German automobile major Daimler Benz holds 81.33 per cent equity stake in the company, while the rest is held by the Tatas. The company is the second highest loss making one among its subsidiaries worldwide after Micro Compact Car AG, Biel which suffered a loss of Rs 740 crore in 1997. Daimler Benz' South African subsidiary is the third highest loss making subsidiary with a loss of nearly Rs 162 crore.

Mercedes Benz India's turnover is also the lowest among Daimler Benz subsidiaries worldwide. Faced with a recession in the premium car segment, Mercedes Benz had slashed its sales target for 1998-99 by almost half. Thecompany's sales during the current year has fallen sharply. It sold 49 units in August this year (601 in August 1997), 102 units in July (previous year 487) and 104 units in June this year (previous year 323).

The company signed a memorandum of understanding (MoU) with the directorate general of foreign trade (DGFT) in September. It has achieved 58 per cent indigenisation of components and has undertaken to achieve stipulated 70 per cent by the year 1999-2000. The company had earlier expressed its reluctance to sign the MoU with the government which prescribes an indigenisation schedule for auto companies, as it felt that the poor volumes would not justify the indigenisation level. It also felt that the localisation norms were tough to meet.

The joint venture intends to import parts worth $142 million by 1999-2000 and achieve foreign exchange neutrality by way of equivalent export of cars by the year 2001-2002. Till date, MBIL has exported 2,500 cars, according to company officials.

Under the the MoU,MBIL will import kits worth Rs 535 crore till 2000, out of which 1,350 kits will be imported within 1999 at a total cost of Rs 69 crore.

Earlier this year, as part of its marketing strategy, MBIL decided to reduced the prices of its new E-class cars. The parent plans to expand its presence in Asia especially in its passenger car assembly plants in India, Malaysia, Indonesia, Thailand and Singapore. It also took over the management of sales activities from Telco, and restructured them throughout the country.