Wartsila Delisting Move On Hold

New Delhi, Sept 22: | Updated: Sep 23 2003, 05:30am hrs
Finnish engineering major Wartsila Corporations move to delist its Indian subsidiary Wartsila India has been put on hold. Reason: the acquisition of the balance 10.31 per cent shareholding, majority of which is with the financial institutions, has not materialised.

Wartsila Award
Wartsila India has also instituted Wartsila-Mantosh Sondhi award to recognise outstanding achievements and contribution to the power sector. The award has been instituted in the honour of Wartsila India late chairman emeritus Sondhi, Mr Bhargava said. The panel of jury are Confederation of Indian Industry (CII) director general Tarun Das, Sobis Software chairman KN Shenoy and Wartsila India managing director Banmali Agrawala.
Wartsila Corporation controls 89.69 per cent stake in Wartsila India. It was keen to convert the latter into a wholly owned subsidiary. This would have resulted in delisting of the company from domestic bourses.

Life Insurance Corporation (LIC) and Oriental Insurance Co, which together hold 6.14 per cent equity stake in Wartsila India, have yet to sell their stake.

The proposal to delist company is on hold, Wartsila India chairman Subodh Bhargava told FE.

The company, meanwhile, has decided to accelerate growth by adopting a two-pronged approach. Wartsila India will soon launch its rural electrification business besides becoming one of the major outsourcing hubs for its parent company, he said.

Wartsila India is holding talks with various companies including government agencies to launch rural electrification projects. We are talking to some companies who are interested in power distribution. We will set up 1-2 MW projects in rural areas. Projects will be set up and maintained by us while the strategic partner will be responsible for distribution, Mr Bhargava said adding that the rural electrification projects are at an advance stage of being launched.

The Indian subsidiary is likely to become a major outsourcing hub for the Finnish parent. Wartsila India has the state-of-the-art manufacturing facility besides having cost advantage. Orders from group companies have already started to come in, Mr Bhargava said.

As a part of the global strategy, Wartsila Corp had made two open offers to minority shareholders of its subsidiary, Wartsila India, to buy the outstanding shares in the company.

According to a Wartsila Corp source, Two offers were made to minority shareholders of Wartsila subsidiary, Wartsila India, to buy the outstanding shares in this company. As a result, Wartsilas holding in Wartsila India increased from 84.8 per cent to 89.69 per cent.

The company had raised its equity stake in Wartsila India from 84.76 per cent to 85.5 per cent during May-June 2002 though an open offer. Later, Wartsila Corp had acquired 1.19 per cent of equity shares through another open offer at Rs 120 per share, raising its stake in Wartsila India from 88.5 per cent to 89.69 per cent between November and December 2002. DSP Merrill Lynch has been advising the company on the buy-back strategy.