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Hyundai puts IPO, private placement on the backburner

Hyundai Motor Company of South Korea has decided against issuing an initial public offering for its Indian subsidiary Hyundai Motor India Limited, or HMIL, for another five years, a senior company executive said.

In addition, the company has decided to go slow on its decision to privately place up to 24 per cent stake in HMIL. ''The private placement would now be carried out only over the next one or two years,'' Hyundai Motor India president A P Gandhi said.

''We have chalked out a three year business plan, which involves fresh infusion of $ 400 million," Gandhi said.

Under the first phase, the company would, within the next one years, expand capacity to 200,000 units from 120,000 units and add one new model 'Sonata'. ''This would be funded partly through internal accruals and partly through debt.''

The second phase, which involves introduction of one new platform, would be funded through private placement. ''We have already initiated talks with a few institutional investors. The 24 per cent equity would be divested in favour of 2-3 investors. We are going slow on the private placement as it comes only later in our business plan,'' he said.

"The equity would not be divested in favour of any other car manufacturer," he said.

In the final phase, the company would be introducing a new model, and further expanding capacities and launching a public issue.

Regarding the debt raising exercise, Gandhi said, HMIL already has unutilised debt from Indian banks to the tune of Rs 9 billion.

''In our initial phase of entry into India, we had utilised only around Rs 500 million to Rs 1 billion of the total debt raised. We still have a huge quantum of unutilised debt and will be using this.''

Hyundai is currently working on introducing the Sonata in India in the first quarter of 2001 in a 2-litre version. The luxury sedan is likely to be priced in the Rs 1 million to Rs 1.2 million price bracket. In addition, it is also exploring the feasibility of rolling out a sports utility vehicle Sportage.

HMIL, Gandhi said, is aiming to be present in India with five passenger vehicles on four platforms by the end of 2003. This would include four passenger cars and one sports-utility vehicle (SUV).

In addition, the company has already announced that it is planning to move into the used car market with its dedicated Hyundai Motor Plazas. Over the next one year, the company will start buying back Hyundai cars, refurbish them and resell them in the market as used cars. However, its activity in the used car business will be strictly for Hyundai cars only.

Hyundai's used car business would be handled by its dedicated Hyundai Motor Plazas. ''Over the next one year, we will start buying back Hyundai cars, refurbish them and resell them in the market as used cars. But the activity will be strictly for Hyundai cars only and we will not take in any other brands and models,'' other company

official said.

In addition, HMIL has decided against introducing a semi-automatic version of its popular 999cc small car Santro, and is working towards introducing three new models on two new platforms by the end of year 2003. The company is now exploring the feasibility of introducing a diesel heart of its mid-sized Accent.

''We had readied the semi-automatic version of Santro but felt the market was not as yet ready for this model. So we have decided against introducing the version in India,'' the officials said.

The model was earlier expected to be positioned between a normal clutch driven and an automatic transmission vehicle. The car had all the features of a normal car, including the gear-shift, except that the clutch pedal has been replaced with an in-built one. ''In this car, when a driver shift gears, the clutch is automatically pressed and if one shifts gears at a wrong speed, a small light and beep on the instrument panel indicates the error, thereby giving the driver a chance to rectify it,'' the officials added.

Regarding the diesel Accent, the sources said, ''We are studying the market for the product...We have not decided on any launch date for the same. Our petrol Accent is fetching good demand and we are not in a hurry to introduce the diesel Accent.''

UNI

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