NEW DELHI, July 13: Hyundai Motor India Ltd has firmed up domestic borrowing of nearly Rs 500 crore from ICICI and five banks. This is significant in light of the fact that financial institutions and banks have become wary of lending to Korean companies in the wake of the economic crisis in their country. In an interview to The Financial Express in the Capital on Monday, worldwide chairman of Hyundai Motor Company Mong-Gyu Chung said: "The domestic borrowing has been finalised at very favourable rates and includes both short- and long-term borrowing."In another significant development, the Korean parent is planning to make the Indian subsidiary a major sourcing base by importing engines, transmission systems and other components from here for meeting its production requirements for the small car Atos, back home, he disclosed.
"The wholly-owned subsidiary of the Korean auto giant has plans to export Santro to its overseas markets next year," Chung said.
Elaborating on the financing details, hesaid the loan from ICICI is to the tune of Rs 100 crore and comes with an eight-year tenor. The rupee loans would come from banks including State Bank of India, Punjab National Bank and United Bank of India.
The equity component is around Rs 640 crore, which is being pumped in by the Korean company. The first phase involves a total investment of Rs 2,200 crore. Answering a query on the company's plans to offload equity in favour of the Indian public or foreign institutional investors, Chung said that there were no plans at present to go in for any divestment.
Despite the won crisis in Korea and economic recession in India, the company's plan to launch `Santro' is on schedule. The situation is expected to stabilise in the next few weeks in Korea, he said. Santro, which will take on the Maruti Zen, will roll out in October this year, he said. Hyundai is developing a car for the mid-size segment, which will be bigger than its popular car `Accent'. The car will make its debut in Korea and India in1999-end.
The chairman also met industry minister Sikander Bakht and apprised him of the company's indigenisation and investment schedule. Besides, Hyundai Motor Company is developing an in-house diesel engine for the successor to Santro. It is at the same time negotiating with Peugeot for the TUD5 diesel engine. The company expects to break even by the year 2000, he said.
Consumer financing soon
Hyundai Motor India announced on Monday the setting up of a "private label" consumer financing operation - Hyundai Finance - in association with Bank of America. Bank of America will provide funding, assets and liability management skills and product delivery strengths while the manufacturer would provide the distribution network. Hyundai Finance will operate through the company's dealers. All the company's dealers will have Hyundai Finance counters at their show-rooms. Though the company had also held talks with Citibank and Countrywide, it zeroed in on Bank of America probably because both thecompanies have tie-ups with Maruti Udyog.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
