Date:29/07/2005 URL: http://www.thehindubusinessline.com/2005/07/29/stories/2005072902301500.htm

Back MRO services, wholesale trading — Lufthansa seeks FIPB nod to set up 100% arm

Ambarish Mukherjee

New Delhi , July 28

ENCOURAGED by the spectacular growth in the Indian aviation sector, the German airline Lufthansa has finalised plans to set up a wholly owned subsidiary in India offering wholesale trading in aircraft components and maintenance, repair and overhaul (MRO) services. The company would, however, not undertake retail trading in aircraft components, Government sources said.

Lufthansa has christened the proposed subsidiary `One Stop Airline MRO Support Pvt Ltd', officials said.

According to the plan, the Indian subsidiary would carry out aircraft maintenance services such as line maintenance, certification, engineering consultancy etc required for aviation safety.

Additionally, it would make available aircraft components, including some critical components.

Lufthansa Technik AG, the parent company of the worldwide Lufthansa group, has sought permission from the Foreign Investment Promotion Board (FIPB) to establish the wholly owned subsidiary in India.

The initial investment would be $1 million, officials said.

Justifying the move, the company has stated in its application that the "Indian aviation sector is poised for unprecedented growth and expansion both at domestic and international levels."

Stating that the new airline companies and aircraft would need international maintenance standards, the company has informed FIPB that it has "identified India to further its business operations, and in order to intimately understand customers' business and objectives in India, the company seeks to establish a long-term business presence through a wholly owned subsidiary."

The company has also provided a written undertaking not to pursue retail trading and undertake only business-to-business sales, officials said.