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Peerless sells shipping arm to French company Stena

Prakash Chawla in New Delhi

Peerless General Finance and Investment Company Limited, India's largest non-banking finance company, has finalised a deal for sale of its shipping subsidiary to Stena of France.

Peerless has also put on the block its housing finance firm, top sources in the company said.

Sale of Peerless Shipping to Stena was brokered and clinched by Credit Lyonnais in a ''business-like manner,'' sources said, declining to disclose the consideration for the deal.

The deal was finalised after the investment bankers had floated a global tender on behalf of the sellers.

They said the sale of the shipping firm is part of the peerless group's efforts to focus on its core competence areas and get out of the businesses unrelated to its line of activities.

The next Peerless unit to be put on the block is its housing finance firm. ''We will find buyers for this company also in a professional way.'' The group would hire one of the investment bankers again to search for a suitor.

As the group is busy cleansing its operations, it has also sold its technology and global trading arm.

Peerless General Finance and Investment Company had 26 subsidiaries before the new board of directors was appointed about three years ago under the chairmanship of former State Bank of India chairman D N Ghosh.

The new board also comprises luminaries like former Hindustan Lever chairman S M Datta and former SBI chairman D Basu.

''Although the board is a non-executive one, it has played quite an active role in the revival of the group,'' sources said.

The board was changed at the instance of the Union government and the Reserve Bank of India which were concerned about protecting the interest of 40 million certificate-holders, mostly in the rural areas.

The RBI is still keeping a close liaison with the group. ''The board members meet the RBI every 15 days,'' sources said.

The central bank needs to be abreast of the largest residuary non-banking finance group since it holds a deposit base of Rs 70 billion.

In the reckoning of the RBI, Peerless has a niche role in tapping the rural savings which are still beyond the reach of the commercial banks in spite of expansion of their network.

The group which managed to go default-free for the last 60 years in spite of problems about three years ago, would sell off at least seven to eight subsidiaries.

One of the problem areas for the group was its investment portfolio which could have resulted in a liquidity crisis. This was the top most issue before the new board. ''The investment in liquid assets has now improved from 52 per cent three years ago to over 80 per cent now,'' sources said.

Another area of concern was the sticky loans sanctioned by the previous board. While Basu is looking after the group's investment portfolio, Datta is keeping a watch on the subsidiaries and is actively involved in the sellout exercise.

While the hotel and hospital may not be the core-competence areas for the Peerless group, it has decided to retain the two subsidiaries in these areas. It has a 300-bed hospital and about four hotels doing well. ''While hospital gives us a brand image and goodwill, the hotels are doing well,'' sources said.

UNI

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