Mumbai, June 2: The Tata Engineering & Locomotive Co (Telco) will pick up a 7.2 per cent stake and ACC Ltd 18.8 per cent in the revised equity structure of Bridgestone-ACC, paving the way for a fresh round of speculation on whether the cement major is actually out of the Tata fold.

Bridgestone-ACC was initially to have a 51:49 equity structure with the Mitsubishi-owned tyre major holding the majority, while ACC, along with associate Tata group company Telco, taking up the rest.A section of Bombay House observers see Telco's equity participation as quashing speculations of ACC's coming out of the Tata fold, after the cement company wilfully opted out of Tata Sons' compendium on group companies.

"If ACC was not a Tata group company, Telco would not have taken a stake in a company promoted by ACC," they said. To pick a 7.2 per cent stake in the scaled down equity base of Rs 139 crore, the Rs 10,000 crore-plus Telco will incur a paltry outgo of Rs 10 crore.

Incidentally, nearly all senior ACC officials, barring chairman Nani Palkhivala, have strongly denied reports that the cement major is out of the Tata fold. Most of them maintain: "We are still part of the Tata group."

However, another section of Tata group observers feel the revised equity pattern was necessitated as Telco was losing interest in financial participation in Bridgestone-ACC after the cement major could not be made to subscribe to group holding company Tata Sons' rights issue. The issue was aimed at strengthening Tata Sons' control over group companies."Telco has decided to pick up a stake only to ensure smooth supply of premium quality Bridgestone brand of radial tyres that it will require for its existing line of vehicles, its proposed small car project and for the venture with Mercedes," they said.

Another point that has been raised by corporate observers is, why ACC could not itself pick up 49 per cent holding, as was initially proposed, even if Telco were not to take a stake in the company.The answer probably lies in the fact that ACC itself is expected to perform miserably in the 1996-97 fiscal in which its net profit has been projected at below Rs 100 crore less than half that of 1995-96.The current fiscal is not expected to be any better. At the same time, ACC itself has lined up major investments in trebling capacity of its 2 million tonne cement unit at Wadi, Karnataka, as well as other expansion and modernisation plans.For a 49 per cent stake, it would have had to invest Rs 76 crore. But having settled for just 18.8 per cent, it will have shell out only Rs 26 crore.

The Foreign Investment Promotion Board has recently cleared a proposal from Bridgestone-ACC for changing the equity pattern, with ACC and Telco reducing their equity participation to just 26 per cent and Mitsui joining the consortium with a minority 10 per cent, as reported earlier by The Financial Express.Consequently, Bridgestone's stake would go up to 64 per cent. The paid-up capital has been scaled down to Rs 139 crore from the earlier proposed Rs 155.2 crore.It is however not known whether the management structure will undergo any significant change. The seven-member board has four representatives from Bridgestone while the remaining three are from ACC.

Telco however does not have any representative in the joint venture. It is not known at this stage whether the board's strength will be increased to accommodate a Mitsui representative. ACC board members includes its vice-chairman Subroto Ganguly (chairman of the JV), managing director TMM Nambiar, and PK Sinor.

The Bridgestone representatives are managing director Sasamoto, vice-chairman T Uchiyama, finance chief Hashimoto and Suchiya.The management committee also includes project director KG Shenoy and sales chief SK Chatterjee. The Rs 360 crore project is scheduled to begin commercial production from March 1998.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.