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Hyundai to invest $ 400 mn on 3 new models for India; Sonata priced at Rs 1 million

Hyundai Motor Company of South Korea will be investing $ 400 million in its Indian subsidiary -- Hyundai Motor India Limited -- by 2003-end for introducing three new passenger vehicles, including the luxury sedan Sonata priced between Rs 1-1.2 million.

The fresh investment would be a mix of internal accruals, debt and fresh equity from the parent company, HMIL director (marketing and sales) BVR Subbu said in New Delhi today.

The Sonata, sporting a two-litre engine, would be launched in the first quarter of 2001. The company hopes to sell 2,000 units of the car in the first year.

The company, he said, is also re-looking at plans to divest equity in HMIL for raising funds. ''If we can raise money through internal accruals and debt, there is no need to go in for private placement of equity or for an initial public offering.''

HMIL is aiming to be present in India with five models on four platforms by the end of 2003. ''This would include four passenger cars and one Sports Utility Vehicle or SUV.''

While the company has decided to introduce the sonata in India in 2001, it is planning to commence a techno-feasibility study on the SUV Sportage this month. ''We need to ascertain the market acceptance for the model before launching it here,'' HMIL executive director (marketing and sales) J H Kim said.

The fresh $ 400 million investment would be utilised for building up capacities and introducing new models, Subbu said, adding that the investment schedule for the same would be decided by early 2001.

He further announced Hyundai's plans to move into the used car market with 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.''

It may be recalled that Hyundai had earlier announced its decision to privately place upto 24 per cent stake in HMIL in the year 2000. Although an exact timeframe for the divestment had not been finalised, Subbu had stated that the company was planning to sell the equity to several institutional investors, including foreign buyers.

''We are in the process of evaluating the share price and whoever pays a good price will get the stake. We will not sell our shares at a low price.''

The money raised through the private placement would be utilised for funding its expansion programme. HMIL equity base is currently Rs 8 billion. However, Subbu had refused to divulge the quantum of funds that Hyundai expects to raise through the share sell-off.

''We have placed an upper limit of 24 per cent for the sell-off. We might begin with five or six per cent initially and gradually achieve the total limit,'' he added.

The decision to sell off stake in HMIL had stemmed out of the fact that the company has recorded profit in its first full year of operations. HMIL ended the 1999 calendar year with a net profit of slightly over Rs 200 million.

''We are looking at an expansion of our growth and to keep pace with it, we need to expand capacities. Hence, the plans for selling off stake has been pulled ahead.''

Prices up: Santro by Rs 20000, Accent by 45000

Meanwhile, Hyundai Santro would become dearer by Rs 20,000 and Accent by Rs 45,000 following implementation of the uniform 12 per cent sales tax rate by Delhi government.

Although the government is yet to annouce a firm date for implementation of the uniform sales tax, HMIL said its fast selling small car's price tag would be revised upwards by Rs 18,000-20,000 and that of Accent by rs 40,000-45,000.

''We are still awaiting the government gazette in this regard...Whenever the decision is made, the prices would automatically go up,'' Subbu said.

UNI

Hyundai mulls launch of 4 Korean models in India

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