by means other than exercising the 79 per cent equity option, which can be anytime over the next five years.
Hispano Carrocera had slipped into loss when its market collapsed soon after it invested in factories and bus design. It operates two manufacturing facilities in Zaragoza, Spain and Casablanca, Morocco and "the product designed by Pininfarina has won Bus of the Year awards in their markets."
The Zaragoza works can produce 800 buses a year. Mr Ravi Kant further believes the strategically positioned Casablanca facility would help in the Tatas' plans for growth in Africa, including Francophone Africa. Traditionally, Hispano Carrocera has built buses on outsourced chassis. Given customers' right of choice on chassis, this practice would continue, the new bus chassis proposed for development by Tata-Daewoo eventually coming in as one more option, Mr Ravi Kant said.
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