Financial Daily from THE HINDU group of publications
Friday, Dec 16, 2005
Financial Daily from THE HINDU group of publications Friday, Dec 16, 2005 |
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Corporate
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Buyback Kirloskars cannot hike stake in Toyota Kirloskar beyond 11% — Original share buyback deal renegotiated K. Giriprakash
Bangalore , Dec. 15 THE Kirloskars and Toyota Motor Corporation have renegotiated their original share buyback agreement as a result of which the Kirloskar stake in Toyota Kirloskar Motor (TKML) now cannot exceed 11 per cent. The Kirloskars had earlier this week bought back 10 per cent equity in TKML from Toyota Motor Corporation. As per the original understanding with Toyota Motor Corporation, the Kirloskars could increase their stake to 26 per cent under a buyback arrangement. The Kirloskars, whose equity holding had dropped to 1 per cent in the joint venture, had divested the rest (25 per cent) at around Rs 15 per share to Toyota Motor Corporation over a period of time between 1999 and 2003. In a new deal signed this week, the Kirloskars bought back 10 per cent of the equity at Rs 18-Rs 22 per share, which amounts to around Rs 125-135 crore. The entire amount has been raised through internal accruals from other group companies. The equity capital of the joint venture is around Rs 700 crore. The deal has already received necessary government approvals. Toyota Motor Corporation has also paid capital gains tax of around Rs 7-8 crore on the amount they received from the Kirloskar Group from the buyback deal. In 1999, the Government gave Toyota Motor Corporation permission to increase its stake in the joint venture to 89 per cent from 74 per cent as the venture needed additional funds immediately, which the Kirloskars were unable to provide. The Kirloskars' stake reduced further to 1 per cent a few years ago when Toyota subscribed to the additional holding on behalf of the Indian partner, taking the Japanese carmaker's stake to 99 per cent.
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