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Ford not to buy out M&M in Indian JV

Ford Motor Company of the United States is not in favour of buying out its Indian partner Mahindra and Mahindra.

Though the world's second largest car-maker has hiked its holding in the Indian venture -- Ford India Limited (FIL) -- to around 85 per cent, the company has decided not to convert FIL into a wholly-owned subsidiary, Vaughn A Koshkarian, president, Ford Asia-Pacific Operations (APO) said in Detroit.

Ford India Limited, formerly known as Mahindra Ford India Limited, was floated as a 50-50 joint venture between Mahindra And Mahindra (M&M) and Ford Motor Company. However, M&M decided to freeze its investments in the venture following its inability to keep pace with the equity requirement and its decision to concentrate on an in-house sports utility vehicle project.

Ford had, then, sought the Foreign Investment Promotion Board approval to hike its holding in the Indian venture and was permitted to increase it to 92 per cent. However, the Indian partner has the option of buying back its entire stakeholding.

''We are moving ahead in phases. Our equity holding in Ford India had touched 80 per cent by the time Ikon was produced. We will be raising it to 85 per cent by the end of 2000 calendar year. But there are no plans to totally buy-out the Mahindras in the venture,'' he added.

Mahindra and Mahindra, Koshkarian said, had helped the company establish base in India. ''We wanted to enter the Indian market with a local partner and the Mahindras had been an ideal partner. We would like to retain them as our partner in the venture."

Mahindra and Mahindra managing director Anand Mahindra had earlier said that the company was willing to buy back the stake. The company's buy-back clause, he had said, does not set a time frame for purchasing back the equity in FIL.

Meanwhile, Ford is planning to enter into strategic alliances, including equity partnerships, with popular Indian portals as part of the company's global e-commerce thrust.

In addition, the company is evaluating the feasibility of introducing models in the small and premium segments of the Indian auto industry as part of plans to increase presence in the country, FMC CEO Jacques Nasser said.

''Our vision is to be the world's leading consumer company for automotive products and services. In India, we are looking at an increased presence. For now, we have directed all our resources towards making our latest offering Ikon popular,'' he said.

Regarding Ford's new models for India, Nasser said the company was looking at all opportunities emerging in the Indian marketplace. He hinted that the company would be addressing either the small segment or the top-end of the mid-size segment with its next offering in India.

''The options are more than what we can offer below the Ikon. We are looking at other alternatives as well.''

However, he refused to divulge further information on the specific models that are currently being studied saying, ''there is a lot of thinking going on now as to what the next model should be. We are not ready to talk about the next offering yet."

''We have a facility in India (near Madras) which is capable of producing much more vehicles than it is doing now. But the focus now is on making Ikon successful. There are many opportunities as we go forward in India. It may include a smaller vehicle or may not. We might head in a different direction. We shouldn't just look at what other people are doing and emulate that. We should look at what is right for the market in the longer term,'' Nasser added.

The Indian operation has the advantage of a flexible manufacturing facility in Madras coupled with a large stable of products and brands available through the parent company -- FMC, he added.

The $162-billion FMC of the United States has decided to retain the Daewoo brand name and not close down any of its global operations, including the Indian venture, if its takes over the beleaguered Korean car-maker.

Meera Kumar, manager, communications, Ford Motor Company, said that Ford would retain the Daewoo brand name and ''try to grow the brand through its worldwide network.''

''It is our intention to maximize employment and to enhance, in every way, the potential of Daewoo's Korean and overseas facilities. Our objective is to grow the Daewoo brand through our worldwide network and resources so that it retains its distinct identity and grows globally. Ford has a very impressive history in terms of brand management as evidenced by our management of Jaguar and Volvo, to cite just a few of the brands we have recently acquired. In both cases, sales have gone up considerably and the brand identity has not been eroded in any way,'' she added.

Ford's bid proposal, she said, encompasses plans for the acquisition of Daewoo Motors Korea and all its overseas subsidiaries, including the operations in India.

''We do not view the bid for Daewoo as a takeover but rather as a partnership. We have a great deal of respect for the Korean automobile industry and our view is that the Ford-Daewoo relationship is highly complementary.'' Ford has submitted a solo bid for the beleaguered Daewoo Motor Corporation and is now emerging as a front-runner in the race to purchasing the Korean car-maker.

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