The Hindu Business Line : Xerox Corp wants to make Indian venture 100 pc arm

THE US-based Xerox Corporation, which is under investigation both in the US and in India for allegedly bribing Indian Government officials to secure high-value orders, now plans to turn its Indian joint venture subsidiary into a wholly owned one.

The company wants to buy out its Indian joint venture partner, the B.K. Modi group. The Modis currently have more than 40 per cent stake in the joint venture.

As of now, a 36.4 per cent stake in the joint venture is registered in the name of Emco Finvest Pvt Ltd, a B.K. Modi group outfit in which the Mauritius-based Sidh Securities Ltd (SSL), another Xerox subsidiary, has a minority holding. According to Xerox's proposal, Sidh Securities would exit Emco Finvest once it exits Xerox Modicorp.

Yet another B.K. Modi group company — Modi Rubber Ltd — holds a 7 per cent stake in Xerox Modicorp. Xerox intends to buy out Modi Rubber's stake also in the company but is facing stiff resistance from the Modis.

According to informed sources, Xerox and the Modis are fighting over the valuation of the 7 per cent stake held by Modi Rubber. They are also fighting over the price at which Sidh Securities will exit Emco Finvest.

Xerox has approached the Foreign Investment Promotion Board (FIPB) to get a clearance for its acquisition while the Modis have filed an objection to it, sources said.

Meanwhile, the probe by the Department of Company Affairs (DCA) into Xerox's bribing issue is still on. According to information available, a special review of Xerox's accounts in India by the auditing firm PricewaterhouseCoopers (PwC) has revealed that it had made "improper" payments to Government employees through a mechanism involving the company's employees, dealers and others. The aggregate of such payments ranged between Rs 3.8 crore and Rs 4.2 crore, spread over a number of years, the PwC report stated.