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|February 22, 1999||
Telco to float new arm for construction equipment business
Shareholders of the Tata Engineering and Locomotive Company Limited have unanimously approved the creation of a subsidiary for the construction equipment business of Telco at the extraordinary general body meeting of the company, held in Bombay today.
Telco chairman Ratan Tata has mooted the resolution at the specially convened meeting, which was unanimously approved by the members.
Tata said that Telco is currently engaged in talks with three foreign majors including Hitachi to pick up a stake in its construction equipment business in which it expects the foreign partners to be a minority stakeholder.
Tata further said that the subsidiary to be formed will be as a going concern and Telco will receive Rs 2 billion from the subsidiary which will be used to pay off debts of the company.
Tata further said that the division should continue to launch a whole range of products as companies were looking at total solutions to meet project requirements.
According to him, Telco holds a 61 per cent market share in the excavator business and 81 per cent share in the chemical crane business. The construction equipment business of the company is currently valued at around Rs 4 billion.
The assets and liabilities including working capital will be transferred to the new company. The subsidiary will have a equity capital of about Rs 1 billion and another Rs 1 billion would be premium account. Borrowings would be to the tune of about Rs 2 billion.
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