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Hyundai in major expansion drive

New Delhi, Dec. 20: Hyundai Motors plans to shift its global base for manufacturing Santro cars from the Korean mother plant to India.

The company is going in for an expansion plan that will be funded mainly by a Rs 1,400-crore external commercial borrowing (ECB) programme, which is likely to be picked up largely by Korean companies and financial institutions. Another Rs 350 crore will come out of the Indian arm’s savings.

“While HMIL will raise Rs 350 crore from its own internal accruals...raising the rest by way of borrowings from financial institutions will be a better option since they are now a zero-debt companies,” merchant banking sources said.

Sources said the firm plans an initial public offering (IPO) but wants to wait till the Maruti Udyog IPO (tentatively slated for March next year) is issued to gauge the market’s receptivity to the automobile issues.

“Hyundai is waiting for Maruti Udyog (MUL), the country’s largest automaker, to come out with an IPO,” an official said. “Maruti’s IPO will give Hyundai an idea about the valuation of auto stocks. This will help the company put its own scheme in perspective,” the official said.

The expansion programme is part of Hyundai’s strategy to set up the Indian production unit for global exports as the parent firm will stop producing the Santro model by late 2003, confirmed Hyundai officials.

“We cater mainly to the European market. However, we will soon have our presence in the Latin American market,” a company official said. The firm is already carrying out a study on the Latin American market, he added. “We will be exporting around 25,000 Santros by 2004.” At present, the firm exports around 6,000 units a year.

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