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Our Bureau

Mumbai , Dec. 9

HITACHI Construction Machinery Co, a construction equipment manufacturer, has doubled its stake in Telco Construction Equipment Company (Telcon), a joint venture between Hitachi and Tata Motors, to 40 per cent.

Hitachi acquired another 20 per cent stake in Telcon from Tata Motors for $44.25 million (Rs 203.55 crore). With this transaction, Tata Motors' stake comes down to 60 per cent from 80 per cent.

The board composition and the management structure of Telcon would remain unchanged, a spokesperson for Tata Motors said.

"Their (Hitachi) participation reflects their confidence in the fast growing Indian market and their desire to be a part of the infrastructure building in the country as also to strengthen the relationship with the Tata Group," Tata Motors said in a statement to the Bombay Stock Exchange.

The new arrangement will help Telcon to significantly improve its product offerings to its customers and make it evolve as a global manufacturing and design hub, Tata Motors said.

The agreement was signed by Mr Ratan Tata, Chairman, Tata Motors, Mr S. Dazai, President & CEO of HCM and Mr J.K. Setna, Chairman of Telcon.

"The new shareholders agreement signed between the three companies envisages greater co-operation between HCM and Telcon. It includes sourcing, by Hitachi, of components and machines from Telcon, introducing newer products of construction equipment in India, setting up a product development facility in India and making Telcon a part of HCM's global network,'' the statement said.

Telcon was set up in 1999, as a wholly owned subsidiary of Tata Motors through a spin-off of the auto major's construction equipment business unit. In 2000, Tata Motors divested 20 per cent stake in Telcon to Hitachi to bring newer technologies and processes to Telcon.

Telcon is in to designing, manufacturing, assembling, selling, distributing and dealing in all services related to earth moving machinery and construction equipment with manufacturing facilities at Jamshedpur and Dharwad and a marketing and service network covering 65 towns in the country. Its product range includes hydraulic excavators, crawler cranes, wheel loaders, backhoe loaders, dumpers and motor graders.

For the year ended March 2005, Telcon reported a gross turnover of Rs 926 crore and a PAT of Rs 40 crore. For the first half of the current fiscal, it reported a gross turnover of Rs 567 crore and PAT of Rs 28 crore.

HCM, which has a turnover of around $5 billion, has its own manufacturing operations in Japan, China, Indonesia, the Netherlands, France and the US, and distribution network worldwide.

Shares of Tata Motors moved up by Rs 11.20 to Rs 575.40 on the BSE on Friday.

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