Shriram group quits logistics JV

By Our Special Correspondent

CHENNAI, MAY 30. The city-based Shriram group has pulled out of its logistics joint venture - Sembawang Shriram Integrated Pvt. Ltd. - by disinvesting its holding in favour of the Singapore partner - SembCorp Logistics - at an undisclosed premium. Consequently, the joint venture company has become a 100 per cent subsidiary of Sembcorp Logistics and has been rechristened SembCorp Logistics (India) Ltd.

According to Mr. H. R. Srinivasan, managing director of the company, the Foreign Investment Promotion Board (FIPB) has already approved the raising of the Singapore firm's stake in the Indian venture.

Following the deal, the paid-up capital of the new company has been raised to Rs. 38 crores from Rs. 25 crores to fund expansion and new projects. For the year ended December 31, 1999, the company had posted a turnover of around Rs. 30 crores. While declining to reveal the profit figures, Mr. Srinvasan indicated that the company would end the current year with a turnover of about Rs. 100 crores.

Not willing to be drawn as to why the Shriram group quit the joint venture, Mr. Srinivasan, nevertheless, pointed out that the decision of the Singapore company to make the Indian venture its fully-owned subsidiary ``shows its long-term commitment to India.'' The change in ownership, he said, had not affected the operational management.

The Shriram group Chairman, Mr. R. Thyagarajan, said, ``We disinvested at a premium.'' The pull out from the logistics venture, he said, was in line with the decision taken by the group a couple of years ago to get out of non-service-oriented areas. In this context, he indicated that his group would focus more on finance, specifically truck financing, stock broking and insurance.

For one, manufacturing units need more funds as they grow. For another, the norms for non-banking finance companies have become more stringent. Obviously, this has made the Shriram group to take a hard decision. ``We will disinvest whenever opportunities present before us,'' Mr. Thyagarajan hinted. He, however, would not set any timeframe. In line with this decision, the group has already let an American company become a partner in Pavron Spraytech which now becomes Empson Spraytech.

The logistics joint venture came into being in 1996 with the Shriram group holding 49 per cent and the Singapore firm the balance. The joint venture has been in the business of providing complete integrated logistics solutions. It has two facilities - one each in Chennai and Nagpur. A third facility in Pune is slated to open in July. Its client list includes Ashok Leyland, Telco, Bridgestone, Birla 3M and Sony.

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Section  : Business
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